Further protectionist legislation in the U.S., such as the “Buy American” provision in the stimulus package, could ultimately hurt the U.S. economy, said the head of the Confederation of British Industry‘s Washington office.
Rhian Chilcott, who was director of corporate affairs at CBI’s London office before becoming head of the U.S. headquarters, said the organization is worried about measures to stifle foreign investment.
While there is still a large amount of foreign money coming into the U.S., CBI, a British business lobbying organization, is concerned that the “Buy American” provision began a more restrictive stance toward foreign investment.
“The U.S. has always been a beacon of free trade and open investment … but there have been a number of examples over recent months and years where the U.S. is looking to shut down its markets,” she said.
CBI has four main offices outside of the U.K. in Washington, Brussels, New Delhi, and Beijing, but it is particularly interested in cultivating business in the U.S., where so many British businesses are already involved.
To this end, Ms. Chilcott spoke to members of the British American Business Group-Atlanta, an organization that promotes economic ties between the U.K. and the Southeast, at a breakfast meeting on Nov. 22 at the offices of Kilpatrick Stockton LLP.
At the meeting, she briefed members about recent political developments in the U.S. and the U.K., including the state of the countries’ economies during the recession.
After her visit, she told GlobalAtlanta in a phone interview that CBI is concerned about U.S. federal and state legislation limiting foreign investment.
She cited the “Buy American” provision of the American Recovery and Reinvestment Act of 2009 as the most obvious indicator of protectionist leanings. The provision states that all companies must use domestic iron, steel and manufactured goods in projects funded by the act.
According to Ms. Chilcott, this provision forces companies to produce goods in the U.S. even if it is cheaper to make them elsewhere, bumping up the overall cost of a project. She added that these types of legislation could cause other countries to retaliate and pass protectionist legislation of their own.
There are also more subtle signs of protectionist legislation, said Ms. Chilcott. In a Federal Aviation Administration re-authorization bill pending in Congress, Ms. Chilcott says there is a provision to inspect foreign repair stations for aircraft more strictly than domestic repair stations.
Ms. Chilcott said that this type of legislation makes CBI worried that the U.S. is moving to keep out what could be beneficial investments.
“Jobs created by foreign investors tend to be better paid than domestic jobs. There are a whole host of reasons why the U.S. should be welcoming foreign investment,” she said.
According to a report by CBI, the U.K. is the top foreign investor in the U.S. The report found that in 2007, U.S. subsidiaries of British companies created 949,300 jobs in the country and 21,400 jobs in Georgia.
Despite warnings about protectionism, the U.S. is still the largest recipient of foreign direct investment in the world. More than $130 billion flowed into the U.S. last year, according to the U.S. Bureau of Economic Analysis.
While in Atlanta, Ms. Chilcott also visited the British Consulate General to talk to officials about future opportunities for British companies in Georgia.
She said that British companies in Georgia span a wide variety sectors from construction to hospitality and that the U.K.’s diversified base of companies kept British investment strong despite the recession.
Ms. Chilcott said that Atlanta is an attractive location for British business for a variety of reasons, including a skilled workforce from colleges and universities around Atlanta.
“Georgia’s done a good job building up the educational institutions particularly around Atlanta,” she said.
She went on to say that Georgia is perceived as having a rapidly growing economy with an attractive regulatory framework, specifically Georgia’s status as a “right-to-work” state, which means a company can fire an employee for any reason excluding discrimination.
To learn more about CBI, visit www.cbi.org.uk.