By SBE Council at 29 June, 2026, 11:42 pm

Testimony for the Record

American Global Competitiveness at 250: Legislative Proposals to Secure U.S. Technology Leadership

U.S. House Committee on Energy and Commerce

Subcommittee on Commerce, Manufacturing, and Trade

Submitted By:

Karen Kerrigan

President & CEO, Small Business & Entrepreneurship Council

June 30, 2026

Chairman, Ranking Member, and Members of the Committee:

The Small Business & Entrepreneurship Council (SBE Council) appreciates the opportunity to offer its views on the European Union's Corporate Sustainability Due Diligence Directive, commonly referred to as CSDDD or CS3D, and the significant implications it poses for American businesses, small businesses and entrepreneurs.

SBE Council has advocated for America's entrepreneurs, small businesses, and innovators for more than three decades. Our members represent businesses of every size, industry, and region of the country. They are manufacturers, distributors, retailers, technology firms, franchisees, contractors, transportation providers, agricultural producers, energy suppliers, and service companies. Collectively, they form the backbone of the American economy.

SBE Council recently co-signed a letter sent to committee leadership and its counterparts on the Senate Foreign Relations Committee expressing our shared concerns with the CSDDD and the need for congressional action. As we noted in the letter:

"At a time when the United States is pursuing policies designed to enhance industrial competitiveness, strengthen domestic manufacturing, and lower inflationary pressures, the prospect of foreign regulatory mandates imposing additional costs and liabilities on U.S. businesses should be taken seriously and addressed immediately. For this reason, congressional attention to the CSDDD is warranted."

SBE Council appreciates the Committee's attention to this important issue today.

While the CSDDD is often presented as a European sustainability initiative aimed at large multinational corporations, that characterization is incomplete. It is a matter of business and market competitiveness. In practice, the CSDDD extends beyond Europe's borders and reaches deeply into the operations of countless American businesses that have no presence in Europe, no European customers, and no voice in the development of European law.

On the surface, the purpose behind the CSDDD may be well intentioned. The issue before us, however, is not exclusively limited to sustainability. American small businesses have long demonstrated leadership in environmental stewardship, workforce development, ethical business practices, and community engagement. The issue is whether a foreign regulatory regime should be allowed to impose costly compliance obligations on American businesses through commercial relationships and supply chains over which they often have little control.

Under the CSDDD, large companies operating in Europe will be required to conduct extensive due diligence throughout their value chains. To satisfy these obligations, those companies will necessarily require reporting, documentation, certification, auditing, monitoring, and contractual requirements down to suppliers, vendors, distributors, contractors, franchisees, and service providers. That is compliance will look like. It is overwhelming and complicated, and thus incredibly burdensome to any business caught up in the compliance net.

For a Fortune 500 company, compliance may require hiring additional legal counsel, consultants, auditors, and sustainability professionals. For a small manufacturer in Ohio, a family-owned fuel distributor in Missouri, a trucking company in Texas, a franchise operator in Florida, or an agricultural supplier in Iowa, those same requirements can be overwhelming. And that's the EU's expectation - that larger corporations with business in the EU scrutinize their supply chains and apply European-designed standards to follow.

This approach fails to recognize, though, that most small businesses do not have dedicated "sustainability departments." They do not have teams of attorneys specializing in international regulatory compliance. They do not have the resources to map every supplier relationship, conduct risk assessments across multiple tiers of a supply chain, prepare extensive reports, respond to audits, or defend against potential legal claims arising from complex global standards. Yet many may soon be asked to do exactly that. It's an unrealistic expectation, and an impractical demand.

The result will be increased administrative burden, higher costs, reduced competitiveness, and fewer opportunities for growth. Many small firms will face an impossible choice: absorb significant compliance expenses, pass costs on to customers, or risk losing valuable business relationships. For entrepreneurs operating on thin margins, these costs matter. They affect hiring decisions. They affect investment decisions. They affect wages, expansion plans, and the capacity to innovate.

The burden will be especially unreasonable because many affected businesses have no ability to negotiate the terms being imposed upon them. Large companies seeking to satisfy European mandates will need to share the risk and compliance responsibilities downstream. That's the responsibility forced on the larger companies in the law's scope - to become regulators themselves. The CSDDD creates a cascading effect that reaches far beyond the companies directly covered.

The implications extend beyond economics The CSDDD raises important questions about sovereignty, accountability, and regulatory jurisdiction. American businesses are already subject to extensive federal, state, and local laws and rules governing labor practices, environmental protection, workplace safety, anti-discrimination requirements, consumer protections, and corporate conduct. These laws are developed through American democratic institutions and enforced through American legal processes.

The CSDDD effectively allows foreign policymakers to shape business practices across the United States without representation, accountability, or meaningful input from the businesses being affected. This precedent should concern U.S. policymakers across political affiliations. It should not be a question of ideology, but of the U.S. government's willingness to cede legislative and regulatory authority to foreign entities versus debating and retaining that authority itself.

Today the issue may be sustainability reporting and mitigation. Tomorrow it could be another foreign regulatory framework seeking to govern American business activities through supply-chain mandates and commercial leverage. Small businesses are particularly vulnerable because they lack the resources available to larger corporations. Entrepreneurs succeed by focusing on customers, innovation, employees, and growth. Every hour spent completing duplicative reporting requirements is an hour not spent developing new products, serving customers, or growing their businesses and creating jobs.

Congress should also recognize that the CSDDD's impact will not be limited to direct exporters. Many businesses that never sell a single product into Europe may nonetheless become subject to compliance demands because they are part of a broader supply chain connected to a company with European operations. This is why the CSDDD's reach is so expansive and why its effects are often underestimated - or simply dismissed.

The U.S. economy is built upon 36.2 million small businesses. These firms account for roughly half of private-sector employment, create the majority of net new jobs, and serve as the foundation of innovation and economic mobility. Policies that increase uncertainty, compliance costs, and legal risk ultimately weaken the entrepreneurial ecosystem that has long been one of America's greatest competitive advantages. Make no mistake. The CSDDD weakens American competitiveness.

Congress should closely examine the consequences of CSDDD's extraterritorial reach and consider policies that protect American businesses. At a minimum, policymakers should ensure that U.S. companies are not compelled to bear disproportionate costs resulting from regulations developed outside our nation's legislative and regulatory framework.

The U.S. already supports responsible business practices, sustainability goals, and strong supply chains without subjecting American entrepreneurs to burdensome foreign mandates that threaten their competitiveness and growth.

America's small businesses were not represented in Brussels and had no seat at the negotiating table as the CSDDD was in development. Yet they may bear some of its greatest costs. That outcome is neither fair nor sustainable.

Thank you for the opportunity to provide written testimony, and for your leadership on this critical matter.