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Thu. February 29, 2024
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Non-Friction: Toward A Global Economy
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U.S. Treasury Secretary Henry Paulson said on Aug. 1 that he is "very concerned about the anti-trade rhetoric I hear coming from some quarters here and around the world." As he spoke, trade ministers were crisscrossing the globe, frantic to salvage the Doha Development Round of World Trade Organization negotiations. Less noticed is fast-moving legislation that puts more sand into the gears of global commerce. The House and Senate have--with absolutely no opposition--approved different bills to beef up and further complicate the executive branch's review procedures for foreign investments in U.S. enterprises deemed to be "controlled" by foreign governments. These expansions of the role of the Committee on Foreign Investment in the United States (CFIUS) are supposed to head off controversies such as the proposed takeover of operations at certain U.S. seaports by DP World, a Dubai company; that deal was abandoned earlier this year after U.S. authorities expressed concerns over port security. Germans have a word for this kind of politics: "Aktionismus," or doing something--usually haphazardly--just to appear to be doing something. The results are typically counterproductive and often harmful. Surely, in the case of the recent proposed legislation, the economic and long-term political wisdom behind it is in grave doubt. By any objective standard, the DP World deal was good for the U.S., but it was torpedoed by an act of uninformed congressional populism, poor executive-legislative communications and bad public relations. The proposed new congressional initiatives would improve communications by force, imposing new reporting mandates and broader legislative oversight of CFIUS reviews of foreign investment in the U.S. Bringing members of Congress into the deliberative process so early may head off some of their grandstanding--one hopes--as it would expose them as part of the problem rather than the solution. If that makes it easier to sell America's obvious economic interdependence to a restive public, so much the better. But these bills--especially the Senate version, which threatens indefinite delays and brings governors, business rivals and everyone but the American Idol crew into the process--have endless potential for mischief. Serious, time-limited, tightly focused analyses aimed at flushing out major national security issues have an obvious, and important, purpose. But unlimited delays for cross-border deals mean trouble, and if America wants to become more like Europe (in a bad way--mercantilist, economically nationalist and fearful of genuine competition), then this is just the legislation America needs. If, on the other hand, one believes that the free flow of goods, services and ideas around the globe is desirable and in need of a bit of a moral boost these days, then strengthening CFIUS (at least in the way the Senate proposes) is not your thing at all. Instead, the U.S. should send a positive signal to the world that it knows how to guard the security of its people without reneging on its commitments to global commerce. Economic openness is not only compatible with safeguarding national security, but indeed a fundamental component. The "Dubai problem" can be fixed in a way that upholds mutual economic interests; such deals don't need to be blocked whenever someone in Nebraska gets the vapors. President George W. Bush told the National Association of Manufacturers that "one of my big fears is that we lose our nerve, is that we kind of say, 'Well, this is a new emerging economy, and if we can't compete, let's just retreat.' ... That's not the America I know." Maybe he's not long on eloquence, but he's sound in principle if deed matches word. The CFIUS debate gives the president a bold opportunity to make it known that he will veto any bill that threatens to create protective barriers against the free flow of capital, investment and entrepreneurial initiatives across national borders. He and his national security team, together with his fresh economic team led by Secretary Paulson, should draft and publish rigorous, detailed criteria defining what a veto-proof CFIUS compromise must have. Not coincidentally, that exercise of presidential leadership would also be a strong signal that Doha's doldrums are not the way of the future, and that America acts out of strength and hope, not fear. Surely this is an opportunity not to be missed. George A. Pieler is senior research fellow with the Institute for Policy Innovation and former economic adviser to Sen. Bob Dole. Jens F. Laurson is editor in chief of the International Affairs Forum.

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