Use a Different Lever
Ellen L. Frost
The extension of the global economy and the accompanying change in corporate behavior have brought investment and conditional national treatment to the front of the policy debate. It is essential for the private sector to play an active role in this debate, to redefine the terms, and to educate us all about the benefits at stake.
We must also maintain a dynamic perspective. Other countries have behaved differently from the United States in investment. But we are witnessing a sea change, especially in developing countries. In the Asia-Pacific region and in Latin America, one country after another is moving to deregulate, privatize, and reduce restrictions on investment. This is a business-driven movement, a historical trend pushed by market forces that may be irreversible. The first Vietnamese delegation has now appeared in the office of the U.S. Trade Representative (USTR), for example, hungry to learn more about U.S. views on trade and investment policies.
Speaking for the administration, I can make a clear, strong policy statement: We support an open investment climate. Trade and investment increasingly are inseparable. We do not associate foreign investment with the export of U.S. jobs. Instead, with so many of our exports going to investment in U.S. subsidiaries abroad, we view investment flows as closely tied to exports.
The Clinton administration also welcomes foreign investment in the United States, not only because it is good for us but also because we need foreign capital. In the 1980s, the U.S. investment-savings gap of roughly a trillion dollars was largely filled by foreign investors. Today, the need continues as we grow faster than our allies, and the trade deficit increases as a result. Foreign investors