Controlling Foreign Investment in National Interest Sectors of the U.S. Economy

Recent large increases in the amount of foreign investment in the United States have prompted congressional and public concerns that vital U.S. national economic interests might be endangered.

Reexamination of foreign investment policies and legislation indicate that no change in the traditional open door foreign investment policy is necessary. No two federal statutes governing foreign investment in national interest economic areas apply the same standards for defining foreign ownership or control, although most of them establish limits on the allowable amount of investment. The Department of Defense Industrial Security Program monitors foreign investment in U.S. firms working on classified contracts and requires the firms to submit certificates pertaining to foreign interests. These must be updated when the foreign investors change, but this regulation is laxly enforced. Federal Communications Commission regulations apply equally to domestic and foreign investors. At least 75 percent of the voting interests of U.S. air carrier corporations certified by the Civil Aeronautics Board must be U.S. owned, and presidents and the majority of the boards must be U.S. citizens. The Interstate Commerce Commission has no restrictions on foreign investors, and few limits are placed on the U.S. energy industries. Other federal agencies tend to apply their regulations equally to foreign and domestic investors.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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