Foreign-owned firms would get U.S. aid Object is help to workers in U.S.

June 02, 1993|By New York Times News Service

WASHINGTON -- In a break from decades of government policy, the Clinton administration has reached a rough consensus to give higher priority to helping foreign-owned companies expand production in the United States than in assisting domestic companies with output from their factories overseas, three administration officials said yesterday.

The informal understanding was reached by five top administration officials at a secret meeting last Wednesday.

The compromise addresses the questions of where the United States' interests lie in an era of heavy international investment and what kinds of companies the federal government should be helping.

These questions have become more pressing for policy-makers now that foreign-owned factories in the United States, for example, produce 11 percent of all cars and light trucks sold here.

The new consensus represents a shift from traditional U.S. views on foreign investment, one of the three administration officials said. For decades, the federal government backed U.S.-owned companies in setting trade policy and other goals, whether their factories were at home or abroad.

The top administration officials agreed that the federal government's top priority should be to encourage American-owned companies with their factories in the United States. But officials decided that the second-place priority should be to help foreign-owned companies with their factories in the United States, the administration official said.

The interests of overseas factories belonging to American-owned companies would be an even lower priority.

Last Wednesday's consensus represented an accommodation between Labor Secretary Robert B. Reich and Laura D'Andrea Tyson, the head of the Council of Economic Advisers, who took opposite positions during their academic careers on whether the nationality of a company's owners mattered.

In addition to Ms. Tyson and Mr. Reich, the meeting included U.S. Trade Representative Mickey Kantor; Robert E. Rubin, the coordinator of the National Economic Council; and Commerce Secretary Ronald H. Brown.

Each of the five officials also brought a single deputy, and the deputies later briefed the staff of the National Economic Council at the White House.

The compromise will be used to draft a road map for trade and commerce officials in deciding which battles to fight and where to apply scarce resources for aid to exporters. More broadly, it represents a reordering of priorities that will affect a range of issues in U.S. trade policy and export promotion for the rest of the Clinton administration.

A Clinton administration official who insisted on anonymity said that last Wednesday's meeting also included a discussion of the difficulties of putting the philosophical compromise into policy terms.

Participants at the meeting pointed out that it was difficult to determine what a U.S. company is now that joint ventures and international stock investors mean that a company may have many owners in many countries, the official said.

The participants also discussed the difficulty of deciding how to regard an American-owned company with factories both in the United States and overseas.

"It's a big issue that goes through a lot of our policy-making," the official said.

As a result of the meeting, an administration policy paper is now being rapidly drafted by officials from several agencies, another administration official said.

The policy paper will set guidelines for choosing the foreign markets the United States will try to open, the official said.

The Commerce Department and other federal agencies will use the same guidelines in determining which companies to help with information and financing for exports, the official said.

Last Wednesday's consensus was reached at an informal meeting that lasted an hour and a half at Mr. Kantor's office.

Because a few agencies, notably the Treasury Department, were not represented at the meeting, the understanding reached by the five administration officials is still subject to a formal interagency review.

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