Isabelle Icso Isabelle Icso
Senior Director, International Policy, U.S. Chamber of Commerce


September 07, 2023


Officials from the U.S. and 13 other countries will meet in Bangkok on September 10-16 for further talks on the Indo-Pacific Economic Framework (IPEF), which aims to “fuel economic activity and investment, promote sustainable and inclusive economic growth, and benefit workers and consumers across the region.” 

The IPEF isn’t a trade agreement, according to Biden administration officials, but it does aim to enhance U.S. commerce with the region. That makes sense because the Indo-Pacific is “home to more than half of the world’s people, nearly two-thirds of the world’s economy, and seven of the world’s largest militaries,” according to the White House’s Indo-Pacific Strategy.  

While the U.S. Chamber has supported the IPEF’s goals, we’ve also urged the administration to pursue more ambitious outcomes, not least due to China’s powerful and rising commercial influence across the region. The U.S. Chamber has pressed for the IPEF to address the real market access and other trade barriers facing American manufacturers, farmers, and service providers in the region. 

But investment—not just trade—is key to these efforts. As Deputy National Security Adviser Mike Pyle recently stated, “building a toolkit to facilitate investment” is central to U.S. engagement abroad, particularly the Indo-Pacific. And when it comes to investment, the private sector is pretty much the entire ballgame. 

The good news is that U.S. companies’ investments in key regions such as Southeast Asia—totaling more than $450 billion—are six times larger than those of Chinese companies, according to the East Asia Institute’s Bert Hofman. The flow of new investments also shows the leadership of U.S. companies active in the region.  

The reality of these investments is at odds with popular misconceptions about how and why American companies invest abroad. Consider:  

  • U.S. companies invest in foreign markets to serve those markets—not as a substitute for domestic production. Indeed, more than 90% of the production of foreign affiliates of U.S. multinationals is sold abroad—not in the U.S.—according to Commerce Department data. 
  • International investment is a powerful driver of U.S. exports. U.S. multinational corporations generate nearly half of American merchandise exports, with their own foreign affiliates purchasing one-fifth of the total. 
  • Earnings from foreign investments help U.S. companies innovate here at home. Sales by foreign affiliates of U.S. multinationals are approximately $7 trillion annually, and these revenues help underwrite their research and development activities, five-sixths of which continue to be performed in the United States, according to the Commerce Department. 

Given that the Biden administration has been reluctant to embrace a bold, market-opening trade agenda, could an international investment agenda be a worthwhile alternative? To answer this question, it’s worth reflecting on the questions U.S. executives are obliged to ask before investing in a given market and doing business there:  

  • Will the company face barriers to entry in a given market? 
  • Will it face tax or regulatory treatment that favors domestic companies over those headquartered abroad? 
  • Can the company assume majority ownership of its local affiliate, or will it be obliged to enter into a joint venture with a local company — and share its intellectual property, trade secrets, and know-how? 
  • Can the firm repatriate profits?
  • Is there a risk that commercial disputes will be criminalized?
  • Could import tariffs, licensing requirements, or other trade barriers be raised suddenly — or export restrictions?  

For decades, Democratic and Republican administrations have reliably gone to bat for American companies investing abroad. In fact, they’ve explicitly encouraged companies to do so to strengthen U.S. ties and foster development.  

U.S. officials have consistently fought for the rule of law and the fair treatment of American companies around the globe — and opposed discrimination, expropriation, and other violations of due process. These actions can and should be coupled with the reduction of non-tariff barriers, which is a key focus of the framework. Doing so will benefit literally millions of American workers and facilitate protected investments to the region. 

There’s no great mystery regarding what the Biden administration should do to achieve its international investment goals in the Indo-Pacific: Officials simply need to fight every day for fair play, nondiscriminatory treatment, and the rule of law for U.S. firms investing overseas. They need to work with foreign governments to ensure U.S. companies get favorable answers to the questions above. 

The American business community appreciates the many times Biden administration officials have gone to bat on a wide range of these issues. But America’s ambitious goals in the Indo-Pacific require us all to up our game.  

About the authors

Isabelle Icso

Isabelle Icso

Isabelle Icso, senior director of international policy at the U.S. Chamber of Commerce, advocates for the Chamber’s international trade and investment priorities before the administration, Congress, and foreign governments.

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