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March 27, 2006
TO MEMBERS OF THE UNITED STATES CONGRESS:
On behalf of the members of Business Roundtable, I am writing
to express our hope that the Congress will not adopt proposals
related to the Committee on Foreign Investment in the United
States (CFIUS) process that would place damaging restrictions
on foreign investment, and to express our commitment to work
with the Congress in shaping constructive provisions that
may be needed to reform the CFIUS process.
As CEOs of major American companies, Business Roundtable
members understand the importance of national security concerns
that arise from international trade and investment. The security
of the American people is paramount. We also know from our
experience competing in the global economy how important foreign
investment is to economic growth and job creation.
As the Congress moves forward with new CFIUS legislation,
we hope that you will recognize that protecting national security
and securing foreign investment are not incompatible goals,
and that proposals to reform the CFIUS process must be balanced
and constructive so that they do not place unnecessary, damaging
and counterproductive restrictions on foreign investment.
In considering reforms, we believe it is important that legislative
changes to the CFIUS process be guided by several central
principles:
- National security should continue to be the principal
focus of the foreign investment review process;
- The review process should continue to be objective and
fair, as well as non-political; it should not create obstacles
that put a damper on legitimate business activities; and
- Maintaining an open, fair and non-discriminatory investment
environment for legitimate foreign investment is important
to the U.S. national interest.
National security should continue to be the principal
focus of the foreign investment review process. The existing
national security factors in the CFIUS process are sufficiently
broad enough to cover threats to American security that have
evolved in recent years and to continue to do so as technology
and global politics change. Attempts to redefine national
security for the purpose of mandating a full, 45-day investigation
of certain types of investments where a foreign government
is not involved, for example, would have the unintended, adverse
consequence of discouraging legitimate foreign investment.
Such changes would also divert scarce government resources
away from national security, the principal focus of the CFIUS
process.
For instance, one proposal under consideration by the Congress
requires that all matters involving "critical infrastructure"
undergo a full, 45-day investigation-even where no national
security issues exist. Under this proposal, the European acquisition
of Ben & Jerry's Ice Cream would have required a 45-day investigation
because the Department of Homeland Security includes "food"
within its definition of critical infrastructure.
The review process should continue to be objective, fair
and non-political, and should not create obstacles to investment
that put a damper on legitimate business objectives. We
understand that a new relationship with the Executive Branch
is needed to ensure that the Congress can effectively fulfill
its responsibility to oversee the operation of the CFIUS process.
However, if the CFIUS process is allowed to become political
or burdensome, it will deter foreign investors from making
legitimate investments that are vital to the U.S. economy.
For example, a proposal to establish unprecedented Congressional
reporting requirements on a case-by-case basis would be especially
counterproductive because it invites politicization of the
CFIUS process. In addition, proposals to extend the initial
CFIUS review process from 30 to 60 days without any express
national security need are both unnecessary and counterproductive.
Such measures would introduce regulatory uncertainty and delay.
These circumstances, in turn, would chill foreign investment
in the United States, diminish the value of U.S. assets and
adversely effect U.S. economic growth.
Maintaining an open, fair and non-discriminatory investment
environment for legitimate foreign investment is important
to the U.S. national interest. In 2004, foreign investors
invested more than $115 billion in the United States, providing
U.S. companies and workers with important capital for expansion
of U.S. production facilities, increased R&D spending, and
other investments to help grow the U.S. economy. In addition
to employing more than 5 million Americans, foreign companies
in the United States generate approximately twenty percent
of our exports. U.S. companies also make significant foreign
investments in order to expand their markets and establish
the worldwide networks that are the key to maintaining their
competitiveness in today's global marketplace.
These are important factors for the Congress to consider
as it moves forward with legislation to reform the CFIUS process.
If the Congress were to adopt excessive changes, such as banning
foreign investment in or across certain sectors, there is
a significant risk that these types of changes would have
the unintended consequence of discouraging legitimate foreign
investment in the United States and encouraging other countries
to discriminate against U.S. companies.
We believe that the CFIUS process can be reformed without
damaging its objective and fair operation, and are committed
to working with the Congress to achieve that goal.
Sincerely,
John J. Castellani
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