Claude Barfield worries about recent actions taken to restrict foreign investment:
There is, however, one ominous sign of protectionism in an area that is mostly outside the scope of WTO trade rules: foreign direct investment (FDI). The leading advocate of investment protectionism is French President Nicolas Sarkozy, who has proposed the creation of a $25 billion sovereign wealth fund to shield French companies from foreign “predators,” insisting that without such a mechanism, France will “stop building trains, aircraft, cars and ships” and become a “reserve for tourists.” Sarkozy intends to use an existing state financial house, the Cassis des Dépôts et Consignations (CDC), as the vehicle to administer the fund.
...
It is unclear whether other governments will heed Sarkozy’s siren call for investment protectionism. (Germany has severely criticized the French plan.) But even before the current economic turmoil, apprehension about foreign investment had been growing in countries around the world. According to the United Nations Conference on Trade and Development (UNCTAD), national regulatory changes to FDI guidelines were overwhelmingly favorable during the 1990s. As late as 2000, of 150 regulatory changes tracked by UNCTAD, only three were counted as unfavorable to FDI. By 2006, however, UNCTAD reported that 37 of 184 actions (20 percent) were unfavorable.
...
The growing danger of investment protection demands both an international response and a strong statement from the incoming Obama administration. On the international front, world economic leaders must buttress their warnings against trade protection with an agenda that includes robust support for open capital markets and cross-border international investment. The recent collapse of the Doha Round of global trade talks has made this all the more urgent.
I worry about this, too. Is it time for global rules on investment flows? Not necessarily the MAI, but something to prevent discrimination from going too far.
