Reply to Handelsblatt article (Op-ed, August 27, 2010)

I read with interest “Die Riskanten Staaten von Amerika,” and disagree with nearly every point.  The United States has both the largest economy and internal market in the world for two fundamental reasons: first, the U.S. has regulations governing economic activity that establish clear rules and create predictability for market participants; and, second, these rules are applied fairly to all.  In short, we welcome foreign investment, products and services, and we do not discriminate in law or practice against foreign business in order to protect our domestic markets.  This is confirmed in the most recent Ease of Doing Business Index, which ranks the U.S. fourth, behind Singapore, New Zealand and Hong Kong, for ease of investment and market entry.  The U.S. is also consistently among the top five destination countries for foreign direct investment every year.    

 Yesterday's article in Handelsblatt complained primarily of three elements which conspire to create an unfriendly environment for German business: product liability cases, patent infractions and prosecutions for corruption.  Our legal system is based on Anglo-American common law, as opposed to the continental civilian tradition, and provides an exceptional structure for enforcing contracts, protecting investors and property rights.  We also have product liability laws that give plaintiffs the right to have a jury trial when injured by defective goods.  Some foreign investors are concerned by the unpredictability and potential liability created by damages awards in jury trials, but we have made substantial progress in this area: the Supreme Court has limited punitive damages awards to nine times actual damages; tort reform initiatives are proceeding in several states; and class action lawsuits against foreign companies above five million dollars are now automatically heard in federal, and not state, courts.  In a recent survey, 86 percent of U.S. companies rated their state court systems from fair to excellent, with only ten percent rating them as delivering poor results. 

 Protections for patents and trade secrets in the U.S. are among the strongest in the world, and foreign companies have the same access as domestic companies to U.S. courts to defend against patent or trade practice infringements.  It is because of our strong tradition of protecting intellectual property rights that the U.S. commands fully forty percent of research and development investment in the world, and ranks first in venture capital availability.  Cooperation in protecting intellectual property between the U.S. and EU is one of the pillars that supports our vibrant trading relationship. 

 I was somewhat dismayed to see a publication like Handelsblatt complain about the burdens of transparency created by the Foreign Corrupt Practices Act.  As your readers know, the FCPA gives jurisdiction to U.S. courts to prosecute domestic and foreign companies doing business in the U.S. for corrupt practices occurring overseas.  I am particularly proud of this legislation, as it has substantially contributed to improving transparency and combating corruption worldwide by holding companies accountable for their actions.  Companies wishing to invest or do business in the U.S. must ask themselves a simple question: is it worthwhile sacrificing access to the largest consumer market in the world in order to be able to pay bribes elsewhere?  They do not, however, have to ask whether the FCPA is used to penalize or discriminate against foreign-owned businesses.  While much is written about enforcement against foreign companies, U.S. companies and individuals are also regularly convicted and fined under the statute.

 The United States has aggressively moved to reduce non-tariff barriers to trade, and remains among the most open markets for foreign goods and services of any country in the world.  It is precisely because of our transparency, the mixture of skill and liquidity in our labor markets, and the predictability of our business environment that the U.S. remains a leading destination for foreign investment from around the world, as many large and small German companies have found to be true.