NJBIA President and CEO Michele Siekerka released the following op-ed in support of the Protect USA Act, which seeks to shield U.S. companies from the European Union’s (EU) harmful extraterritorial regulations. The bill advanced in the federal Energy and Commerce committee on June 30.
Anyone who has run a business knows that clear, predictable rules matter.
Whether you’re operating a manufacturing facility or running a logistics hub that keeps goods moving across the Northeast, you make decisions based on the regulatory framework in front of you. When those rules are consistent and grounded in local realities, businesses can plan, invest, and grow. When they are not, costs rise and consumers pay the price.
For businesses across New Jersey and the United States, a new European Union policy, the Corporate Sustainability Due Diligence Directive (CS3D), is one these problematic curveballs that should get the attention of our representatives in Washington.
CS3D would require companies around the world to conduct extensive reviews of environmental and human rights practices across their global operations and supply chains.
That obligation even extends to American companies and, in many cases, to their New Jersey-based suppliers and partners they rely on every day.
It goes without saying that businesses should depend on responsible supply chain partners with good track records on labor and environmental issues. But we don’t need the Europeans to police that process.
New Jersey businesses already operate under a well-established system of federal and state laws governing environmental protection, labor standards, and corporate accountability. Many companies go further, adopting their own sustainability practices to meet customer expectations and remain competitive.
The conundrum that CS3D poses to American leaders is who sets business standards, how they are applied, and whether they reflect the realities of the communities they affect.
This should be an easy answer.
New Jerseyans have a voice in Trenton and Washington – but we don’t vote or have representation in Europe.
CS3D would introduce a new layer of oversight from another continent that is both far-reaching and difficult to implement in practice. Companies could be expected to assess and report on activities across suppliers that they depend on but do not directly control. Policies as important as taxing and regulating businesses
That approach creates two immediate challenges. First, it adds cost. A recent analysis by the Hudson Institute estimates that compliance could cost U.S. companies as much as $1 trillion dollars upfront, with billions more in ongoing expenses.
Those are resources spent on paperwork that might otherwise go toward hiring workers, upgrading equipment, or expanding operations that help businesses grow.
Second, it introduces uncertainty. Businesses operate best when they understand the rules and can apply them consistently. A regulatory system shaped outside the United States, layered on top of existing state and federal requirements, risks creating conflicting standards and unclear expectations.
New Jersey’s economy is particularly sensitive to these kinds of pressures. Our state relies on a diverse mix of industries, from pharmaceuticals, chemicals, manufacturing, energy, logistics, and consumer goods.
These sectors depend on complex supply chains and competitive cost structures. Our proximity to major ports and global markets makes us a hub for trade and commerce, but it also means that regulatory shifts abroad can have an outsized impact here at home.
Those impacts show up in the prices New Jerseyans pay for everyday goods, in the cost of energy and transportation, and in the pace of job creation across the state.
In a state where the cost of living is already among the highest in the nation, every additional regulatory cost can have an outsized impact on businesses, workers, and consumers.
This is not the first time the Europeans have tried to set global standards. In 2012, when the European Union attempted to apply its emissions trading system to international flights from the United States, Congress and President Obama responded on a bipartisan basis to prevent that expansion. Lawmakers recognized that decisions affecting American businesses should be made through American institutions.
A similar principle applies here.
A proposal called the Protect USA Act offers a straightforward solution in protecting U.S. businesses from overreaching foreign mandates and keep regulatory authority where it belongs.
New Jersey’s congressional delegation should be leading the way in ensuring that the rules governing our businesses are set here at home.
New Jersey helped shape a nation founded on the idea that those who are governed should have a voice in the rules that govern them. That principle still matters. We should not accept a system where decisions that will raise costs for businesses and families are made overseas without representation.\
