Subcommittee Examines How to Encourage U.S. Corporations to Invest at Home, Not Abroad

 The Effects of Globalizing Jobs & Technology on the American Economy


(Washington, DC) – As millions of American manufacturing jobs continue to move offshore, evidence is mounting that ever more sophisticated operations, once seen as the potential source of benefits from free trade and globalization, are headed to foreign soil if the rules underlying corporate incentives don’t change.

The focus of a hearing by the House Committee on Science and Technology’s Investigation and Oversight Subcommittee is how to change government incentives so that they encourage companies to keep high-paying manufacturing jobs, as well as research and development jobs in America.

A panel of expert witnesses will suggest innovative incentives such as reducing income tax rates for corporations that retain or create higher-paying jobs in the U.S., making new rules that point corporations in the direction of public purpose rather than exclusively of short-term profits, and examining how the race for short-term gain contributes to off-shoring of American jobs.

Contact: Fred Stokes 662 476 5568, Cell 601 527 2459

March 24, 2008

 The Coalition for a Prosperous America praised the work of the Committee on Foreign Investment in the United States (CFIUS) for helping prevent the acquisition of 3Com by Chinese government-owned Huawei and Bain Capital.  That acquisition, announced last November, was opposed by many lawmakers.  CFIUS is obliged to review foreign investment, whether by private companies or governments, that pose a risk to national security.

“The members of the Coalition for a Prosperous America are very concerned about the geopolitical and economic impacts of foreign government purchases of U.S. companies,” said Fred Stokes, CPA president.  “Just as U.S. citizens are reluctant to allow our government to buy, operate or control private companies, we should be extremely resistant to allowing foreign governments to do the same in our economy, directly or indirectly.” The CFIUS is an inter-agency committee, with representatives from 12 U.S. agencies including the Defense, State, Homeland Security and Commerce departments.  The Treasury Department chairs the committee. As stated on the Committee’s website:

            Section 5021 of the Omnibus Trade and Competitiveness Act of 1988 amended Section 721 of the Defense Production Act of 1950 to provide authority to the President to suspend or prohibit any foreign acquisition, merger or takeover of a U.S. corporation that is determined to threaten the national security of the United States.

“We appreciate the foresight of Congress in 1988 to recognize the risks of foreign investment in the United States.  3Com sells sensitive technology including hacker-prevention hardware sold to the Pentagon.  While foreign direct investment can be beneficial, there are special dangers, especially when there is a connection to another government,” continued Stokes. 

“Foreign governments control the largest financial funds in the world, called Sovereign Wealth Funds, many of which are controlled by geopolitical rivals,” said Stokes.  “The CFIUS has an increasingly important task in examining pending and future foreign investments.”

The  Coalition for a Prosperous America (CPA) is a non-profit coalition, working for new and positive trade policies that deliver prosperity and security to America, its citizens, farms, factories and working people.