The Foreign Investment Debate: Opening Markets Abroad or Closing Markets at Home?

Daniel M. Price

The broader competitiveness policy debate provides an important vehicle for the debate over investment and the treatment of domestic and foreign-owned firms operating in the United States.

There are more than twelve bills pending in Congress that seek to boost technological development and the economic welfare of American firms by making federal funds and facilities available to the private sector. These include the National Competitiveness Act, the Department of Energy Laboratory Technology Act, and the Environmental Technologies Act. To be eligible for any of the programs, a firm must first pass a two-part eligibility test. Part one consists of a general benefits test that requires both U.S.-owned and foreign- owned companies to demonstrate that their participation would be in the economic interest of the United States. Part two applies only to foreign-owned companies. It requires, in addition to the benefits test, that the company demonstrate that its home country government (1) has an open and nondiscriminatory investment environment; (2) grants U.S.-owned companies reciprocal access to comparable R&D programs; (3) provides adequate and effective intellectual property protection; and the list may go on.

No one takes issue with the view that U.S. tax dollars should be spent to benefit the American economy. At issue, instead, is whether the imposition of performance requirements and conditioning of national treatment are the proper policy tools to address problems of market access and discriminatory practices that U.S. investors may face abroad. The answer to the first is clearly "No"—performance

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