The Bush administration yesterday announced an initiative to attract and retain foreign investment in the United States, saying the government’s current hands-off attitude toward such investment is out of date.
Tying a high rate of foreign direct investment to high economic growth, Undersecretary of Commerce Franklin L. Lavin said the government’s “historically passive role” has become “increasingly anachronistic.”
The U.S. received $99 billion in investment in 2005, Mr. Lavin said in remarks for the Peterson Institute for International Economics, while Britain attracted $164 billion, and China, including Hong Kong, attracted $108 billion.
Mr. Lavin cited a number of recent foreign investments in his speech, including the announcement last week of Toyota’s decision to build a $1.3 billion assembly plant near Tupelo, Miss., and Swiss drug company Novartis’ decision to move its global research headquarters from Switzerland to Cambridge, Mass.
“Whether it is Aventis-Pasteur’s vaccine production facility in Swiftwater, Pa., Mercedes’ research and development facility in Michigan or Nestl’s Stouffer’s Division in Cleveland, Ohio, these investments are an endorsement of the United States,” he said.
The Commerce Department’s new “Invest in America Initiative” will use commercial attaches in 96 U.S. embassies to promote investment, work to cut federal red tape for investors and support state and local governments promoting foreign investment.
The program, will not involve new staff or spending, he said after the speech, but will involve allocating existing staff to the investment effort, including the attaches and staff in Washington.
James A. Fetgatter, chief executive officer of the Association of Foreign Investors in Real Estate, called the initiative “very encouraging.”
“In today’s global economy, investors can just as easily invest their money in any country in the world, and if we don’t encourage investment in the United States, we will lose it. We are happy to see the Commerce Department taking this proactive step in support of foreign direct investment in the U.S.,” he said.
Mr. Lavin said officials have information on how much foreign investment has been made in the United States, but it is more difficult to find out about investments that are not made or the factors that companies find most or least inviting about U.S. investment.
Finding out that sort of information would be useful, he said.
The new effort is not designed to supplant the interagency Committee on Foreign Investment in the United States (CFIUS), whose responsibility is limited to reviewing proposed investments that have national security implications.
The new initiative, he said, “is not designed to supplant CFIUS or its rightful role, but to deal more effectively with those cases where there is no national security dimension.”
Stephen J. Canner, a vice president at the U.S. Council for International Business, said the proposal “could be a useful step to help correct misperceptions about U.S. policies toward foreign investment,” but that the key question is whether foreign companies engaged in mergers and acquisitions or takeovers will be excessively referred to CFIUS.
The House last week expanded CFIUS’ review powers to include transactions involving homeland security and critical infrastructure, and takes steps to ensure that high-level officials will be involved. It now moves to the Senate.
Mr. Lavin said he expected more Chinese companies to be interested in investing in the United States, but said such companies should plan to spend time preparing the ground for investment to avoid misconceptions or political questions over ordinary investments.
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