Lazy, ctd.

Earlier this week, I pointed out some inconvenient facts regarding President Obama's recent allegations of American laziness in the global marketplace.  I focused on the Obama administration's lackluster pursuit of trade and investment liberalization, mainly through FTAs, but the editors at Investors Business Daily have gone one further by pointing out several very-specific examples of the White House's outright hostility to foreign investment:

The Obama administration has a record of making life miserable for foreign investors that put their capital on the line to create jobs in the U.S.

Politically wedded to special interests such as Big Labor, White House officials have hurled scurrilous charges against foreign companies and muscled others in ways no domestic company would tolerate.

Foreign investors also have been targets of punitive regulations disguised as "patriotism" and had contracts kicked out from under them. Now the president would have everyone think the U.S. is merely asleep at the wheel in attracting investment from abroad. In reality, it's a different story...

Exhibit 1: In 2010 Japan's Toyota was humiliated over a safety issue. It wasn't enough to let the regulators deal with accusations about Toyota's brake pedals — as Ford and GM had been over comparable problems. The Obama White House had to publicly shame Toyota....

Exhibit 2: U.K. oil giant BP was put through a similar wringer after the Gulf oil spill of 2009. Instead of treating BP as a domestic company, Obama proudly announced he had his "boot on the neck" of the British company and, in a move of questionable legality, demanded $20 billion....

Exhibit 3: In 2009, Obama signed off on the Democratic Congress' special "Buy American" provisions in the $900 billion stimulus package, shutting out foreign investors for U.S. government contracts. The language was all about "patriotism," but it signaled that the U.S. wasn't welcoming foreigners. The same year, Obama also refused to lift the Jones Act in the wake of the Gulf oil spill. Foreign nations' offers of expertise in cleaning up a dangerous problem were dismissed due to the 1930's protectionist act that was designed to protect union jobs....

Exhibit 5: European jet maker EADS won a $35 billion Pentagon contract for tankers in 2010, only to see it pulled and given instead to rival Boeing — whose congressional representative said it would bring 50,000 "American jobs" to unionized Washington and other states. EADS's proposal would still have created 40,000-plus U.S. jobs — but in right-to-work Alabama....

[W]ith Asia and Latin America booming and in a position to invest abroad, and Europe in far worse shape than the U.S., the U.S. should be seeing double-digit foreign investment gains, as it did in the 1990s. Instead, foreign direct investment — which totaled $2.34 trillion in 2010 — continues to grow at about the same meager 6% rate of the last decade.

Ouch.  I had already mentioned in my blog post IBD's Exhibit 4 (on NAFTA trucking), and I'd be remiss not to add the very recent and very topical Exhibit 6:

China's largest solar power plant developer has put a planned $500 million U.S. project on hold over an anti-dumping trade dispute, the company's general manager said on Monday.  CECEP Solar Energy Technology Co Ltd, a unit of the state-owned giant China Energy Conservation and Environmental Protection Group, said a planned installation of China-made panels to generate solar power in California, New Jersey and Texas would be made uneconomic by U.S. anti-dumping moves.

"If the solar panel prices increase by, say 30 percent, in the United States, following the move, then we would certainly drop the plan because there's no profit to be made," Cao Huabin, the general manager of CECEP Solar Energy, told a news conference in Beijing.

Prices of solar panels in the project, which account for about 70 percent of the costs, are set to jump if Washington imposes duties on imported Chinese products that U.S. rivals say breach agreed global trade rules...

Seven solar manufacturers led by the U.S. arm of SolarWorld AG last month asked Washington to impose hefty duties on China solar imports. European firms may ask for similar action.

Now, this isn't to say that the issue of China and FDI is easy.  Indeed, there are very real national security and other issues that preclude unfettered Chinese investment in the US private sector.  AEI's Claude Barfield elaborates on these issues in a great new paper that focuses Chinese telecoms giant Huawei's failed attempts to invest in the United States.  Barfield also offers up a few solutions to Huawei's problems and the difficult issue of Chinese FDI more broady.  He recommends, among other things, that:

• The US government should make the investment/security-vetting process (the so-called CFIUS process) more transparent and should take steps to formulate and publicize a set of guidelines that would explain the rationale behind individual investment decisions. As a number of intelligence officials from several administrations have concluded, Committee on Foreign Investment in the United States (CFIUS) officials can provide more detail on the sources of their security concerns without jeopardizing US intelligence efforts. At a minimum, the results of the White House task force initiative cited above, as they pertain to Huawei, should be made public.


• Efforts to expand CFIUS to cover normal business contracts or joint research and corporate ventures should be resisted. If acceded to, moves to expand CFIUS, whether stemming from congressional sources or private competitors, would lead to an undesirable politicization of the process through an adverse intermingling of national security and private competitive concerns and motives.


• Beijing should renounce trade-investment-distorting credit subsidies that aid Chinese companies competing in overseas markets. It should agree to adhere to the guidelines and specific restrictions set out in the 1978 Organisation for Economic Co-operation and Development (OECD) arrangement on export financing and the 1991 Helsinki Package that clarified rules with regard to tied aid to developing countries.  Pending this action, Huawei would be well advised to agree to be bound by OECD rules when accepting subsidized credit arrangements for its customers.

I completely agree.  (And be sure to read the whole Barfield analysis here.)  Our existing investment/security vetting process is messy and ripe for abuse by domestic companies seeking to keep their competitors out of the US market.

So, yes, foreign investment in the United States is quite important for future economic growth and employment, and there are very real obstacles to reaping the full benefits of that investment, particularly as they relate to China.  But those obstacles have very little to do with American "laziness" and very much to do with our arcane and often protectionist regulatory apparatus and an administration that has been slow to embrace - and at times outright hostile to - foreign investment.