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DOCUMENT RESUME
02524 - [A1672679]
U.S. Direct Investment in South America's Andean Common Market.
ID-76-88; B-172255. June 7, 1977. 38 pp. + 10 appendices (94
pp.).
Report to the Congress; by Elmer B. Staats, Comptroller General.
Issue Area: International Economic and Military Prograus- Direct
Inve3tment Capital Flows (606).
Contact: International Div.
Budget Function: International Affairs: International Financial
Programs (155).
Organiiation Concerned: Department of Commerce; Department of
t?ie Treasury; Department of State; Library of Congress:
Congressional Research Service; Overseas Private Investment
Corp.
Congressional Relevance: House Committee on Tnterstate and
roreign Commerce; Senate Committee on Commerce; Congress.
Authc'Uty: Foreign Investment Study Act (P.L. 93-479).
Inte:',ational Investment Survey Act of 1976 (P.L. 94-472);
S. 2839 (94th Cong.). Bretton Woods Agreement Act; Executive
Order 10033.
Through '.n' estm.rt incentives, such as favorable tax
policies and investment insurance, the Government has sought to
encourage the flow of U.S. direct investment to developing
countries. U.S. policy has been to encourage econcic
integration mechanisms, such as common markets, one of these
being the Andean Common Market (AWCOM), whose principal
objective is to develop the Andean area. Findings/Conclusions:
The foreign investment code adopted by ANCOM was intended as an
investment ncentive by providing a uniform set of rules within
%-aer countries, but its exception and escape clauses allow
members to vary the rules as necessary. Chile, however, could
not work within the structure and withdiew, which introduced
uncertainties that the U.S. investor must consider. Trade and
U.S. economic assistance ties remain strong between the onited
States and the Andean countries, but U.S. direct investment is
diminishing, due to expropriation, divestment, and unfavorable
reaction to Andean investment restrictions. Manufacturing and
service types of investments predominate because of the
possibility of natural resources investments being expropriated.
Adequate data were not available for an indepth assessment of
tax preferences as inducements. U.S. firms continue to have an
impact on Andean countries, but private capital diminished,
causing a need for more borrowing. U.1. firms provide jobs at
high wages, and do not, necessarily, purchase materials from
U.S. sources. Technology transfer is hindered by safeguards and
other impediments. The largest percentage of U.S. investment
will probably continue to be in mining and high-technology
manufacturing areas. Othor foreign investors have received
k.'-, :. acceptance because of their willingness to engage in](ViewImageLocal?handle=hein.gao/gaobaacjm0001&div=1&collection=&method=preview&ext=.png&size=3)