Administration Issues Proposed CFIUS Regulations
On April 21, the Adminstration released proposed regulations to implement rules passed by Congress last summer on national security reviews of foreign acquisitions of U.S. companies.

OFII, Business Roundtable, the Financial Services Forum and the U.S. Chamber of Commerce issued a statement praising the release of the regulations as a needed step in finalizing the new process for the interagency Committee on Foreign Investment in the United States (CFIUS).

According to the statement, “The issuance of the regulations clarifies the procedures for national security reviews by the CFIUS and provides certainty to investors.  The regulations provide necessary guidance on which transactions involve both control and a relationship to national security and therefore require CFIUS review.  Neither FINSA or these regulations constitute a barrier to foreign investment in the U.S. but rather the regulations provide a roadmap for investors as to when and how they must go through the CFIUS process.”

Tanker Deal Stirs Isolationism on Capitol Hill
Last month, the international consortium of Northrop Grumman, EADS and GE beat the international consortium of Boeing, Alenia and Pratt & Whitney for the Air Force's $40 billion tanker contract. 

In an effort to reverse the decision, Boeing and its supporters are promoting the “foreignness” of EADS as a reason to reject the Air Force’s decision. This argument is a red herring. As detailed in a cover story in the latest edition of Congressional Quarterly Weekly, "Global Market Forces," John Donnelly explains the global nature of today’s aerospace industry and how any company making an airplane platform buys parts from suppliers around the world. 

OFII will oppose efforts to change the government procurement process in a way that does not focus on choosing the best product for the best price. It is critical that the process be credible and free of politicking. Both of these are also necessary to ensure U.S.-based companies are assessed fairly when competing for government contracts in other countries. 

New Study Shows U.S. Benefits When Foreign Companies Acquire U.S. Businesses
OFII released a new study, “Insourcing Mergers & Acquisitions,” which details the many ways U.S. companies, workers and the overall economy benefit when foreign companies acquire U.S. businesses. 

According to the report, authored by Professor Matthew Slaughter, mergers and acquisitions are the main way in which foreign companies start and expand their U.S. operations and are essential for the country to benefit from insourcing.

From 1987-2006, the U.S. received $2 trillion in new foreign direct investment - of which insourcing M&A accounted for 88.8 percent, with greenfield activity (i.e., when a firm builds a new facility) making up the remainder.

According to the report, acquired U.S. companies often gain access to more capital, greater productivity and efficiencies, and global reach. Specifically, foreign acquisitions can foster growth of key activities like employment, wages, and investment.

In addition, foreign acquisitions of U.S. companies play an important role in financing the U.S. current account deficit.

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