To hear Georgia’s top foreign investors tell it, the state has the No.1 business climate in the U.S. for a reason, but macroeconomic issues beyond its control are threatening cross-border dealmaking during a strange season marked by a global pandemic.
The Metro Atlanta Chamber hosted a “road ahead” webinar with representatives from the countries taking the top four slots for job-creating investments in the state: the U.K., Japan, Germany and Canada. See the full event here
The deep discussion functioned as a survey of the geopolitical issues and trade concerns affecting decision-making at companies, drilling down on the ways they influence bilateral relationships with these four vital partners.
For Nadia Theodore, the outgoing consul general of Canada, in many ways this is uncharted territory, and projections are hard to make.
“As much as many of us don’t want to admit it — myself included some days — we are still in the midst of a global health pandemic. And so, really and truly what the effect of that will have on future investment trends remains to be seen.”
But it’s clear from the Canadian presence in the Southeast U.S. that trade (the flow of goods) and investment (the flow of capital) are inextricably linked, which is why trade agreements like the newly enacted USMCA in North America and the TPP-11, the Pacific deal ratified after the U.S.’s departure, are so important, she said.
Small companies in particular benefit from the “certainty and predictability” offered by trade deals. Often taken for granted, those commodities had been in short supply over the past few years as the U.S. upended the status quo of the North American relationship.
The pandemic may have caused an acute closure of the U.S.-Canada border to non-essential travel and tourism, but Ms. Theodore was quick to remind the audience that immigration restrictions were on the rise even before COVID-19 began to dominate the discussion.
In some ways, that has helped Canada in the short term, at least in the eyes of investors eyeing a North American presence.
“We are one of the most educated countries in the world. Our immigration policies are very business friendly. We have a lot of incentives now for businesses with regards to tax breaks, breaks on capital investments, that are becoming very attractive to businesses, especially as they look at what the future is going to be in terms of near-shoring and re-shoring,” Ms. Theodore said.
Even U.S. companies are starting to look at setting up an office in Canada as a “jump-off point” to the rest of the world.
“Canada has free trade agreements with all of the other G-7 countries. So the idea of setting up a second office in Canada to then have access to the rest of the world is very interesting to many,” she said. “Canada, for many businesses is kind of close to home, just different enough to make a difference.”
Even still, the panel agreed that restrictions on the movement of people were among the biggest impediments to closing deals today.
Malcolm Joy, partner in the Atlanta-based accounting firm Frazier & Deeter’s London office, said sectors like tech and life sciences have been relatively unaffected by the pandemic, and in some cases have seen strong growth. Some basic investment management can be done remotely or through a new hires connected via Zoom.
“But when it comes to any more significant investment, I think the the inability of the people in the UK to go over and base themselves over there … to monitor more substantial investments is definitely an issue.”
Teri Simmons, who leads the global business and immigration practice at Arnall Golden Gregory LLP, said bans on transatlantic travel have left many companies “very, very frustrated,” especially earlier in the year when U.S. consulates in Europe were closed.
Many companies couldn’t send in people to get their equipment provisioned, and they couldn’t send Americans to train after the EU shut its own borders. Asked whether she knew of specific projects derailed by these issues, her answer was succinct: “Absolutely.”
“So the way that’s traditionally been done is a lot of companies will take American citizens, bring them to their home country and train them on the machinery that is operational in that home country. When that cannot happen, we have, we have a tremendous issue,” she said.
Now, things have been somewhat patched up. Neither side has lifted its ban, but the EU has been allowing in U.S. travelers with a specific business purpose — as long as they adhere to quarantine requirements — and Ms. Simmons has been successful in gaining “national interest exceptions” for clients bringing personnel into the U.S. whose tasks are deemed to be of benefit to the American economy.
Even with approvals of non-immigrant visas like the L and H-1B suspended through the end of the year, the fact that the U.S. has put in place a process to circumvent the bans when necessary is welcome, she said.
Japanese companies employing more than 860,000 people in the U.S. (400,000-plus in manufacturing) have weathered crises before in their U.S. operations, said Chief Executive Director Takuya Takahashi at the Japan External Trade Organization’s Atlanta office.
Since the 2009 financial crisis, the stock of investment nearly tripled, he said, and that has continued even during the pandemic, as many Japanese firms weathered personnel issues, sales declines and lack of clarity on how to continue operating in line with local shutdowns.
Not only are Japanese firms growing their U.S. operations, but the country also remains open to American investors, especially those looking to use technology to improve lives.
“Japan is aiming to realize Society 5.0, which is a technology-based, human-centered society. And this is a new model for society to support economic development and solve social issues by incorporating advanced technologies into every aspect of industry and social living,” Mr. Takahashi said.
Metro Atlanta Chamber Vice President of Global Commerce John Woodward moderated the panel.
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