What are the U.S. policy implications of extraterritorial application of U.S. economic legislation?
Many pieces of U.S. economic legislation apply to operations and transactions of U.S. firms outside of the United States. They also apply to transactions of foreign corporation outside of the U.S. on various jurisdictional grounds.
Transactions subject to extraterritorial U.S. regulation and prosecution include among others global mergers, corruption of foreign government officials, taxation of foreign income of U.S. firms, reporting foreign bank holdings of U.S. nationals, participation in foreign government boycotts, securities violations (disclosure and inside trading), rules concerning commodity trading, antitrust violations such as price-fixing, violation of export and reexport controls, trade sanctions including financial transactions, and corporate governance especially as to firms listed on public markets within the U.S.
So what is the impact of all this legislation as to foreign transactions and foreign actors? It’s hard to say. But what is amazing is that the U.S. still remains the number one location for foreign investment.
The answer is somewhat unclear as to the competitiveness of U.S. firms abroad. However, it should be noted that U.S. multinational corporations are thriving with huge amounts of retained earnings in both the U.S. and abroad. (The same can’t be said for the U.S. government or economy.)