F O R E I G N I N V E S T M Z N T IN U.S.
ISSUE BRIEF NUMBER
THE LIBRARY OF CONGRESS
CONGRESSIONAL RESEARCH SERVICE
D A T E O R I G I N A T E D 12/13/78
D A T E UPDATED 10/18/82
I N F O R M A T I O N CALL 287-5700
I S S U E DEFINITICh'
Although the tocai amount of foreign direct investment (hereinafter called
FDI) in the U.S. is small relative to U.S.
direct investment abroad, it is
growing rapidly and may have a large effect on some industries and geographic
areas of the U.S.
The two main issues raised by FDI in the U.S. are first, shall Congress
require more extensive data collection efforts than a r e already underway, and
second, Should laws be enacted to limit foreign direct investment in the U.S.
These two issues turn in substantial measure
the benefits of
additional data collection and/or restrictions on FDI in the U.S. exceed
The purpose of this issue brief is to inform Congress of
history of the issue, the magnitude and distribution of FDI in the U.S.,
existing data collection efforts, the potential implications for the U.S.,
the motivations for FDI in the U.S., and U.S. policy regarding FDI.
in this issue brief refer to all foreign direct investment in the U.S.;
however, the isc cuss ion excludes for the most part those issues related
FDI in U.S.
farmland, which is the topic of IB78064.
BACKGROUND AND POLICY ANALYSIS
Foreign investment is often divided
into two categories, namely,
direct investment where the investor exercises considerable control over
enterprise in which the investment has been
(2) portfolio, or
indirect, investment where the investor has little or no such control.
International Investment Survey Act of
1976 defines direct investment a s
(defined a s an
ownership or control, directly or indirectly, by one person
individual, association, corporation, governmental body, etc.) of 10% or more
of the voting securities of a corporation or an equivalent
interest in an
unicorporated enterprise, and portfolio investment a s any
than direct investment, including ownership of debt
where data are not separated in the Historical Perspective section below,
this issue brief is concerned only with
direct investment and not with
portfolio investment, since direct investment is currently of most concern.
U.S. economic development was stimulated
foreign capital, primarily
British, French, Dutch, and Spanish.
In the early 1800s, U.S. railroads and
canals were financed largely by federal and state securities sold abroad
by 1854 foreign investors held about one-half of
Foreign investment in U.S. real estate and private
communications, utilities, and industrial
large foreign investment in
toward the end
the 1800s, followed
petroleum around 1900-1905.
By 1914 total foreign investment in the U.S.
(including portfolio'and direct investment as well a s loans) was estimated to
be about $7 billion, compared with
investment abroad of about $3.5
However, because loans to foreigners increased and
investment in the U.S. declined during World War I to about
1919, the U.S. became a net
pcsition it stil; naintains.
Foreign direct investment i n the U.S. increased very
was about $7.6 billion in 1 9 6 2 , but then almost doubled in the next d e c a d e ,
reaching $14.9 billion a t the end of 1972.
By t h e early P 9 7 0 s , the
i n Japanese f o r e i g n direct investment and the potentially high
l e v e l of
OPEC's investable f u n d s led to Congressional a n d public
concern a b o u t
extent and effect of present and future FDI in the U.S.
of FDI was conducted in 1 9 5 9 and although the d a t a were annually updated
published in the Survey of Current Business, they were thought to be
In the 93rd a n d 9 4 t h Congresses, 70 bills and resolutions were
introduced ranging from those
direct investment a t one extreme to those authorizing studies to obtain more
F o r example:
o n e g r o u p of bills established a national f o r e i g n
investment control commission to prohibit or restrict
acquiring domestic securities deemed vital
economic security and
national d e f e n s e of the U.S.
Extensive policy review by
t h e Administration
i n 1 9 7 4 a n d 1 9 7 5 and
Congressional hearings were undertaken.
In g e n e r a l , the Administration's
position was that the existing restrictions o n f o r e i g n direct investment were
However, both the Administration a n d C o n g r e s s agreed that m o r e
extensive, timely data were necessary t o make informed analyses of t h e issue.
While n o restrictive l a w s were passed, the F o r e i g n Investment Survey Act
of 1 9 7 4 (P.L. 93-479) became l a w on Oct.
2 6 , 1974.
this A c t , the
Secretary of Commerce w a s directed to conduct a comprehensive, overall
o f foreign direct investment i n t h e U.S. while t h e Secretary of T r e a s u r y was
authorized to d o the same f o r foreign portfolio investment i n the U.S.
included f o r failure t o provide
information, a n d
Secretaries o f Commerce and Treasury were required t o
submit a n interim
report by October 1 9 7 5 a n d a f u l l report by
dollars was authorized t o be appropriated to carry o u t the Act.
S i n c e under t h e Foreign Investment Survey Act of
1 9 7 4 the C o m m e r c e and
Treasury Secretaries' authority t o collect information expired when t h e study
w a s completed, the International Investment Survey Act o f 1 9 7 6 (P.L.
w a s enacted o n Oct. 1 1 , 1976.
Under this a c t , t h e P r e s i d e n t i s directed
set up a regular a n d comprehensive data collection
periodic benchmark surveys o n direct and portfolio
foreigners i n the U.S. and by U.S. investors abroad.
T h e President
is a l s o
directed t o conduct a study of the feasibility of establishing a system
monitor foreign direct investment in agricultural,
r u r a l , and
property i n the U.S. and to submit the findings to Congress by October
The President delegated the responsibility' for the d i r e c t investment studies
t o the Bureau of Economic Analysis of the U.S. D e p a r t m e n t of Commerce,
penalties a r e included for f a i l u r e to provide information and authorizations
for appropriations of $1 million for fiscal year
1 9 7 8 and
$ 1 million
fiscal year 1 9 7 9 were made.
Of the 3 4 bills and resolutions introduced i n the 9 5 t h Congress regarding
1 7 focused o n foreign investment in U.S.
O n e of
these bills, S. 3 3 8 4 , became P.L. 95-460 o n Oct.
FDI in the U.S.,
~ ~ ~ ~ ~ E - 1 0 / 1
fully in Issue Brlef
fCreig3 0WnersP.ip of some types o r amounts of secur;:les
~ m p r o v e d disclosure of beneflclal
Ir.~ernat;orial Scrvey A c t of 1976.
The Domestic and Foreign Investment Improved Disclosure Act (Title I 1 of
S. 305), which became
95-213 on Dec. 1 9 , 1 9 7 7 , requires expanded
disclosure to the SEC of beneficial owners (both foreign and domestic) of
2 2 , 1 9 7 8 , the
more than 5% of specified kinds of
Amendments to the International Investment Survey Act of 1976
These amendments increased the appropriation authorization
from $1 million to $ 4 million for the fiscal year ending Sept.
extended the date for submission of the findings of the feasibility study
regarding the monitoring of agricultural, rural, and urban real property
October 1979, established a requirement for an interim report on the
feasibility study to be submitted by
October 1 9 7 8 , and nade other minor
In the 96th Congress, 25 bills relating to FDI in U.S.
introduced. Of these, 1 1 pertained to equalizing tax treatment
the capital gains tax) between
foreign and domestic investors, 7 were
concerned with improved data reporting and/or restrictions on FDI, authorized
appropriations to carry out the International Investment Survey Act of 1976,
and 2 were aimed a t stimulating FDI in U.S. industry.
T w o ~ l a w swere passed relating to FDI in the 96th Congress.
Section 23 of
Public Law 96-72 (the Export Administration Act of 1979), which became law on
Sept. 2 9 , 1979, authorized appropriations of $4.4.
for the fiscal
year ending Sept. 30, 1980 and $4.5 million for the fiscal year ending Sept.
3 0 , 1981 to carry out the International Investment Survey Act of 1976.
Foreign .Investment in Real Property Tax Act of 1 9 8 0 , Subtitle C of Public Law
96-499 (H.R. 7765) was passed on Dec.
5 , 1980.
Subtitle C amended the
Internal Revenue Code of 1954 so that the gain or loss of a nonresident alien
individual or a foreign corporation from the disposition of a U.S.
property interest is treated a s if the foreign investor were engaged in a
trade or business within the U.S. and a s if such gain or loss were connected
with such trade or business.
Reporting requirements and penalties for
failure to comply were established.
A series of hearings on the operations of Federal agencies in monitoring,
reporting, and analyzing foreign investments in the United States were held
by the Commerce, Consumer and Monetary Affairs
Subcommittee of the House
Committee on Government Operations i n 1 9 7 8 and 1979.
In a subsequent report,
in 1 9 8 0 , "The Adequacy of the Federal Response to Foreign
Investment in the United
States," it i s argued that the current data
collection efforts are inaccurate and incomplete, present policies and
foreign investment restrictions are inappropriate, and the Committee on
Foreign Investment in the U.S. does not adequately perform
assigned to it.
Although data on FDI in the U.S.
are collected by many government
agencies, they are compiled, analyzed, and made public only by the Bureau
Economic Analysis (BEA) and the Office of Foreign Investment in the U.S.
(OFIUS), both of which are units of the Department of Commerce.
U P D A T E - ~ O / ~
Pour studies b y BE.& are the main
scurces for comprehensive data.
f i r s t , a r.:ne-volume
study "Foreign Cirect Investment in the United S t a t e s , "
conducted b y :he Department of Commerce i n compliance w i t h
Investment Study Act of 1 9 7 4 (P.L. 9 3 - 4 7 9 1 , contains the most comprehensive
data. This s t u d y , hereinafter calied the 1 9 7 4 Benchmark Survey, was based on
firms as of 1 9 7 4 , a n C
a c o m p l e t e s u r v e y of foreign ownership of U.S.
indicated chat foreign companies do not hold a large share of any of the
major sectors of the U.S.
economy and that PDI is generally beneficial
t h e U.S.
S e c o n d l y , BEA publishes a n annual article in the Survey of Current
Business which, based on a sample of f i r m s , updates the latest Benchmark d a t a
o n F D P ; the most r e c e n t article was published in the August 1 9 8 2 issue of the
Survey of Current Business. Third, selected data on the operations of U.S.
affiliates of f o r e i g n companies are given in an annual sample s u r v e y ,
beginning in the J u l y 1 9 8 0 issue of the Survey of Current Business with
most recent data i n the May 1 9 8 1 issue.
F o u r t h , data from a new BEA survey
on U.S. Business Enterprises Acquired
or Established by Foreign Direct
Investors were published in the January 1 9 8 1 , August 1 9 8 1 , and J u n e 1 9 8 2
issues of the Survey of Current Business.
D a t e in the third and fourth
sources are not directly comparable with each other or- with data in the f i r s t
t w o sources.
Almost a l l of the numerical data in this issue brief are from the BEA's
1 9 7 4 Benchmark Survey o r from various
issues of the Survey of Current
Business, since these a r e the only comprehensive sources for data.
mentioned earlier, however, the accuracy a n d completeness of some of these
d a t a have been
severely questioned by the House Government Operations
Committee in i t s r e p o r t entitled "The Adequacy of the Federal Response to
Foreign Investment i n the United States."
T h e OFIUS h a s published several studies o n foreign investment w h i ~ h , in
addition to providing lists o f FDI in t h e U.S.,
a l s o give breakdowns by
country source, i n d u s t r y , S t a t e , and t y p e of investment.
H o w e v e r , - the d a t a
a r e based on r e p o r t s of Federal agencies (often i n connection with regulatory
procedures), n e w s p a p e r s , standard business r e p o r t s , etc., and the coverage i s
not a s complete a s i n the 1 9 7 4 Benchmark Survey or the Survey of Current
Another source of data i s a quarterly report entitled "Announcements of
Foreign Investment i n U.S.
Industries," published by
Conference Board i n New York City.
T h e l i s t of announcements (which i s based
o n published s o u r c e s and consequently n o t complete), includes the domicile o f
t h e foreign company, the firm undertaking t h e investment, and a description
of the investment, although n o totals f o r foreign investment i n the U.S.
Overall magnitude a n d recent growth
As of Dec. 3 1 , 1 9 8 1 , the FDI position in the U.S. (book value of .foreign
direct investors' equity i n , and net outstanding loans t o , their U.S.
affiliates) was $89.8 billion, up from $68.4 billion at the end of 1 9 8 0 and
$54.5 billion a t the end of 1 9 7 9 -- a n n u a l growth rates of 26% in 1 9 8 0 and
31% in 1981. By comparison, the U.S.
direct investment position a b r o a d ,
which increased 1 5 % in 1 9 8 0 and 5% i n 1 9 8 1 , w a s $227.3 billion a t the end of
1981. T h u s , w h i l e FDI in the U.S.
i s small relative to U.S.
investment a b r o a d , i t is growing at a higher rate.
FOREIGN S I R E ? T I I N V E S T M E l i T
(FCI) I N THE U.
o n Dec. 3 1
Annual P e r c e n t
FDI p o s i t i o n
i n FDI p o s i t i o n
due t o
Net c a p i t a l
T o t a l Annual
Not A v a i l a b l e
N e d G. M o w e n s t i n e a n d G r e g o r y G . F o u c h .
T h e unusually large negat-ve calkatlor. aC:ustment of $-1.2 Sllllon :n 1 9 7 6
was prirnar~ly Cue to the r e c l a s s ~ f ~ c a t i o rof
. a large investment from U.K.
E x c l u d ~ n g che valuaclon adjustmect glves a
capltal lnflows increased
the ~ n v e s c m e n t declslons
substantially ~n 1 9 8 1 and were the maln cause of
lncrease ~n the FDI
posltlon ln 1981.
Which foreign countries a r e investing the most?
At the end of 1 9 8 1 , the t o t a l FDI position was $89.8 billion: parent f i r m s
in the Netherlands held the l a r g e s t amount ($20.2 billion), followed by
LI. K. ($15.2 billion) , Canada (12.2 billion) , Germany
billion) , Japan
($6.9 billion) , F r a n c e ($5.8 billion) and
discern which countries were leading when measured
c o u n t r i e s were ranked a l s o by t h e total of
capital inflows and
reinvested earnings during 1980.
Total n e t capital i n f l o w s and
earnings in 1 9 8 1 were $21.3 billion:
of t h i s , the Netherlands accounted
t h e l a r g e s t share ($3.7 billion) , followed by the U .K. ($3.3 billion) , F r a n c e
($2.9 billion) , J a p a n ($2.7 billion) and C a n a d a ($1.7 billion)
direct investment of members
Exporting Countries (OPEC) i s q u i t e small.
1 9 8 1 , the P D I
position i n the U.S. by OPEC countries was $3.5 billion, a n increase of
billion from 1980.
In t h e d a t a given i n the a b o v e two paragraphs, investments were classified
by t h e country of the f i r s t company outside t h e U.S.
In some cases, the
country of the f i r s t company outside the U.S. differs from t h e country of the
ultimate beneficial owner.
T h e r e s u l t s of a r e c e n t survey by B E A , published i n the J u n e 1 9 8 2 i s s u e of
t h e S u r v e y of Current Business, indicate that when
investment outlays a r e
Classified by the country of ultimate beneficial o w n e r , a somewhat different
d i s t r i b u t i o n emerges.
By far t h e most i m p o r t a n t difference
is that, when
Classified by ultimate beneficial o w n e r , 1981 investment outlays by
t h e Netherlands Antilles were
classified by the. country of f i r s t foreign parent.
u l t i m a t e beneficial
resulted i n
0u.tlays by Canada a n d the U.K.
In which industries a r e foreigners investing?
Of total FDI i n t h e U.S. of $89.8 billion a t the end of 1 9 8 1 , by
f a r the
largest industrial category w a s manufacturing ($29.5 billion),
petroleum ($17.8 billion), and trade ($17.7 billion).
i n v e s t m e n t during
1 9 8 0 , the
t h e same;
investment in manufacturing was $4.3 b i l l i o n , investment i n petroleum
billion and investment in trade $2.4 billion.
Of the manufacturing
in 1 9 8 1 , the chemical and allied products industry
far the l a r g e s t
s u b g r o u p when ranked by the a m o u n t of F D I , but machinery is first when ranked
by n e w investment.
W h e r e , geographically, in the U.S. d o foreigners prefer to invest?
The most recent data available cn the geograp?,ical dis+'ibut'
ilon cf foreign
direct investment are glven in an article by
"Foreign Direct Investment in the United States: Recent Locational Choices of
Foreign Manufacturers," in the November/December
1 9 8 0 issue of
England Economic Review.
Regions were ranked by several different
for 1 9 7 8 - 7 9 , such a s number of foreign
constructions and acquisitions per
thousand manufacturing employees.
By this criteria, a n d a l s o when ranked by
the number of foreign constructions per thousand manufacturing employees, the
New England region ranked f i r s t , followed
the Southeast region.
represents a change from the 1975-77 p e r i o d , when the Mid-Atlantic region was
f i r s t , the Southeast second, and New England third, when ranked by the number
of foreign constructions and acquisitions per
T h e New England and Southeast regions a r e attractive to foreign
mainly because of their proximity to U.S. markets and to
the availability, cost, quality and attitude of l a b o r , and their
It appears that degree of unionization, financial a i d a n d tax
incentives a r e not important factors i n choice of location.
Another finding o f this study i s that in making
foreign investors put more
emphasis on certain characteristics, such as
relatively l o w wage rates and proximity to the home country, than d o domestic
T o some extent, foreign investors tend to invest where o t h e r s of
their nationality have either migrated o r invested earlier.
Sources of Funds for FDI in U.S.
A s reported by BEA in the August 1981 issue of the Survey of
Business, U.S. f u n d s financed $3.7
billion, or 3 7 % , of total
outlays of $9.9 billion by foreign investors i n 1980.
This compares with
U.S. financing o f 48% in 1 9 7 9 , which included a large petroleum
by a U.S. affiliate with U.S.-source funds.
O f U.S.-source funds of $3.7 billion, the largest amount
w a s borrowed from unaffiliated U.S.
Second in importance was
internally generated funds of U.S.
F o r e i g n source funds of $6.2
$1.9 billion from internally generated funds of foreign direct
investors making investments, $3.3 billion from funds supplied by
direct investors to U.S. affiliates making investments and $0.8 billion
f u n d s borrowed from unaffiliated foreigners.
I t should be noted that all funds were classified by the i m m e d i a t e . source
and not the ultimate source.
D a t a on U.S. Affiliates of Foreign Companies
S i n c e data on U.S.
affiliates of foreign
and positions between the U.S.
the forelgn parent
thaz ~ n c l u d e s
zompany a c e o t 3 e r s , zhey are nor comparaSle tc data f o r FDI
t r a n s a c t ~ o n sand posit2or.s Setween the U.S. a n e forelgr residents.
As of Dec. 3 1 , 1 9 7 9 , assers of U.S. affiliates of foreign companies were
T h e s e affiliates accounted for a relatively l a r g e share of
the total U.S.
U.S. merchandise t r a d e , but a small share of
employment and landownership were the criteria.
T h e distribution
of U.S. affiliates by foreign countries of parent f i r m s and by industries is
Of the 1.6 million persons employed
very similar to that f o r FDI.
a f f i l i t a t e s n a t i o n a l l y , California, New York and New Jersey had
Liabilities Of U.S. affiliates were $152.7 billion a t the end of 1979.
$49.3 billion i n long-term debt, $38.4 billion, o r 7 8 % , was to U.S. firms and
Why d o foreigners i n v e s t in the United States?
According to the 1 9 7 4 Benchmark S u r v e y , the large market
economic stability of the United States a r e two of the most important reasons
why f o r e i g n e r s invest'in the U.S.
T h e large U.S. m a r k e t , unified by a common
l a n g u a g e and t a s t e s , i s perceived a s offering better o p p o r t u n i t i e s for future
growth and profits than the European market, where the l a r g e growth rates
the post-war era a r e
participation i n the economy i s thought t o be progressing slower in the U.S.
than a b r o a d , and o v e r a l l , the private enterprise system preferred by
investors i s regarded a s healthier here.
T w o other important reasons mentioned i n the 1 9 7 4 Benchmark Survey a r e the
growth i n corporate capacity t o f i n a n c e FDI in the U.S.
e a r n i n g s , borrowing, o r issuing equities and the d e s i r e t o d i v e r s i f y , both by
product l i n e a n d geographically.
R e c e n t l y , u n i t l a b o r cost developments, adjusted f o r c h a n g e s i n exchange.
r a t e s , h a v e become more favorable i n the U.S. than in many c o u n t r i e s abroad.
A l s o , l a b o r unions i n the United States a r e considered more f l e x i b l e and l e s s
interested in participating i n management decisions than they a r e abroad.
factor i s t h e desire t o gain
technological developments, managerial skills, a n d marketing techniques.
to l a r g e U.S.
for future financing
relatively l o w prices for shares of U.S.
c o m p a n i e s , the elimination
transportation c o s t s
(particularly important i n the
chemical and heavy
machinery industries), the possibility of vertical integration to secure raw
material s u p p l i e s , a n d relatively l o w U.S.
rates a r e a l l of varying
significance to different in8ustries.
Although avoiding tariff and
a l w a y s b.een a n
important motivation, the more r e c e n t trend toward
within the United States may be encouraging more
e x a m p l e , U.S. restraints on Japanese TV exports to the U.S.
f a c t o r i n the J a p a n e s e TV-manufacturing investment in the United States.
T h e non-discriminatory attitude of the U.S. government regarding
investment as well as the incentives offered by many s t a t e governments may be
A l s o , t h e U.S.
1s c o n s i d e r e d p o l i t i c a l l y more
f f z r o f t e r r o r ; s m , a c o r n m o ~ f a c z o r a S r o a 5 , 2 s L a r g e l y a S s e n t i n t h e U.S.
The 1977-79 d e p r e c i a z i o r . of
m a r k e t s p r o v i d e d a n a d d e d s t i m u l u s to f o r e i g n
making i n v e s t m e n t i n t h e U . S . c h e a p e r
d o l l a r d e p r e c i a t i o n i n c r e a s e s t h e p u r c h a s i n g power of f o r e i g n f i r m s t h a t want
t o invest here.
Also, i f the d o l l a r appreciates i n t h e
i n c o m e e a r n e d o n FDI i n t h e U.S. a n d s e n t a b r o a d w i l l b e w o r t h m o r e i n
sf f o r e i g n
u n d e r v a l u e d , t h e y s e e t h i s a s a n a d d e d i n c e n t i v e t o i n v e s t i n t h e U.S.
I S FDL BENEFICIAL O R HARMFUL T O THE UNITED STATES?
I t i s v i r t u a l l y i m p o s s i b l e t o e s t i m a t e t h e n e t e f f e c t o f FDI o n
t h e
For example, t h e e f f e c t depends on
e c o n o m y , s i n c e many f a c t o r s a r e i n v o l v e d .
(1) w h e t h e r t h e f o r e i g n i n v e s t m e n t r e s u l t s i n a n e t a d d i t i o n t o U . S .
investment o r s u b s t i t u t e s f o r U.S. domestic investment; (2)
t h e U.S. i s o p e r a t i n g a t o r n e a r f u l l e m p l o y m e n t when t h e f o r e i g n
i s undertaken: (3) whether t h e funds f o r t h e
a b r o a d o r i n U.S. f i n a n c i a l m a r k e t s : a n d ( 4 ) w h e t h e r
a r e being considered.
I n t h e f o l l o w i n g d i s c u s s i o n , a f o r e i g n i n v e s t m e n t i s d e f i n e d as t h e amount
o f m o n e y i n v o l v e d i n t h e a c q u i s i t i o n o f U.S.
productive f a c i l i t i e s o r
c o n s t r u c t i o n o r expansion of p r o d u c t i v e f a c i l i t i e s i n
as t h e
e x p a n s i o n o f p r o d u c t i v e f a c i l i t i e s i n t h e U.S.
and f o r e i g n
E f f e c t o n i n v e s t m e n t , GNP, j o b s a n d p r i c e s
Probably t h e most important e f f e c t of f o r e i g n d i r e c t
U.S. e c o n o m y i s i t s i m p a c t o n U.S. d o m e s t i c i n v e s t m e n t , j o b s , r e a l
I n g e n e r a l , a s l o n g as t h e r e a r e u n u s e d
i n c r e a s e i n U.S. d o m e s t i c i n v e s t m e n t ( w h e t h e r f r o m U . S . o r
r e s u l t s i n a n i n c r e a s e i n U.S.
p r o d u c t i v e c a p a c i t y , new j o b s , h i g h e r
S t a t e , a n d F e d e r a l t a x r e v e n u e s , a n d a n i n c r e a s e i n r e a l GNP b y m o r e t h a n t h e
e f f e c t s on
increase i n U.S. domestic investment due
I f t h e e c o n o m y i s a t f u l l e m p l o y m e n t , a n i n c r e a s e i n U.S.
i n v e s t m e n t w i l l t e n d t o i n c r e a s e p r i c e s m o r e t h a n j o b s a n d r e a l GNP, a t l e a s t
i n t h e short run.
Whether o r n o t a f o r e i g n i n v e s t m e n t
i n v e s t m e n t beyond what i t would have been
investment (i-e., r e s u l t s i n a net
t o U.S.
depends p a r t i a l l y on whether t h e f o r e i g n investment i s an a c q u i s i t i o n
U.S. f i r m ,
F o r e i g n i n v e s t m e n t s t h a t i n v o l v e new c o n s t r u c t i o n o r e x p a n s i o n o f
a l w a y s r e s u l t i n a n e t a d d i t i o n t o U.S. d o m e s t i c i n v e s t m e n t ; h o w e v e r , i n some
c a s e s , c o n s t r u c t i o n o r e x p a n s i o n b y a f o r e i g n f i r m may c a u s e a U . S .
reduce its planned investment expenditures and
i n f l o w of
f o r e i g n i n v e s t m e n t i s u l t i m a t e l y o f f s e t by a d e c l i n e i n p l a n n e d i n v e s t m e n t by
On t h e o t h e r h a n d , a f o r
a U.S. f i r m
a d e .- t:~?? t~ C.S.
i t s e l f a ne
Is e ; l i n g company
r e r e i v eC E y +L,ie
=he U.S., a n e t adCitioc
e l s e w h e r e I.
o c c u r s . On b a i a n c e , i t i s l i k e l y t h a t
U . S . d o m e s t c i n v' e s t m e n t b e y o n d w h a t i
f o r e i g n i n v s t m e n. t , w i t h a b e n e f i c i a l
gn a c q u l s i t i o n 0 f a U.S. f i r m i s
e reinvestea i n pla
d o m e s zit i n v e s t m e n t
d i re c t
wouid have been i n t h e a b s e n c e
r ea l GNP,
I n g e n e r a l , a f o r e i g n d i r e c t i n v e s t m e n t i n t h e U.S
b a l a n c e o f PaYm e n t s a n d t h e i n t e r n a t i o n a l V a l u e o f t h e d o l l a r i f t h e
e f f e c t of a l l t r a n s ac t i o n s conne c t e d w i t h it r e s u l t s i n an
d o liar
d e m a n d f o r d o 1l a r s o n t h e f o r e i g n e x c h a n g e m a r k e t ,
a foreign d i
l e ss rap i d l y .
depre c i a t e
i n v e s t m e n t l e a d s t o a n e t o u t f l ow o f U . S . d o l l a r s , i t i s h a r m f u l t o t h e
b a l a n c e o f p a y m e n t s a n d t h e d o 1 l a r , s i n c e i t a d d s t o t h e s u p p l y o f d o liar
d o 1. l a r t o d e p r e c i a t e ,
t h e f o r e i g n exchang e market
appreciate less rapidly.
In t h e s h o r t r u n , a f o r e i g n d i r e c t i n v e s t m e n t i s b e n e f i c i a l t o t h e U.S.
balance of payments i f t h e funds f o r t h e investment a r e t r a n s f e r r e d
United S t a t e s from abroad.
However, if t h e f u n d s a r e borrowed
i n t h e U.S.
f i n a n c i a l m a r k e t s , o r r e p r e s e n t r e i n v e s t m e n t of e a r n i n g s , t h e r e i s n o e f f e c t
on t h e U.S. b a l a n c e of payments o r t h e d o l l a r .
I n t h e l o n g r u n , t h e f o r e i g n d i r e c t i n v e s t m e n t w i l l be b e n e f i c i a l
U . S . b a l a n c e o f p a y m e n t s a n d t h e d o l l a r t o t h e e x t e n t t h a t (1) U . S .
a r e d i s p l a c e d b y g o o d s p r o d u c e d i n t h e U.S. b y f o r e i g n i n v e s t o r s o r ( 2 )
e x p o r t s i n c r e a s e d u e t o t h e p r o d u c t i o n i n t h e U.S.
On t h e o t h e r h a n d ,
g o o d s t h a t were f o r m e r l y p r o d u c e d i n t h e f o r e i g n c o u n t r y .
t h e l o n g - r u n e f f e c t o n t h e b a l a n c e o f p a y m e n t s a n d t h e d o l l a r w i l l be h a r m f u l
t o t h e e x t e n t t h a t (1) p a y m e n t s a r e m a d e a b r o a d o f
sales o u t l e t
r o y a l t i e s , and f e e s o r (2) t h e foreign investment i s a
f o r e i g n f i r m ( w h i c h r e s u l t s i n h i g h e r U.S. i m p o r t s ) .
if c a p i t a l e q u i p m e n t f o r u s e i n t h e new p l a n t i s
t h e United
S t a t e s from abroad.
However, if t h e c a p i t a l e q u i p m e n t i s p a i d
f o r e i g n p a r e n t c o m p a n y ( i n s t e a d o f t h e U.S.
subsidiary) the import
i s o f f s e t b y a n i n v e s t m e n t i n f l o w a n d t h e r e i s n o n e t e f f e c t o n t h e U.S.
balance of payments.
Technology T r a n s f e r s
Foreign d i r e c t investment leads t o both technology inflows and technology
o u t f l o w s ; some
f o r e i g n i ' n v e s t m e n t may
invigorate an old firm, while i n
firms acquire U.S.
companies p r i m a r i l y t o o b t a i n t h e b e n e f i t of t h e i r technology.
t h e 1974 Benchmark S u r v e y , t h e n e t e f f e c t of t e c h n o l o g y t r a n s f e r s h a s been a n
inflow i n t h e a r e a of product and process technology, while i n t h e
Other f a c t o r s
O t h e r p o s s i b i e imp1:ca:lons
o f P P I i n c l u d e i t s e f f e c t o n competition a m o n g
f l r m s w i t h i n t h e U.S., ~ t esf f e c t
s e c u r i t y , t h e c o n c e r n r e g a r d i n g foreigners' g a a n l n g c o n t r o l o i r a w
o r o t h e r strategic s u p p l i e s , a n d ~ t esf f e e z o n s o m e l o c a l l t l e s ~n t h e U . S .
In general, foreign d i r e c t investment i s l i k e l y t o enhance competition
This is especially
t h e
b r i n g i n g new f i r m s i n t o a n i n d u s t r y .
i n d u s t r y i s d o m i n a t e d b y a f e w l a r g e f i r m s a n d t h e new f o r e i g n f i r m
l a r g e and dynamic.
H o w e v e r , a s m a l l f o r e i g n f i r m e n t e r i n g a U.S.
i n d u s t r y which
d o m i n a t e d by a f e w l a r g e f i r m s o r a n
f i r m s would have a
i n f l u e n c e on
D o m e s t i c b o r r o w i n g by f o r e i g n - o w n e d f i r m s h a s
same e f f e c t
o n U.S.
c r e d i t m a r k e t s a s d o e s d o m e s t i c b o r r o w i n g b y U.S. f i r m s ; t h e d e m a n d f o r f u n d s
increases and, t o the extent t h a t
A t p r e s e n t and i n t h e f o r e s e e a b l e f u t u r e , t h e amount
rates tend t o rise.
d o m e s t i c b o r r o w i n g by f o r e i g n - o w n e d f i r m s i s small r e l a t i v e t o
And, i f
U.S. c a p i t a l m a r k e t s a n d i t s i m p a c t i s m i n i m a l .
S y f o r e i g n - o w n e d f i r m s i n c r e a s e s s u b s t a n t i a l l y , i t may n o t c r e a t e a d d i t i o n a l
problems s i n c e presumably t h e F e d e r a l R e s e r v e System c o u l d t a k e t h i s as w e l l
a s o t h e r f a c t o r s i n t o a c c o u n t when
s u p p l y of money.
Concern i s sometimes expressed t h a t
s e c u r i t y and might
i m p e d e U.S.
t o i t s own
H o w e v e r , f o r e i g n - o w n e d f i r m s h a v e t o o b e y t h e same U.S.
laws a s
assets i n
S t r i c t f e d u r a l c o n t r o l s o v e r management of
and i n an extreme c a s e e x p r o p r i a t i o n of
PDI o f t e n a t t r a c t s a t t e n t i o n , a n d s o m e t i m e s h o s t i l i t y , p a r t i c u l a r l y i f
i s an a c q u i s i t i o n of an e x i s t i n g
f e e l more
toward foreign d i r e c t investment i f it involves t h e c o n s t r u c t i o n o r expansion
of f a c i l i t i e s , e s p e c i a l l y by former f o r e i g n c o m p e t i t o r s ) .
This might r e f l e c t
a f e a r of f o r e i g n e r s t h e m s e l v e s , a f e a r t h a t f o r e i g n e r s a r e b u y i n g d o m e s t i c
making i t h a r d
f i r m s a t uneconomic p r i c e s (perhaps overpaying)
firms t o compete, o r a f e a r t h a t f o r e i g n
firms w i l l
l a b o r o r community n e e d s .
P O L I C Y R E G A R D I N G FDI
t o accord
W i t h a f e w e x c e p t i o n s , t h e U.S. p o l i c y
o n FDI
F o r e x a m p l e , P r e s i d e n t F o r d made t h e f o l l o w i n g
statement a t
t h e s i g n i n g of t h e F o r e i g n I n v e s t m e n t S t u d y Act of 1 9 7 4 :
I sign t h i s act, I reaffirm that it i s intended t o
I t i s n o t i n any s e n s e a s i g n of
gather information only.
a change i n America's t r a d i t i o n a l open door p o l i c y towards
We c o n t i n u e t o b e l i e v e t h a t t h e
o p e r a t i o n of f r e e market f o r c e s w i l l d i r e c t w o r l d w i d e
i n v e s t m e n t f l o w s i n t h e m o s t p r o d u c t i v e way.
my Administration will oppose any new restriction
on foreign investment in t h e United States except where
2Ssolutely necessary on national security grcunds cr
to protect a n essential national i n ~ e r e s t .
This policy was reaffirmed in extensive administrative reviews of FDI in
1975 and 1 9 7 7 that resulted i n the establishment of a n int eragency C ommittee
on Foreign Investment i n the U.S. (CFIUS), under
the ch airmanship of
The CFIUS was created to cons ult with
governments Concerning potential investments i n the U.S. , monitor
investment trends a n d make recommendations to the National Security Council
a n d the Economic P o l i c y Group.
Another administrativ'e action w a s the
i n the c o m m e r c e
creation of the O f f i c e of Foreign Investment i n the U.S.
Department to collect a n d analyze data on FDI in the U.S.
The "open-door" policy
is consistent with the bilateral
f r i e n d s h i p , commerce and navigation between the U.S. any many of its trading
partners, and with U.S. obligations under t h e Code of Liberalization of
of the Organization f o r
D e v e l o p m e n t , adopted in June 1976.
O n e reason for U.S. pclicy toward FDI i s t h e traditional belief that only
i n a f r e e market environment (with a f r e e f l o w of investment funds)
maximum economic efficiency be achieved.
Related to this is the recognition
Also, s i n c e U.S. residents a r e
Of the benefits of FDI f o r the U.S.
large direct investors a b r o a d , t h e principle of equitable treatment f o r a l l
investors i s i n the interest of t h e U.S.
L a s t l y , restrictions o n FDI i n the
U.S. might have a d v e r s e foreign policy implications.
T h e exceptions t o the "open-door1' policy a r e federal l a w s t h a t restrict
foreign ownsrship of f i r m s in national defense i n d u s t r i e s , certain natural
resource sectors of the economy, coastwise a n d freshwater shipping, domestic
radio communications, domestic a i r t r a n s p o r t , acquisition of federal mineral
l a n d s , a n d hydroelectric power.
I t should a g a i n be noted t h a t f o r e i g n f i r m s
have to obey t h e s a m e laws and regulations a s domestic f i r m s
(such a s
anti-trust l a w s a n d S E C regulations).
Although there a r e some state laws restricting foreign ownership i n r e a l
estate, banking, a n d insurance, most states a r e eager to a t t r a c t foreign
T h e wide range of incentives to f o r e i g n
(as well a s domestic)
i n v e s t o r s by many
s t a t e s includes initial financing a s s i s t a n c e , working
capital l o a n s , t a x exemptions o r holidays, technical h e l p ,
availability of industrial development bond
At l e a s t 24 states
maintain offices in Europe and seven states maintain offices in J a p a n to
persuade manufacturers to locate plants i n their state.
In the spring of 1 9 8 0 , the Carter Administration announced a new policy of
encouraging foreign investment i n distressed U.S. areas. T h i s policy, which
i s administered by
the International T r a d e Administration and Economic
Development Administration of the Department of Commerce and by
Department of Housing and Urban Affairs, d o e s not reflect any change fzom the
previous policy of neutrality toward foreign investment generally
U.S., b u t , instead s e e k s to encourage foreign i n v e s t o r s , once they have
decided to invest in the U.S., t o consider lecating in distressed U.S. areas.
Among other t h i n g s , under this policy the F e d e r a l Government, in cooperation
State and l o c a l governments, provides information to
regarding existing incentives to invest in distressed areas.
U.S. pollcles toward lnternational Investment a r e currently belng revlewed
tke Reagar. Adml~rs:razlon.
An ~nter-aqer.cy study headed by
S t a t e s , whlch
3epart~e1-1:or. forelgn lrvestmect ; n
r e v ~ e wof the role of C F I U S , 2 s underway.
Amends the International Investment Survey Act of 1 9 7 6 t o require
benchmark s u r v e y s of (1) f o r e i g n direct investment i n the United
covering 1 9 8 0 and 1 9 8 7 and every fifth year thereafter; and (2) U.S.
investment abroad covering 1 9 8 2 and 1 9 8 9 and every fifth year thereafter.
Requires a n a n n u a l compilation of current data on U.S.
abroad. Requires a report o n the cost of compiling data on legislation
enacted by certain foreign nations which regulates f o r e i g n inward investment
in such nations.
Authorizes appropriations to carry out
Introduced on May 4 , 1981; referred to S e n a t e Committee on C o m m e r c e , Science
and Transportation, which reported f a v o r a b l y , with a n amendment, to S e n a t e ,
Report No. 97-68, o n May 1 5 , 1 9 8 1 ; passed S e n a t e with amendment o n J u n e 6 ,
1981; passed H o u s e o n July 2 7 , 1 9 8 1 , became P u b l i c L a w 97-33 on Aug. 7 , 1981.
Section 6 o f H.R. 3567 amends section 9 of the International S u r v e y Act of
1 9 7 6 to a u t h o r i z e appropriations o f $ 3 , 8 4 2 , 0 0 0 f o r each of the f i s c a l years
1 9 8 2 a n d 1983 to carry out the provisions t o this Act.
Introduced on May 1 3 ,
1 9 8 1 a s clean bill i n lieu of H.R. 3134.
Referred to House C o m m i t t e e on
Foreign Affairs, which held mark-up on May 1 3 , 1981; a n d reported to H o u s e ,
Report No. 97-57, o n May 1 9 , 1981; passed House o n J u n e 8 , 1 9 8 1 ; passed
Senate i n l i e u of S. 1 1 1 2 with amendment by voice v o t e o n Nov.
1 2 , 1981;
House unanimously disagreed with Senate a m e n d m e n t s a n d requested a conference
Conference Report no. 97-401 issued Dec. 11, 1981.
on Nov. 2 0 , 1981.
P.E. 97-145 o n Bec. 2 9 , 1 9 8 1 with Section 6 omitted.
H. Con. Res. 49 (Brown, C.)/H.
Con. Res. 5 9 (Brown, C.,
Requests t h e Securities and Exchange Commission a n d t h e S e c r e t a r y sf
Commerce each t o report to the Congress on t h e impact o n the U.S.
the acquisition o f U.S. companies by foreign nationals.
introduced on Feb. 3 , 1 9 8 1 a n d H.Con.Res. 5 9 w a s introduced o n Feb. 5 ,
Both bills w e r e referred t o the House Committee o n F o r e i g n Affairs a n d the
Subcommittee o n International Economic Policy a n d Trade which held hearings
on H.Con.Res. 49 on Feb. 2 3 , 1 9 8 2 , and t h e House Committee on Energy and
Commerce a n d t h e Subcommittee o n Telecommunication, Consumer Protection and
Finance, which held hearings on H.Con.Res. 5 9 o n Feb.
26, 1981 and April 2 ,
1 7 7 (Fithian)
Urges the President to negotiate with Japan concerning the establishment
of Japanese a u t o production facilities i n the United States and the use of
U.S. parts in Japanese cars.
Introduced on Sept. 1 0 , 1 9 8 1 ; referred
House Committee o n Ways and Means and the Subcommittee on Trade.
1 2 9 4 (Brooks, et.al.)/S.
289 ( T o w e r , et-al.)
Amends the Security Exchange Act of 1 9 3 4 to provide uniform margin
requirements in traccactlccs involving = h e acquisition of securities of
cerzain U.S. corporations >y either U.S.
1 2 9 4 was
a c q u i s i t i o ~ is financed S y eicher U.S. or non-U.S.
introduced on Jan. 2 7 , 1981and referred to the House Committee on Energy and
Commerce and the Subcommittee on Telecommunication, Consumer protection
F i n a n c e , which held hearings on Feb. 2 6 , 1 9 8 1 and April 2 , 1981. S. 289 was
introduced on Jan.
2 7 , 1 9 8 1 and referred to the Senate Committee on B a n k i n g ,
and the Subcommittee o n S e c u r i t i e s , which held hearings on March
3 1 , 1981.
F o r further a c t i o n , see H.R. 4145.
2826 (Emerson, et al.)
Mineral L a n d s Leasing Amendment of 1981. Amends the Mineral Lands Leasing
Act to prohibit any foreign person from acquiring more than 25% of the voting
securities i n a U.S. mineral resource corporation and directs the Secretary
Of the Interior to undertake a study of indirect foreign investment in
Introduced o n Mar. 2 5 , 1981; referred to
mineral resources o n U.S.
Committee o n Interior and Insular Affairs and Subcommittee on Mines a n d
Mining, which held hearings on May 7 , 1 9 8 1 and markup on July 1 6 , 1981.
Clean bill H.R. 4 1 8 6 reported i n lieu.
1 4 3 6 ( D q A m a t o et al.)
Amends the Securities Exchange Act of 1 9 3 4 to provide uniform margin
requirements in transactions involving the acquisition of securities of
certain U.S. corporations by foreign persons where such acquisition is
H.R. 2879 was introduced on Mar.
financed by a foreign lender.
referred to Committee on Energy and
Telecommunications, Consumer Protection a n d F i n a n c e , which held hearings on
April 2 , 1981. S. 1 4 3 6 was introduced on J u n e 2 5 , 1 9 8 1 ; referred to the
Senate Committee o n Banking Housing and Urban Affairs and the Subcommittee on
Securities, which held hearings o n July 8, 1981. S. 1 4 3 6 with amendments w a s
F o r further a c t i o n , s e e
referred t o t h e f u l l committee on July 3 0 , 1981.
3 1 3 4 (Bingham)
Section 4 a m e n d s the International Investment Survey Act o f 1 9 7 6 to
authorize appropriations to carry o u t such Act.
Introduced on Apr. 8, 1 9 8 1 ;
referred t o House Committee o n Foreign Affairs and
International Economic Policy and T r a d e , which held hearings on Apr. 1 4 , 1 9 8 1
a n d mark-up o n Apr. 2 8 , 1981.
(For further a c t i o n , s e e H.R. 3567.)
Foreign Investment Control Act of 1981. Establishes a National Foreign
Investment Control Commission to prohibit o r restrict foreign ownership
control or management c o n t r o l , through direct purchase, in whole o r part;
from acquiring securities of certain domestic issuers of securities; from
acquiring certain domestic issuers of securities, by merger, tender of.fer, or
any other means; control of certain domestic corporations or industries, real
estate, or other natural resourced deemed to be vital to the economic
security and national defense o f the United States.
Introduced on Apr.
1981; referred to the House Committee on Energy and Commerce and the
Subcommittee on Telecommunications, Cons6mer Protection and Finance.
C r e a t e s a Joint Congressional C c m m ~ t t e eor F o r e ~ g n I n v e s t m e n t C O R t r o i
z 5 e U n ~ t e d S t a z e s u p z n e n a c z m e n t of t n e Pore:gn
D ~ r e c t st n e c o m m i t t e e c o
F o r e l g n investment C o n t r o i C o m m l s s l o n , e s t a b l l s h e c by s u c h A c t , f u l f l l i s l t s
Introduced on Apr. 29, 1 9 8 1 ; r e f e r r e d to t h e
4033 (Whittaker et al.)/S.
1 4 2 9 (Kassebaum et ab.)
T i t l e I , the Margin Requirements Fairness Act of 1981.
Securities Exchange Act of 1 9 3 4 t o make the margin requirements f o r domestic
purchasers of securities applicable to foreign purchasers of securities in
certain significant transactions involving the United S t a t e s securities
markets Title 1 1 , the Foreign Energy Investment Act of 1981, establishes a
moratorium from J u l y 1 , 1 9 8 1 through March
3 1 , 1 9 8 2 o n certain Canadian
investments in U.S.
energy resource corporations, and directs that a
comprehensive study on foriegn investment
corporations be undertaken and compieted by March 1 , 1982.
Introduced J u n e
25, 1 9 8 1 ; referred to the House Committee on Energy a n d Commerce; the
Subcommittee o n Telecommunications, Consumer Protection a n d F i n a n c e , the
Senate Committee on Banking, Housing and Urban Affairs, a n d the Subcommittee
on Securities, which held hearings o n J u l y 8 , 1989.
H.R. 4 1 4 5 ( W i r t h , et al.)
Amends the Securities Exchange Act of 1 9 3 4 to provide uniform margin
requirements i n transactions involving the acquisition of securities of
certain U.S. corporations by non-U.S. lenders.
Introduced July 1 5 , 1 9 8 1 ;
referred t o the Committee o n Energy and Commerce; reported t o House with
a m e n d m e n t , R e p o r t no. 97-258 o n Sept. 3 0 , 1 9 8 1 ; passed H o u s e , amended O c t .
1 3 , 1 9 8 1 ; referred t o Senate Committee o n B a n k i n g , Housing a n d Urban Affairs
o n Oct. 1 4 , 1981.
4 1 7 7 (English)
Amends t h e Communications Act of 1 9 3 4 t o
Communications Commission to r e g u l a t e t h e entry of foreign telecommunications
services and carriers into U.S.
Introduced on J u l y 1 6 , 1981;
referred t o H o u s e Committee o n Energy a n d Commerce.
4186 (Santini, et al.)
Mineral L a n d s Leasing Amendment of 1981.
Amends the Mineral L a n d s Leasing
Act o f 1 9 2 0 t o prohibit foreign acquisitions o f more than f i v e percent of the
securities i n a U.S.
mineral resource corporation
agreements prior t o July 1 5 , 1981) beginning o n July 1 5 , 1 9 8 1 and ending
April 1 5 , 1 9 8 2 a n d directs the Secretary of t h e Interior to undertake a study
of indirect f o r e i g n investment i n mineral resources on lands owned by the
Introduced July 1 6 , 1 9 8 1 in lieu of H.R. 2826; referred to the House
Committee o n Energy and C o m m e r c e , the Subcommittee on Telecommunications,
Consumer Protection and Finance and the House Committee on Interior and
4 2 2 5 (Walgreen)
Amends the Communications Act of 1 9 3 4 to establish certain limitations
relating to the ownership of c a b l e television franchises by
Introduced July 21, 1981;
Enerqy and Commerce.
Amends the Trade Act of 1974 to restrict direct investment within the U.S.
by foreign countries that discriminate against U.S.
Introduced Aug. 4 , 1981; referred to the House Committee on Ways and Means
and the Subcommittee on Trade.
4 9 3 0 (Brown)
Amends the Energy Policy a n d Conservation Act to provide f o r a n evaluation
o f the effects of acquisitions of domestic petroleum
companies by major
international energy concerns on the exploration, d e v e l o p m e n t , production,
r e f i n i n g , transportation, distribution, a n d marketing of d o m e s t i c petroleum
supplies and to impose a moratorium on such acquisitions until completion a n d
consideration of the evaluation.
Introduced Nov. 1 0 , 1 9 8 1 ; referred to House
Committee o n Energy and Commerce and Subcommittee 0.n F o s s i l and Synthetic
F u e l s which held hearings o n Dec. 1 0 , 1981. Subcommittee markup held o n Dec.
1 5 , 1 9 8 1 and bill was forwarded t o Full Committee
a c t i o n , see H.R. 5274.
M.R. 5 2 7 4 (Brown, C.)
Provides f o r congressional evaluation of energy policy by
moratorium o n certain acquisitions involving major
energy c o n c e r n s a n d
domestic petroleum companies until June 3 0 , 1982. Introduced Dec.
1 6 , 1981;
referred to the House Committee on Energy and C o m m e r c e and the House
C o m m i t t e e on t h e Judiciary a n d Subcommittee o n Monopolies and Commercial Law.
Passed House Dec. 1 6 , 1981; received in S e n a t e and referred to t h e C o m m i t t e e
o n t h e Judiciary Dec. 2 2 , 1981.
4 3 3 (Rosenthal)
Declares that the House of Representatives concurs in t h e public r e l e a s e
of certain classified documents dealing with foreign i n v e s t m e n t s and country
surpluses of members of the Organization of Petroleum Exporting C o u n t r i e s
2 1 , 1982; referred to Committee o n Government
Operations and Subcommittee o n Commerce, Consumer a n d Monetary Affairs, which
held mark-up sessions Apr. 2 9 a n d May 6, 1982. Amended r e s o l u t i o n forwarded
to f u l l committee May 6, 1982.
S. 1 6 8 7 (Pressler)
Makes a technical a-mendment to the International Investment Survey Act o f
1 9 7 6 (deletes the word "calendarw). Introduced on Sept. 3 0 , 1 9 8 1 ; referred
t o House Committee on Foreign Affairs; passed House on Oct. 1 4 , 1 9 8 1 ; passed
S e n a t e on Oct. 1 6 , 1981; became Public Law 97-70 on Oct. 2 6 , 1981.
S. 1 9 2 6 (Metzenbaum et al.)
Amends the Clayton Act t o direct the Secretary of Energy
t o undertake a
comprehensive study of the effects of acquisitions of domestic petroleum
companies by major international energy concerns and to r e p o r t the f i n d i n g s
Prohibits, between Jan. 1 , 1 9 8 2 , and Sept. 3 0 , 1 9 8 2 , any major
international energy concern from acquiring more
than 5 % of a domestic
Introduced Dec. 9 , 1 9 8 1 ; referred to S e n a t e Committee o n
Amends t h e T r a d e Act of 1 3 7 4 to authorize the P r e s i d e n ~ to restrict direct
investment within the U.S. by a foreign cocntry that unfaily discriminates
against U.S. investment or by
c i t i z e n s , nationals, or persons who a r e
organized o r existing under the l a w s of such country.
Changes the definitian
of "commerce" t o include investment.
Introduced Feb. 4, 1 9 8 2 ; referred t o
Committee o n Finance.
S. 2469 (Goldwater et a l e )
International Telecommunications Deregulation Act of 1982.
Amends t h e
Communications Act of 1934 (with a n e w T i t l e VI)
to provide for improved
international telecommunications, and f o r other purposes.
Section 6 0 6 f o f
Title V I a u t h o r i z e s the Secretary o f Commerce to collect information o n ,
Introduced May 3 , 1982; referred to Committee
o n Commerce a n d Subcommittee o n C o m m u n i c a t i o n s , which held hearings J u n e 15
a n d 1 7 , 1982.
Ordered to b e reported with a n amendment in the nature of a
substitute favorably Oct. 1 , 1982.
3 1 7 (Cannon et al.)
Declares it the sense o f the Senate that the Interstate C o m m e r c e
Commission should temporarily refrain from granting applications for motor
carrier operating authority filed by
foreign companies o r by companies
controlled by foreign nationals.
Introduced o n Feb. 1 0 , 1 9 8 2 ; referred t o
Senate C o m m i t t e e o n Commerce, S c i e n c e , a n d Transportation.
Committee o n Agriculture.
S u b c o m m i t t e e on Family F a r m s , Rural Development, a n d
S p e c i a l Studies.
Impact o n foreign investment in farmland.
H e a r i n g s , 9 5 t h Congress, 2nd s e s s i o n , on H.R. 1 3 1 2 8 a n d
r e l a t e d bills.
J u n e 2 0 , July 1 9 a n d July 2 8 , 1978. 4 3 3 p.
C o m m i t t e e o n Energy and Commerce.
Subcommittee o n
Telecommunication, Consumer Protection and Finance.
Acquisition of U.S. Companies by Foreign Nationals.
9 7 t h Congress
o n H. Con. Res. 5 9 a n d H.R. 1294.
1 s t s e s s i o n , Feb. 2 6 , a n d April 2 , 1981. 277 p.
C o m m i t t e e on Foreign Affairs.
Subcommittee on International
Economic Policy and Trade.
Survey Act Authorization for Fiscal Years 1 9 8 0 and 1981.
Hearing and markup on H.R. 3 6 5 3 , 96th Congress, 1st
s e s s i o n , Apr. 2 6 , 1979. 46 p.
C o m m i t t e e on Foreign Affairs.
Subcommittee on International
E c o n o m i c Policy and Trade.
Hearing on H.R. 3134. 9 7 t h
C o n g r e s s , 1 s t session, Apr. 1 4 , 1981. Unpublished.
S u b c o m m i t t e e on International Economic Policy and Trade.
Hearing on foreign investment in the United States:
issues, 97th Congress, 2d s e s s i o n , Feb. 2 3 , 1962.
on Governmert Operat~0r.s. S u b c o m m ; = ~ e e oz C o m m e r = e ,
Consumer and Monecary hifalrs. Federal response tc O P E C lnvestrnents
ln the Unlted Stares. Hearings, 97ch Congress, Ist a n e
Part 1 - Overview, hearlngs on Sept. 22 and 2 3 , 1981.
Part 2 - Investment i n S e n s ~ t l v e Sectors of the U.S.
Kuwalt Petroleum Corp.
of Santa F e International Corp., hearings on
Oct. 2 0 and 2 2 , Nov. 2 4 and Dec. 9 , 1981.
P a r t 3 - Saudl Arabian Influence in Wnlttaker Corp.,
hearlngs o n Apr. 6 , 1982. 293 p.
The operations of federal agencies in monitoring, reporting o n , and
analyzing foreign investments in the United States
Hearings, 95th Congress, 2nd session,
Part 1 - Hearing on Sept. 1 9 , 20 and 2 1 , 1978.
Part 2 - O P E C investment in the United S t a t e s , hearings on
J u l y 1 6 , 1 7 , 1 8 and 2 6 , 1979. 4 7 6 p.
Part 3 - Examination of the committee o n foreign investment in
United States, federal policy toward foreign
investment, and federal data collection efforts,
hearing on July 30, 1979. 1 0 6 2 p.
Part 4 - Foreign investments in U.S. banks, hearings on July
31 and Aug. 1 , 1979.
3 3 6 p.
Part 5 - Appendixes.
Subcommittee on C o m m e r c e , Consumer and Monetary Affairs.
Hearing o n Saudi Arabia influence i n Whittaker Corporation.
97th Congress, 2 6 s e s s i o n , Apr. 1 , 1982.
Committee o n Interior a n d Insular Affairs.
Subcommittee o n
Mines and Mining.
Hearing on H.R. 2 8 2 6 , to provide f o r a r e v i e w
of the policy relating t o mineral leases o n public lands (alien
97th Congress, 1st session, May 7 , 1981.
Committee o n International Relations.
International Economic Policy and Trade.
Hearing a n d
Markup on H.R. 1 2 5 8 9 , 9 5 t h Congress, 2nd s e s s i o n , Apr.
2 5 , May 4 and 1 0 , 1978.
Committee o n Interstate and Foreign Commerce.
on Consumer Protection a n d Finance. Reciprocity i n
investment. Hearings, 9 6 t h Congress, 2d s e s s i o n , o n H.R.
7791 and H.R. 7750. Aug. 1 9 and Sept. 9 , 1980. 2 2 5 p.
Committee on Post Office and Civil Service.
on Census and Population. Data o n foreign ownership of
property within the U.S.
Hearing, 95th Congress, 1 s t
session on H.R. 7411. July 1 5 , 1977. 4 8 p.
Committee on Ways and Means. Taxation of foreign investor
direct and indirect ownership of property in the
United States. Hearing, 96th
Congress, 1 s t session, Oct. 2 5 , 1979. 84 p.
Senate. Committee on E a n k l n g , H c u s ~ n g ,and Urban
Su3cor~m;ttee on S e c u r ~ t ~ e s .H e a r ~ n g on S. 289, a
blli to amenc tne S e c u r l x ~ e sExchange Act of 1934 to p r o v ~ a e
margln requirements ~n t r a c s a c t ~ o n s lnvo1v:ng
acqulslclon of securlcles of certaln U.S. c o r p o r a t ~ o n s by
non-U.S. persons where such acqulsltlons are f ~ n a n c e dby
non-U.S. leaders. 9 7 t h Congress, 1st s e s s ~ o n . March 3 1 ,
Committee o n Banking, Mousing a n d Urban Affairs.
Subcommittee on Securities. Hearing o n S. 1 4 2 9 and S. 1 4 3 6 ,
bills imposing uniform margin requirements o n loans obtained
for the purchase of U.S. securities by foreign persons or
97th Congress, 1 s t s e s s i o n , J u l y 8 , 1981.
Committee o n Commerce, Science and
Authorization for the International
Investment Survey Act.
Hearing on S. 2928, 95th Congress,
2nd session, Apr, 1 9 , 1978. 1 1 4 p.
Committee o n Commerce, Science and Transportation.
appropriations under the International Investment Survey Act
of 1976. Hearing on S. 7 5 8 , 9 6 t h C o n g r e s s , 1 s t s e s s i o n ,
Apr, 1 9 , 1979. 48 p.
- - e m -
Subcommittee on Business, Trade a n d Tourism.
International Investment Survey Act Reauthorization.
97th Congress, 1st session, April 9 , 1981. 1 7 p.
Committee o n Finance.
Subcommittee o n Taxation and Debt
Taxation o f Foreign Investment in the United
States Hearing in S.192 a n d S.268.
J u n e 25, 1979. 2 6 0 p.
Committee o n Foreign Relations.
Subcommittee on International
Economic Policy. U.S. policy toward
international investment. Hearings, 9 7 t h C o n g r e s s , 1 s t s e s s i o n ,
July 3 0 , Sept. 2 8 , a n 8 Oct. 2 8 , 1981. 600 p.
Committee o n Foreign Relations.
Subcommittee on International
Economic Policy. U.S. policy towards international investment.
H e a r i n g , 9 7 t h Congress, 1 s t session, J u l y 3 0 , 1981. Unpublished.
A l i s t of hearings on foreign direct investment i n the United
S t a t e s in
t h e 9 3 r d a n d 9 4 t h Congresses can be obtained by calling the author
REPORTS AND CONGRESSIONAL DOCUMENTS
Congress. House. Committee on Energy and Commerce. Uniform
Margin Requirements; Report to accompany H.R. 4 1 4 5 (97th C o n g r e s s ,
1st session, Report no. 97-258) Washington, U.S. Govt. Print. Off.,
3 1 p.
Committee on Foreign Affairs.
AmendmeRts Act of 1981 (97th Congress, 1st session,
rep or^ nc. 97-57) Washlngtcc, U.S. Govt. Trint. Off., 1911.
15 p .
- - - - - Committee on Foreign Affairs.
SuScommittee on Foreign Economic
Policy. Direct foreign investments i n the U.S.
July 7 , 1974.
Washington, U.S. Govt. Print. Off., 1974. i 4 p.
At head of title: 93rd Congress, 2nd session.
Committee on Government Operations.
The adequacy of the
federal response to foreign investment in the United States
(96th Congress, 2nd session, Report No. 96-1216)
Washington, U.S. Govt. Print. Off., 1980. 217 p.
Committee on International Relations.
International Survey Act of 1976; report to accompany
H.R. 12589 including cost estimate of the Congressional
Budget Office (95th Congress, 2nd session, Report no.
95-1154) Washington, U.S. Govt. Print. Off., 1978.
Joint Committee on Taxation.
of S. 192 and S. 208 relating to tax treatment of foreign
investment i n the United States, scheduled for a hearing
before the Subcommittee on Taxation and Debt Management
Generally of the Committee on Finance on June 2 5 , 1979;
prepared for the use of the Committee on Finance.
U.S. Govt. Print. Off., 1979. 1 0 p.
Congress. Conference Committees. Export Administration
Act of 1979; conference report to accompany S. 737
(96th Congress, 1st session, House Report no. 96-482)
Washington, U.S. Govt. Print. Off., 1979.
5 9 p.
Committee on Commerce, Science and Transportation. Authorization for
the International Investment Survey Act of 1970 (97th Congress,
1st session, Report no. 97-68) Washington, U.S. Govt.
Print. Off , 1981. 8 p.
Committee on Commerce, Science and Transportation.
Authorizing appropriations for the International
Investment Survey Act for fiscal years 1980
and 1981; report t o accompany S. 7 5 8 (96th Congress, 1st session,
Report no. 96-129) Washington, U.S. Govt. Print. Off., 1979.
Committee on Commerce, Science and
International Survey Act of 1976
authorization report to accompany S. 2928 (95th Congress,
2nd session, Report no. 95-863) Washington, U.S. Govt.
Print. Off., 1978. 9 p.
General Accounting Office.
Office of the Comptroller
General of the United States. Are OPEC financial holdings
a danger to U.S. banks or the economy? June 1 1 , 1979.
51 p .
U.S. General Accounting Office. Office of the Comptroller
General of the United States. Controlling foreign
investment in national interest sectors of the U.S.
Oct. 7 , 1977.
8 2 p.
General Bccountinq Ofilce.
Office zi tne Comptroller
Ger-era1 of the Unlted States.
Fcrelgn dlrec: ~ n v e s t m e n c i n
the UnlteC Staces - zne federai role.
June 3 , 1980.
ID-80-24. 8 3 p.
CHRONOLOGY OF EVENTS
A Technical Amendment to the International Investment
Survey Act of 1 9 7 6 (P.L. 97-70) became law.
T h e Amendments to the International Investment Survey
Act of 1 9 7 6 (P.L. 97-33) became law.
The Foreign Investment i n Real Property Tax Act of 1 9 8 0 ,
Subtitle C of P.L. 96-499, became law.
Section 23 of
F Y 8 0 a n d FYS1
Survey Act of
the Export Administration Act of 1 9 7 9
which authorized appropriations for
t o carry o u t the International Investment
1 9 7 6 , became law.
The Agricultural Foreign Investment Disclosure Act
(P.L. 95-460) became law.
T h e Amendments to the International Investment
Survey Act of 1 9 7 6 (P.L. 95-381) became law.
T i t l e I1 of P.L. 95-213 (The Dcmestic and F o r e i g n
Investment Improved Disclosure Act) became law.
T h e International Investment Survey Act of 1 9 7 6
(P.L. 94-472) became law.
T h e Foreign Investment Study Act of 1 9 7 4
(P.L. 93-479) became law.
ADDITIONAL REFERENCE SOURCES
Announcements of foreign investment i n U.S. manufacturing industires.
T h e Conference Board, Inc., New York, published quarterly.
K r u e g e r , Russell C.
U.S. international transactions, f i r s t
Survey of Current Business, v. 6 2 ,
J u n e 1 9 8 2 , p. 36-72.
U.S. business enterprises acquired or established
B e l l i , R. David.
by foreign direct investors in 1981.
Survey of Current Business,
v. 6 2 , August 1 9 8 2 , p. 27-31.
H o w e n s t i n e , Ned G. and Gregory Fouch.
Foreign direct investment
in the United States i n 1981.
Survey of Current B u s i n e s s ,
v , 6 2 , August 1 9 8 2 , p. 30-41.
H o w e n s t i n e , Ned G.
Selected data on the operations of U.S.
affiliates of foreign companies, 1977. Survey of
Current Business, vol. 60, July 1 9 8 0 , p . 3 2 - 4 4 , 5 5 .
Selected data on the o p e r a ~ i o n s of U.S. affliiares cf
foreign cornpanles, 1978 and 1979. Survey of Current Business,
vol. 6 1 , May 1 9 6 1 , p. 35-52.
The Impact of incentives on foreign investors' site selections.
Federal Reserve Bank of Atlanta.
Economic Review, December 1981.
Little, Jane Sneddon. Foreign Direct Investment in the United
Recent Locational Choices of Foreign Manufacturers.
Federal Reserve Bank of Boston.
New England Economic Review.
Nov./Dec. 1980. p. 5-22.
The Impact of Acquisition by Foriegners on the Financial Health
of U.S. Firms. Federal Reserve Bank of Boston.
Economic Review, July/August 1982.
United States. Department of Commerce.
Foreign direct investment
in the United States:
report of the Secretary of Commerce
to the Congress in compliance with the Foreign Investment
Study Act of 1974, Public law 93-479. Washington, U.S.
Department of Commerce:
for sale by the Supt. of Docs.,
U.S. Govt. Print. Off., 1977. 9 volumes.
International Trade Administration.
Foreign direct investment
in the United States; 1979 transactions.
Sept. 1980. 4 0 p.
Office of Foreign Investment i n the United States.
Foreign direct investment in the United States;
all forms; 1974-76 acquisitions,
mergers and equity increases.
Washington, for sale
by the Supt. of Docs., U.S. Govt. Print. Off., 1977.
Library of Congress.
Congressional Research Service.
Foreign investment in U.S. farmland [by] Karla Perri.
(Archived -- 12/22/80)
Issue Brief 78064
Foreign ownership of property in the United States:
federal and state restrictions [ b y ] Howard Zaritsky.
Washington, July 1 1 , 1978 (Updated June 23, 1980). 42p.
Report No. 80-105A
Reciprocity in foreign trade [ b y ] Alfred Reifman and Raymond
Washington, Mar. 23, 1 9 8 2 (Updated periodically).
Issue Brief 82043