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Investing in the United States

Is the US Ready for FDI from China?

Edited by Karl P. Sauvant

This essential book analyzes the regulatory and operational challenges that foreign direct investors face in the United States, as well as the ways in which these challenges can be overcome.
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Chapter 3: The US Regulatory and Institutional Framework for FDI

David N. Fagan


David N. Fagan* INTRODUCTION In May 2007, President George W. Bush issued a statement on United States policy toward foreign investment, termed by the administration as a statement on “open economies.” The statement was spurred by a desire to affirm to the world that the United States remained open to foreign direct investment (FDI) – a task made essential by the highly politicized reaction of the US Congress in 2006 to the proposed investment in US port operations by Dubai Ports World. The statement also anticipated the more balanced action taken by Congress later in 2007 to adopt reasonable reforms to the primary legal mechanism for vetting FDI, the Exon–Florio Amendment to the Defense Production Act. Importantly, though, President Bush’s statement was not centered only on promoting foreign investment. Rather, it sought a balance between maintaining an open environment for investment and preserving important security interests, as follows: A free and open international investment regime is vital for a stable and growing economy, both here at home and throughout the world. The threat of global terrorism and other national security challenges have caused the United States and other countries to focus more intently on the national security dimensions of foreign investment. While my Administration will continue to take every necessary step to protect national security, my Administration recognizes that our prosperity and security are founded on our country’s openness. As both the world’s largest investor and the world’s largest recipient of investment, the United States has a key stake in...

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