Canada's Foreign Investment Review Agency

The Canadian economy is heavily influenced by a magnitude of foreign direct investment. Thus the Government established the Foreign Investment Review Agency (FIRA) to screen incoming foreign investments. The report addresses the following issues concerning the agency and the possible necessity of establishing a similar one in the United States: (1) the criteria used by FIRA to evaluate the desirability of foreign investments; (2) FIRA policy goals and the types of investments which have contributed the most to Canada's national objectives; (3) the current administrative, policy, enforcement, political, and other problems of FIRA; (4) data gathering and use; (5) types of investigations FIRA makes, for what goals and with what results; and (6) whether the review process is needed in the United States.

The study showed that there is not a need for establishing a foreign investment screening agency in the U.S. at this time. The reasons are: (1) such an agency would be inconsistent with the longstanding U.S. policy to encourage the free flow of trade and investment and to promote equal treatment of domestic and foreign investors; (2) whereas foreign investors control about 60 percent of the industrial firms in Canada, only about 2 percent of U.S. manufacturing establishments are foreign firms and no single foreign country has a large concentration of investment; and (3) the United States already has methods to monitor and control some foreign investment and many States have additional controls. Instead, the effective implementation of existing legislation, effective functioning of the interagency Committee on Foreign Investment in the United States, and continued congressional interest should all alert agencies and the Congress to the need to further improve the monitoring and the regulation of foreign investment.