Security and Foreign Investment in the United States (June 2006)
APCAC fully recognizes and supports effective measures to deprive international terrorists of the financial and other means to damage U.S. security not only in the United States itself but elsewhere as well. APCAC also believes that these measures must and can be consonant with the vital need to maintain a vibrant domestic and global economic system. The movement of capital across borders, including investment, is a critical element in fostering economic growth, and creating the jobs and prosperity that eliminate breeding grounds for terrorism. The U.S. should continue to welcome—and be perceived as welcoming—foreign investment on its own merits and to spur similar policies in other countries.
The US has a long tradition of welcoming foreign capital as partners in our economic growth. We place few restrictions on foreign lending and equity investment (e.g. sensitive technology), which finance much of the US budget and trade deficits. Our economy is the world’s largest recipient of foreign capital, receiving US$ 96 billion in 2004, an increase from US$ 57 billion in 2003, and rising to US$ 129 billion in 2005 or US$ 2.5 billion a week. The US is also the world’s leading foreign investor. In 2005 US companies invested over US$ 200 billion overseas, one-third of total global FDI flows. These unprecedented volumes of cross-border investment – some US$ 600 billion in 2005 – are supporting dynamic economic growth in America, Asia and elsewhere.
The emotional hyperbole surrounding the proposed investment by the Dubai Ports World and China National Offshore Oil Corporation (CNOOC) must not distort the legitimate congressional review, updating and strengthening of the operations of the inter-agency Committee on Foreign Investments in the United States (CFIUS). This review, however, must not result in giving the impression that the United States has turned to isolationism. If international investors and traders pull back from doing business with the United States, because of costly and onerous review procedures for example, only terrorists will benefit. Furthermore, Congressional action will have a resounding effect around the world and US investment abroad could be threatened if other countries decide to adopt retaliatory measures.
APCAC urges that the Congress take a comprehensive approach to improving our collective defenses against terrorism. It should, for example, provide adequate budgetary support for the Secure Trade Initiative to assess security risks – in cooperation with our trading partners – and implement appropriate screening for all shipping traffic as is practical and appropriate.
Globalization has helped terrorists to extend their reach to our shores. But globalization also provides us with the best means to defeat them. Only by acting together with our allies and partners will we together prevail.
What Needs to be Done
APCAC fully recognizes and supports effective measures to deprive international terrorists with the financial and other means to damage U.S. security not only in the United States itself but elsewhere as well. APCAC strongly opposes legislation in the Congress which would restrict the free flow of capital without materially enhancing U.S. security. The strength of the American economy depends on foreign capital. Last year the US welcomed US$ 129 billion in FDI and foreign companies employ millions of Americans.
It is important to remember that America is both the largest recipient of foreign investment and the largest global foreign investor. If reciprocal restrictions were imposed by Asia Pacific nations, it would make it more difficult for APCAC member companies to do business in the region, consequently reducing the U.S. presence and influence in the region, as well as jobs at home.
Concerns about security, anti-trust and other corporate behavior can best be met through enforcement and regulation and not by blocking foreign ownership. Similarly, cooperating with our trade and investment partners under programs such as the Secure Trade initiative, if adequately funded, would also add materially to our ability to prevent terrorist acts.
AmCham Vietnam’s Ho Chi Minh City chapter has 320 member and associate companies with nearly 600 representatives, based in Vietnam’s commercial and industrial center. The “Southern Economic Zone” represents over one-third of the GDP of Vietnam, and this share is expected to increase to 40 percent by 2010.