Foreign Investment Needs; Restrictions Jeopardize Economic Future
Byline: John Castellani, Thomas Donohue and Todd Malan, SPECIAL TO THE WASHINGTON TIMES
Today, reacting to the public concern about the Dubai Ports World transaction, the Senate Banking Committee will begin a legislative process in which very important national issues will be the focus - none more than national security. But Congress needs to be careful as it moves forward in this area: National security, our economy and the health of many American's investment portfolios are at stake.
As leading business associations representing multinational companies based here and abroad, we have a strong interest in making sure the public and elected officials view the Committee on Foreign Investment in the United States (CFIUS) process as an effective national security tool. Our member companies will either have to comply with any changes to U.S. foreign investment policy or live with other nations' reaction to them.
Members of Congress are introducing legislation to "fix" the CFIUS system that many say created the storm in the first place. Some legislation focuses on refinements to CFIUS, while other bills go beyond to ban non-U.S. firms from entire sectors of our economy.
The most draconian proposal would ban non-U.S. companies' ownership of U.S. assets not only in seaports, but in energy, telecommunications, financial services and other industries viewed as "critical infrastructure." The bill would force companies based in countries that are among our staunchest allies, such as Great Britain, to sell their U.S. operations within a five-year period, the equivalent of a fire sale.
Why is it a bad idea to restrict foreign direct investment in the United States, provided it does not endanger our national security interests? Let's start with jobs. Restricting foreign direct investment would put at risk the jobs of 5.3 million Americans employed by foreign companies in the United States.
Next, let's look at the American investor's stock portfolio. Americans now hold more than $2.9 trillion in shares of foreign companies. For instance, cell phone maker Nokia may be based in Helsinki, but 40 percent of its shares are owned in America. The forced sale of U.S. assets by foreign-owned companies would hurt U.S. pensions, mutual funds and investors through falling stock prices and lower investment returns.
Foreign direct investment is also critical to the success of our capital markets, which provide the "seed corn" essential to the creation of new businesses and jobs, innovations and ideas. Our growing economy and robust capital markets attract more foreign investment than any other single country: more than $1.5 trillion. …