Relative to other countries the United States has few exceptions to this rule.
It does restrict foreign investment in areas considered vital for national security, as
well as in domestic aviation, banking, and mass communications. Republicans during the 104th session of Congress promised, however, to use their leadership positions to lift some of these restrictions, including the 25 percent ownership restriction under the Federal Communications Act of 1934 on foreign investment in any
U.S. communications company. "Pressler Backs Revision of Rules on Ownership of
U.S. Telecomm Firms", International Trade Reporter, January 4, 1995, p. 11.
For liberalization moves among developing countries, see the United Nations, World Investment Report 1993, especially pp. 35, 183.
Foreign direct investment is the ownership by a foreign person or business of 10
percent or more of the voting securities of an incorporated business enterprise. At the policy level, definitions vary over what investment includes. The United States is pushing in
international negotiations for a broad definition that includes not only production but also
investments in distribution networks, intellectual property rights, and research activities.
United Nations, World Investment Report 1994:Transnational Corporations,
Employment, and the Workplace ( New York: United Nations, 1994), p. 130.
United Nations, World Investment Report 1993, p. 126.
Robert Lipsey, "Outward Direct Investment and the U.S. Economy", NBER
working paper no. 4691, March 1994.
For more on the theory of foreign-market penetration through FDI and the
problem of structural impediments, see papers from "Foreign Direct Investment into
Japan:"Why So Small and How To Encourage? U.S.-Japan Management Studies
Center, the Wharton School of the University of Pennsylvania, October 6-7, 1994.
United Nations, World Investment Report 1994.
Under the Trade Related Investment Measures (TRIMs) in the Uruguay
Round Agreement, local content restrictions are prohibited for the first time at a
multilateral level. But a comprehensive code that includes a broad national treatment commitment and protection of investment is still being developed through
forums such as the Organization for Economic Cooperation and Development and
the forum on Asia Pacific Economic Cooperation.
Stephen Canner, U.S. Department of Treasury office director for international
investment, testimony before the Defense Policy Panel and Investigations Subcommittee of the Armed Services Committee, U.S. House of Representatives, May 14, 1992.
See U. S. Congress Office of Technology Assessment, Multinationals and the
National Interest:Playing by Different Rules ( Washington, D.C.: U.S. Government
Printing Office, September 1993), as well as Multinationals and the U.S. Technology Base