Today, President Bush reaffirmed America’s continuing commitment to advancing open economies at home and abroad, including open investment and trade.

“The United States has a longstanding commitment to open economies that empower individuals, generate economic opportunity and prosperity for all, and provide the foundation for a free society. . . . A free and open international investment regime is vital for a stable and growing economy, both here at home and throughout the world.”

- President George W. Bush

Focusing on the benefits of open investment, Secretary of the Treasury Henry M. Paulson Jr. will moderate a panel discussion on the gains to the United States economy from foreign investment here.

“Foreign investment in the United States strengthens our economy, improves productivity, creates good jobs, and spurs healthy competition. Americans have prospered as foreign companies have put their money to work here.”

- Secretary Henry M. Paulson Jr.

Foreign Direct Investment (FDI) in the United States Creates High-Paying Jobs

· Foreign companies in the U.S. employed more than 5 million U.S. workers in 2005, providing 4.5% of all private sector employment in the United States.

· Manufacturing jobs accounted for 33% of the jobs created by foreign companies in the U.S. (2004 data). The manufacturing sector accounts for just 12% of overall U.S. private sector employment. Thus, FDI is disproportionately bolstering this important sector.

· An additional 4.6 million U.S. jobs indirectly depend on foreign investment in the U.S. (2005 data). Foreign companies in the U.S. buy 80% of their inputs from U.S. companies. This additional business indirectly supports almost as many U.S. jobs as FDI creates directly.

· Compensation at foreign companies in the U.S. is on average 30% higher than the U.S. national average. Foreign-owned firms paid U.S. workers an average of $63,428 in 2004.

Foreign Direct Investment in the United States Strengthens Our Economy

· Foreign firms in the U.S. account for 5.7% of U.S. economic output, as well as 10% of all investment in plant and equipment in the United States.

· Foreign firms in the U.S. re-invested $48.6 billion (45% of their income) back into the U.S. economy in 2004. This investment furthers innovation and promotes economic growth.

· Foreign firms generate 19% of U.S. exports ($153.9 billion in 2006). This contribution is greater than their overall percentage of U.S. economic output, which means they are doing more than their share to help improve the U.S. trade balance.

· Foreign firms in the U.S. generate a disproportionate share of national R&D spending (13%, totaling $29.9 billion). This spending strengthens U.S. global competitiveness in pharmaceuticals, high-tech, and other key sectors and produces innovative products that help to improve our standard of living.

· The economic benefits generated by inflows of foreign capital help strengthen economic leadership. In the late 1980s and early 1990s, some pointed with alarm to Japanese purchases of U.S. assets, fearing they foreshadowed the Japanese overtaking our economic leadership. Twenty years later, the resulting jobs and economic growth show those fears were misplaced.

Maintaining U.S. Competitiveness in Attracting FDI Requires Renewed Commitment

· At $1.9 trillion, the total stock of FDI in the United States in 2005 was equivalent to 15% of U.S. GDP. Foreign investment in the U.S. is the ultimate vote of confidence in our economy. It signals a long-term belief in the strength of our markets and the skill of our workforce.

· In the last few years, the United States has not received as high a share of total worldwide FDI as it did before 2000. This trend could be due to the growth of opportunities in emerging markets, burdensome U.S. legal, regulatory and corporate tax regimes, or the misperception that the United States is no longer open to foreign direct investments.

· However, this trend is cause for some concern. In 2000, foreign firms directly employed 5.7 million people in the U.S. (5.1% of the private sector workforce) and indirectly supported 6.5 million more jobs. In 2005, those figures had fallen to 5.1 million (4.7% of the private sector workforce) and 4.6 million, respectively. Foreign firms’ R&D spending as a share of total R&D spending in the U.S. has also slightly declined since 2000.

· This trend reinforces the need for the United States to renew its commitment to open investment, and to policies that make the U.S. attractive for FDI.

Our National Security Review Process Has Not Restricted the United States’ Openness to Foreign Direct Investment

· Since 1988, the interagency Committee on Foreign Investment in the United States (CFIUS) has carefully reviewed the potential national security impact of proposed foreign investments in the United States.

· CFIUS’s recently more public profile has created the misconception in some quarters that the United States is becoming less open to foreign investment. However, CFIUS is continuing its long history of fairly, efficiently, and narrowly reviewing individual transactions for national security concerns alone, without any protectionist influence on its decisions.

· Less than 10% of foreign investments in U.S. companies were reviewed by CFIUS in 2006, and the average since 2000 is about 5%. The vast majority of foreign investment does not raise national security implications - and is untouched by the CFIUS process.