Pryce's Subcommittee Further
Legislation Reforming the Body to be Unveiled Soon
WASHINGTON, D.C. – On Thursday, the Subcommittee on Domestic and International Monetary Policy, Trade and Technology (DIMP) - chaired by Congresswoman Deborah Pryce (R-Ohio) - held its second hearing into the process by which CFIUS (the Committee on Foreign Investment in the United States ) operates. Pryce and Majority Whip Roy Blunt (R-MO) are currently drafting legislation to reform CFIUS.
“The information gathered at today’s hearing will prove invaluable as I continue to work with Congressman Blunt to improve the operations of CFIUS,” said Pryce. “My paramount concern throughout this process has been to ensure that the security of our nation and that of my constituents are never compromised in the effort to expand trade. Making CFIUS more accountable and adding transparency in how it approves these transactions will ultimately serve our security concerns.”
“The Dubai Ports World transaction brought CFIUS into the public lexicon. It is the responsibility of this subcommittee to ensure that the public has no future reason to question the procedure or logic by which foreign interests are approved to invest in the United States.”
Testifying before the Subcommittee today were:
The Honorable Donald L. Evans
Mr. Daniel K. Tarullo
Mr. Paul Vikner
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CHIARMAN DEBORAH PRYCE
OPENING STATEMENT (As Prepared)
CFIUS & THE ROLE OF THE FOREIGN DIRECT INVESTMENT IN THE UNITED STATES
APRIL 27, 2006
I am pleased to welcome you all here today to this hearing. I would like to thank our witnesses for being here and appreciate the opportunity to discuss with you the CFIUS process and the role of foreign investment in the United States.
Over the last few months we have heard much on the CFIUS process and transactions that have given pause to most Americans. Since 911, Congress has taken a strong position on the importance of National Security by strengthening our ports of entry, increasing benefits for our men and women in uniform, and protecting our troops to ensure that our country remains safe.
In a post 9/11 world, Congress operates under heightened awareness when it comes to all aspects of National Security. National security, however, is not mutually exclusive of economic security and trade.
While strengthening our security we have also continued our work to strengthen our relationships and open markets with nations abroad—nations like India and China. These countries have a growing appetite for foreign goods and products—American products, and American investments.
In the late 1990s China began loosening its regulations on companies wanting to invest and build in China. India, a country whose economy is reportedly growing at 8 percent a year, had started to open its markets to more foreign investment after years of negotiations with our government. American companies, brand names that we all recognize like Nike and Budweiser have grown exponentially because of these market openings—and growing American companies means a growing job force here at home.
At a time when the rest of the world is moving forward, some here in Congress are talking of taking a step back. Congress has no greater obligation than to protect our homeland. National Security is paramount above all else. But, we cannot let our national security concerns morph into economic protectionism that views foreign investment as inherently bad. I am concerned that Congress’ quick and politically heated reaction to a disappointing misstep by our Administration will lead to a decrease in international trade and foreign investment.
In Ohio, we have seen the benefits of welcoming Siemens, Sodexho, Honda, Lexis-Nexis, and many other global companies. Honda of American Manufacturing, a U.S. subsidiary of the Japan-based Honda Motor Corporation, has become the largest auto producer in Ohio.
Honda began United States production in 1979, initially investing $35 million in Marysville, Ohio. In 2004, Honda announced a new $123 million paint facility in Marysville. To date, Honda’s capital investment in Ohio now tops $6.3 billion over 26 years.
Honda's North American plants purchased more than $6.5 billion in parts from 150 Ohio suppliers in 2005. In 2004, Honda produced nearly 645,000 Accords, Civics, Elements, and Acura products in its Ohio facilities. Honda’s investment in the people of Ohio keeps approximately 8500 employed in the 15th district.
When a foreign company looks to invest in the U.S., they are looking to grow their business, and that equals growing jobs in the U.S. The Wall Street Journal reported on April 21 st that, “in an annual report on its survey of multinational corporations, the U.S. Commerce Department said foreign firms other than banks doing business in the U.S. employed nearly 5.1 million employees in 2004 -- slightly less than one of every 20 workers in the private sector.”
Since the Dubai ports transaction, the posturing of some of the members of this Congress has been to limit the role of foreign investment in the U.S. Legislation that’s been passed and discussions in the press have lead to a backlash in the markets from Russia, China, India and Mexico. India had just lowered investment retentions, now they have voted to raise them again. The U.S. Chamber of Commerce recently noted that the Mexican Senate approved legislation that would create longer review periods or that would bar foreign investment in specific sectors such as transportation and telecommunication.
In Russia, President Putin has also proposed to limit foreign investment in key sectors, and there has been an explicit link to U.S. actions made by the economy minister as a justification for these new limits.
This issue of reforming CFIUS has the potential to undercut the United States’ longstanding support for capital market access and the free movement of capital. We must continue to focus our efforts in securing our nation, while remaining committed to free trade as one of the greatest engines of prosperity
In recent weeks, Treasury has made strides in congressional notification of pending deals that could potentially affect national security, but a wake up call simply is not enough. More still needs to be done to ensure that a Dubai Ports World does not happen again in a Post 9/11 world.
When questions of national security or foreign government ownership arise accountability is clearly needed. Clear standards of congressional notification need to be set and the President should remain the final judge for the most consequential deals.
This subcommittee has oversight of CFIUS. We have already held one hearing prior to today and will continue to asses the CFIUS process as we work with other Members of Congress, on both sides of the isle, to draft legislation to reform the process with greater accountability.
I want the American people to have more information about the oversight and protections that are in place to determine if foreign investment is in the best interest of the United States national security. CFIUS is in place to evaluate the national security risks of foreign investment and my subcommittee is exercising its oversight of this process.
In a world intertwined by global companies, it is important we continue to protect US national and economic security while promoting foreign investment. This issue touches every American who wants to know that each day, they are safe. I look forward to hearing our witness’s testimony and I yield back the balance of my time.