- - Tuesday, July 3, 2018

ANALYSIS/OPINION:

As a Milwaukee native, I’ve followed Harley-Davidson for a long time. I’ve taken groups of admiring international investors to tour its manufacturing plants and pitched its stock to institutional investors all across Asia.

Harley-Davidson is a unique and potent brand symbolizing American spirit and craftsmanship. Like the Trump administration, I would prefer that the company’s manufacturing stays in America and that we pressure countries that unfairly block its exports with high tariffs and other barriers to quickly reverse course.

But while trade issues always attract significant media attention, international investment is just as important to American jobs, manufacturing, innovation and economic growth.

This is why the recent groundbreaking ceremony attended by President Trump for Taiwan-based FoxConn’s planned $10 billion manufacturing plant is so important. This investment not only will create thousands of high-paying jobs, it will lead to innovation and research, economic growth down the supply chain — not to mention strengthening ties between Taiwan and America.

In addition, Guinness, a subsidiary of London-based multinational Diageo, has announced an $80 million investment to open a brewery in the U.S. for the first time in more than 60 years.

By investment I mean foreign direct investment (FDI) — when companies headquartered abroad build facilities, purchase equipment, hire workers and create products and services in the United States.

For the most part, America treats international companies investing and operating here on par with American companies. This is why America consistently leads the pack as the world’s top destination for FDI. This is important because oftentimes international investment drives exports.

These subsidiaries of international companies make a significant contribution to America’s economic growth. Roughly, 20 percent of the American manufacturing workforce and about half of all American manufacturing jobs created in the last five years are due to international investment.

International investment accounts for nearly 7 million high-paying jobs in America and — here’s a stunner — these subsidiaries of international companies produce 22 pecent of total U.S. exports.

Toyota has the world’s largest manufacturing facility in the world based in Kentucky, and BMW churns out 1,500 autos each day at its Spartanburg, South Carolina, plant in which it has invested $8 billion, employs 10,500 workers and relies on 230 American auto-part suppliers. Japanese automakers make in America two of every three cars sold to Americans.

L’Oreal, headquartered in Paris, has the world’s largest cosmetics manufacturing facility in Little Rock, Arkansas, and employs 11,000 American workers with 65 percent of the company’s U.S. sales made in America. You can see why America, like any country in the world, would welcome international investment and would prefer it to importing goods made elsewhere in the world.

The challenge is that many countries in the world have the same attitude — make it here or pay the import tax.

But America is first among equals precisely because it doesn’t need the tariff stick to encourage great global companies to invest here. America offers foreign investors the trifecta of a talented and educated workforce, due process and the rule of law, and a huge consumer market. One unfortunate side effect is that international companies play one state off another extracting costly tax concessions — this needs to be addressed.

Now let’s turn to the pressing and sensitive issue of Chinese investment in America.

Because China is both a commercial as well as military rival and its state-controlled and state-owned companies dominate key industries, Chinese investment in America needs to be handled a bit differently than from a longtime ally such as France or Canada.

This is particularly important when foreign companies are considering investing in companies related to U.S. technology. These transactions require a higher level of due diligence and scrutiny, and legislation to do just that is currently winding its way through Congress.

We also need to push for American firms operating in China to be treated on an equal basis with Chinese companies. All too often, China forces American companies to invest in joint ventures with Chinese state-owned companies rather than giving them the freedom to operate independently to protect their intellectual property and keep all of their hard-earned profits.

Instead of letting state-capitalist nations such as China promote an agenda centered on their interests, let’s turn the tables with a powerful economic diplomacy that plays to our ace in the hole — international investment.

• Carl T. Delfeld, the author of “Red, White & Bold: The New American Century,” was a U.S. Treasury adviser and represented America on the executive board of the Asian Development Bank.


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