US official: Overseas investment brings benefits to our economy
As it emerges from a deep recession, the US must reject protectionism and economic nationalism, and champion foreign investment as a key driver of prosperity, a top US State Department official told a conference organized by ICC’s representative in the US.
Addressing a conference on cross-border investment on 10 March in Washington, D.C, organized by the United States Council for International Business (USCIB), Robert Hormats, US Under Secretary for Economic, Energy and Agricultural Affairs, said both inward and outbound foreign direct investment (FDI) contributes to US growth, employment and competitiveness. USCIB also released new data demonstrating the contributions of overseas investment to the US economy.
“We need to maintain a positive environment for international investment,” said Mr Hormats. “The US, along with other governments, needs to resist protectionism and economic nationalism. We also need to recognize that FDI contributes enormously to our economic success. And we need to pursue policies that will increase confidence of foreign investors. This is the key to extending our economic recovery and global economic growth.”
With many speakers at the conference calling for a forceful statement from the Obama administration on the contributions of open investment policies to the American economy, Mr Hormats said the US will seek to craft policies to support investment both in this country by foreign firms and overseas by US multinationals.
“We know that some overseas investments by American companies can lead to job losses in the US but for many companies, expansion abroad tends to support employment and dynamic opportunities here at home. For many, foreign affiliate activity has tended to complement, not substitute for, key parent activity in this country, boosting wages, employment and capital investment.”
At the USCIB conference, a diverse array of speakers from business, government and international, labour and non-governmental organizations addressed key challenges for foreign investment in the US and other major markets. Most agreed that the terms of public debate over cross-border investment had changed in the wake of the economic crisis, with wariness in many countries over certain aspects of inward FDI largely giving way to skepticism of the value of outbound investment for home countries.
“Jobs and exports are the main issues on the minds of policymakers,” said Jeffrey Shafer, Vice-Chairman of Citigroup, summing up the conference’s lessons. “We need to get the facts out about how open investment policies benefit ordinary people, while keeping the pressure on governments to resist protectionist impulses.”
Further to this point, USCIB joined with the Business Roundtable this month in releasing a new study by Dartmouth Professor Matthew Slaughter that demonstrates the sizeable domestic returns of overseas investment by US companies, in terms of jobs, exports, and research and development. Mr Slaughter’s research in this area was widely cited by experts at the USCIB conference.
Most speakers agreed that bilateral investment treaties are essential to provide foreign investors with safeguards against political risk, while multilateral deliberations of investment policy can provide an important safety valve to avoid a potential protectionist backlash against investment.
In his speech, Secretary General of the Organisation for Economic Co-operation and Development Angel Gurria highlighted that the OECD is planning to undertake a review of bilateral investment treaties worldwide with a view toward developing best practices, or even a model treaty.
Conference panels examined challenges to foreign investors in global markets, investing in green technologies, foreign investment and jobs, while addressing societal problems.
Speakers included David Rubenstein, Managing Director of the Carlyle Group; Jim Quigley, CEO of Deloitte Touche Tohmatsu; Miriam Sapiro, Deputy US Trade Representative; Richard A. Boucher, Deputy Secretary General of the OECD; John Evans, Secretary General of the Trade Union Advisory Committee to the OECD; Ted Moran of Georgetown University, Thea Lee, Deputy Chief of Staff of the American Federation of Labor and Congress of Industrial Organizations, and Margrete Strand, Director of the Sierra Club’s Labor, Worker Rights and Trade Program.
Executives from Chevron, Fedex, Goldman Sachs, Wal-Mart, Google and Cadbury also participated as speakers and discussants.