Welcome Investment from Abroad
In the 21st century, investment capital moves across national borders as never before. Americans derive great value on both sides of the investment equation. The total stock of foreign direct investment (FDI) in the United States exceeds $2 trillion.
Investments by foreign companies in our country have created more than five million American jobs with an annual payroll of $350 billion. This number does not include the millions of people who work for companies that supply parts and materials to foreign-owned firms.
Moreover, studies have found that foreign employers pay wages averaging 15% higher than wages paid by U.S. companies. Average annual compensation at foreign-owned firms typically exceeds $73,000. It's impressive to note that U.S. affiliates of foreign companies spent $40 billion on research and development and $183 billion on plants and equipment in 2009.
Coupled with home-grown capital and ingenuity, these investments give the United States extraordinary access to cutting-edge technology and productivity tools. Which foreign employers create the most jobs in the United States? Two-thirds of these investments come from developed countries, principally the United Kingdom, Japan, Canada, the Netherlands, Germany, France, and Switzerland.
Recognizing that the United States benefits tremendously from international investment, what can Washington do to ensure that the goose that lays the golden eggs continues to produce?
In 2007, Congress approved the Foreign Investment and National Security Act (FINSA). It reaffirms the U.S. "open door" policy toward international investment, ensuring the president's authority to block a foreign acquisition of a U.S. company when tangible national security issues are at stake. It restores certainty to the federal government's process for reviewing foreign acquisitions of U.S. firms, which is managed by the interagency Committee on Foreign Investment in the United States (CFIUS).
The U.S. Chamber applauded Congressional approval of FINSA, and we believe it's a good law. It strikes the right balance by limiting reviews to national security considerations, and it should be given a chance to work.
The U.S. Chamber has no higher priority than national security, and it is entirely appropriate for foreign investment in the United States that affects national security to be subject to special review by appropriate government agencies. Through a rigorous and circumspect review that focuses only on true security issues, the United States can help ensure that the benefits of foreign investment in the United States continue to flow to American workers.
On a related note, a number of countries around the world have been considering the establishment of formal procedures to review national security concerns relating to inward foreign investment. FINSA has been hailed as a model of balance that other countries may usefully consider. The U.S. Chamber is committed to working with foreign governments to help them adopt a similarly focused, transparent, and effective approach to national security reviews of foreign investment.
Chamber Recommendations
- U.S. officials' reviews of foreign investments should focus on tangible national security issues as laid out in U.S. law, thus safeguarding America's longstanding "open door" policy on international investment.
- The United States should encourage foreign governments to devise procedures to conduct national security reviews of foreign investments in a similarly focused, transparent, and effective manner.