A FEDERAL appeals court has decided it is all right for foreign investors who buy companies in the United States to refuse to employ Americans, simply because they are Americans.
Five years ago Quasar, an American owned firm, was bought by Matsushita Electric Industrial Company of Japan. Matsushita then fired Quasar's top management, replacing it with Japanese executives.
The dismissed American managers then sued Matsushita for discrimination on the basis of age and national origin. After they won their case in the district court, the Seventh Circuit Court of Appeals ruled that Quasar's new Japanese owners did not commit an illegal act, because job discrimination on the basis of citizenship is permitted under a treaty with Japan.
Far from creating jobs for Americans, as many people have repeatedly claimed, foreign investment in the US could, under this policy, become a large new source of employment for foreign citizens. The notion that foreign investors should not only be free to buy valuable American industrial assets, but also should then be able to discriminate against the firm's American workers is simply absurd.
Have we become so dependent on foreign investment to finance both government debt and business growth that we no longer can stand up for the rights of our citizens when those rights are abused by employers, including employers who are foreign investors?
I am not against the ability of foreign interests to invest in our economy. But that does not mean we should ignore either the rights of American citizens or important national-security interests in an effort to attract foreign investment.
Legislation before the House Subcommittee on Commerce, Consumer Protection, and Competitiveness would strengthen the law under which the president may restrict foreign investment for national-security reasons. Although the major provisions of the bill are based on recommendations from the Defense Department's own science board and the General Accounting Office, the administration has opposed the bill on the grounds that it would discourage foreign investment in the US.
It is a sad day when the administration feels compelled to oppose legislation strengthening the president's ability to protect the national security for fear that it will offend foreign investors. Other countries do not feel any similar restraint.
In the United Kingdom, American investors can be blocked from buying British firms if such an acquisition could be deemed to harm the "national interest," clearly a broader basis for action than the national-security test in the legislation before Congress. The French government takes into account the effect of the investment on employment and advanced technology in determining whether to block foreign acquisitions for reasons of "public health, order, security, or defense."
In Japan, the government can block foreign acquisitions that might "imperil the national security, disturb the maintenance of public order, or hamper the protection of the safety of the general public." German law regulates foreign investment "to guarantee the security of the Republic, to prevent a disturbance in the peaceful coexistence between nations, or to prevent external relations of the Federal Republic from being substantially disturbed."
Clearly, there is a broader basis for blocking foreign investment in most other major countries than there is for restricting foreign investment in the US, either under existing law or proposed legislation. It is time we stopped making legitimate US interests take a back seat to the interests of foreign investors who want to buy major parts of our industrial and technological base.
The proposed legislation would ensure that foreign investment can continue under circumstances that require technologies the president deems essential to the national security.
It also implements recommendations of the Defense Science Board that the president be given broader powers, including the authority to impose conditions on foreign investors that buy American firms which may be needed to protect the national security.
These changes should not discourage foreign investment, as the president claims. If some foreigners perceive these changes as a threat, so be it. I say it is time for the president to start standing up for the rights and best interests of Americans, rather than the foreign investors he seems so concerned about.