Congress Should Not Chase Away Critical Overseas Investment Dollars 

Committee on Foreign Investment in the United States Should Be Permitted to Perform its Job Independent of Congress's Political Coercion 

In a world that becomes more economically interconnected each passing day, American lawmakers simply cannot afford to suffocate American companies' access to overseas direct investment. 

Although it is important to ensure that American security is not jeopardized by such transactions, our economic growth increasingly depends upon this growing form of cooperation.  Unfortunately, some in Congress appear poised to stifle this indispensable source of investment. 

"Overseas direct investment" simply refers to American companies' ability to obtain critical capital funding from sources that happen to originate overseas.  In other words, it helps provide the financial lifeblood for American companies to continue operating.  Without it, these companies would be forced to go out of business, move overseas or sell out to other buyers. 

Given today's tightening credit environment and increasing scarcity of investment dollars, it is even more important that we not isolate ourselves from this vital wellspring.  Doing so will merely chase more businesses overseas, thereby causing significant American job losses and economic damage. 

Furthermore, we Americans cannot on one hand demand that other governments allow U.S. investment in foreign companies, but then turn around and prohibit overseas investments in ours. 

Of course, it is also critical to ensure that overseas investors do not present a security threat to American interests.  For instance, while we welcome overseas investments, we cannot allow foreign agents to use investment dollars as a means to leverage access to classified information that might undermine America's security. 

For precisely this reason, we have the politically-independent Committee on Foreign Investment in the United States (CFIUS). 

Established in 1975 and granted Presidential oversight by Ronald Reagan in 1988, CFIUS is a federal agency that examines the potential national security implications of foreign investment in American companies.  Accordingly, its members include representatives from the Departments of Defense, Homeland Security, Commerce, State and Treasury.  CFIUS then reviews proposed transactions and determines whether they satisfy our national security concerns. 

This process of combining free trade with CFIUS oversight has yielded substantial benefits to the American people.  According to the independent Congressional Research Service (CRS), America has reaped almost $1.4 trillion in foreign direct investment since 1999 alone.  This investment has yielded enormous opportunity for American workers.

In 2004, the latest year for which comprehensive CRS research data is available, foreign firms investing in the U.S. resulted in $350 billion in wages and compensation alone.  That translates to an average of $63,000 per worker -- higher than the average of $58,000 paid by U.S. parent companies operating in the United States.

As good as these numbers are, they have actually declined since 2000, as has our share of the total worldwide overseas direct investment.  While many potential explanations for this decline exist, the most likely reason has been the high-profile politicization of the foreign investment process in the U.S. 

As vividly illustrated by the opposition of some in Congress to the efforts of Bain Capital and its minority partner Huawei Technologies to buy 3Com, politicians and activist groups have sought to hijack CFIUS's approval process in order to drive their individual political agendas.  Bain Capital's proposed purchase of 3Com is being derided, even though its minority partner would have no access to sensitive technology or U.S. government sales.

Examples like this undoubtedly have a chilling effect on other would-be foreign investors in the U.S.

Nobody disputes that security concerns, especially since 9/11, are critically important.  But throughout the past 30 years, both Democrat and Republican administrations have established strong and effective safeguard processes, without sending a signal to foreign investors that their dollars and high-paying jobs are unwelcome here. 

These safeguards fully ensure American security interests.  As recently as last summer, for instance, the CFIUS process was amended to allow withdrawal of government support for an acquisition - and the transaction undone - if there is evidence that any of the parties have materially failed to comply with their agreements to respect and protect U.S. security interests. 

This put added teeth to an already-strong process.

Simply put, economic enrichment via foreign investment in the U.S. can co-exist with an unyielding commitment to protecting our country.  But that will no longer be the case if we allow politics to shout down CFIUS's very effective investment screening system.

Our policy on overseas investment in the U.S., supported and expanded by Presidents from both parties, has fostered a very lucrative investment climate for Americans during the last 30 years.  Let's keep the good returns coming.