International investment is increasingly important to the U.S. economy. Foreign companies have invested $4 trillion in the United States and employ 7.1 million Americans, according to data from the U.S. Department of Commerce. U.S. affiliates of foreign-headquartered companies purchase hundreds of billions of dollars of inputs from local suppliers and small businesses and produce more than one-quarter of all U.S. merchandise exports.
It’s impressive to note that these U.S. affiliates of foreign-headquartered companies annually spend more than $65 billion on research and development annually. These affiliates spent more than $250 billion on property, plant, and equipment in the United States in 2016.
Coupled with home-grown capital and ingenuity, these investments give the United States extraordinary access to cutting-edge technology and productivity tools. Companies headquartered in seven countries—the United Kingdom, Japan, Canada, Germany, Switzerland, France, and the Netherlands—account for more than 70% of the stock of foreign direct investment in the United States.
To be sure, some potential foreign acquisition of U.S. companies draw concern from a national security perspective. In 2007, Congress approved the Foreign Investment and National Security Act (FINSA). It reaffirmed the U.S. “open door” policy toward international investment but ensured the president’s authority to block a foreign acquisition of a U.S. company when tangible national security issues are at stake. It restored 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).
Ten years later, in 2017, Congress approved the Foreign Investment Risk Review Modernization Act (FIRRMA). Under this new law, CFIUS will continue to prioritize reviews of possible foreign investments linked to foreign governments. The Chamber remains engaged to ensure that the new regulations for FIRRMA’s implementation are framed in a manner consistent with legislative intent.
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 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.