For U.S. Firms Overseas, Every Handshake Has a Pinch of Politics : Analysis: Increasingly, foreign governments and human rights groups try to influence business deals.
China’s decision this week to link a $1-billion auto deal to diplomatic feuds with the United States illustrates a changing dynamic on the international stage: the sharply increased vulnerability of U.S. commercial interests to efforts to influence U.S. policy abroad.
Increasingly whipsawed by foreign governments, human rights groups and members of Congress, U.S. corporate interests are paying the price for their heightened visibility as tools of a post-Cold War foreign policy that is driven significantly by trade and economic interests instead of traditional issues of national security, analysts say.
U.S. companies have grown increasingly concerned that they could become victims of the rapidly deteriorating relationship between the United States and China, which was triggered by the Clinton Administration’s decision to allow Taiwanese President Lee Teng-Hui to visit the United States last month.
The Lee flap appears to have jeopardized prospects for U.S. auto makers Chrysler Corp. and Ford Motor Co. to win a $1-billion auto manufacturing contract in China, which is now said to favor German firm Mercedes-Benz instead.
Meanwhile, the U.S.-China tensions--which were further aggravated by China’s recent detention of U.S. human rights activist Harry Wu and new allegations of missile technology sales to Iran--have fueled a wave of anti-Chinese sentiment in Congress. Support is building for restrictions on U.S. commercial activity with China, including the revocation of its most-favored-nation trade status.
“The business community is alarmed at the number of resolutions being floated on the Hill that could seriously further undermine the U.S.-China relationship,” said Myron Brilliant, Asia specialist for the U.S. Chamber of Commerce.
There are other hot spots in Asia.
On Tuesday, Sen. Mitch McConnell (R-Ky.) is expected to introduce legislation that would impose stiff sanctions on U.S. trade and investment in Myanmar, formerly known as Burma, because of human rights violations by the country’s military leaders. Among those potentially affected: Los Angeles-based Unocal, partner in a proposed $1-billion pipeline project there.
Vietnam is expected to be another flash point for human rights concerns as the Clinton Administration nears a decision to normalize relations, clearing the way for stepped-up U.S. corporate investment and trade. The advocacy group Human Rights Watch will push the U.S. government for guarantees that any increased economic or trade privileges for Vietnam will be conditioned on greater political and religious freedoms.
“Human rights cannot be eliminated from the equation if the U.S. wants to further its commercial objectives or its human rights objectives,” said Mike Jendrzejczyk, the group’s Washington lobbyist.
The U.S. Chamber of Commerce is concerned about the recent increase of congressional measures that would restrict U.S. commercial activities abroad in an effort to promote social or political reforms, according to Brilliant. U.S. companies argue that they are agents for positive change in China and other developing countries, and already operate under much stiffer labor and environmental standards than exist in most countries.
“Companies don’t want to be caught in the day-to-day issues that exist between governments,” Brilliant said. “Companies are in the business of doing business. Their goal is to create exports abroad and promote jobs for Americans.”
Such pressures have been felt keenly at Boeing Co., which has experienced the wrath of the Chinese government during periods of tension and is now struggling with U.S. restrictions on investment in Vietnam. Now, as the United States seeks to normalize relations with its former enemy, Boeing and other U.S. firms fear a new set of obstacles linked to human rights.
Getting caught in political cross-fire is a risk U.S. companies have always taken when they ventured abroad. But the stakes have escalated dramatically as the United States pays more attention to its overseas commercial relationships, corporations become more dependent on the global economy for profits, and foreign governments begin flexing their muscles on the international stage.
Nicholas Lardy, a specialist on the Chinese economy, said it is difficult to tell how large a role politics is playing in the current U.S.-China trade relationship. But he said the “low ebb” of the relationship could easily lead to a delay in key contracts being awarded while Chinese officials see which way the wind blows.
“If things get worse in the next six months, it is politically less risky for people making decisions to tilt at the margins towards the countries with whom relations seem to be relatively good,” the University of Washington professor said.
Simon Billenness of the Franklin Research & Development Corp., a Boston firm specializing in socially responsible investing, said the growing importance of U.S. companies in developing countries means they have an increased responsibility to promote democracy and human rights.
“If they’re going to enjoy access to new markets, if they’re going to take over industries that are being privatized, then they’re the ones who are in the hot seats,” he said.
* ADDED TENSIONS: Detention of activist may jeopardize Beijing’s most-favored-nation trade status. A6
