The goal of safeguarding U.S. public policy from undue foreign influence is critically important to our democracy. But U.S. employees of a Canadian auto-parts company or a German grocery chain should not be lumped together with an agent of a foreign government. International companies are imperative to America’s development in a variety of ways:
- Supporting Millions of High-Quality Jobs: International companies employ eight million U.S. workers, providing compensation that is 10 percent higher than the economy-wide average. In fact, over the past five years of data, international companies have created nearly 400,000 new manufacturing jobs in the United States, compared to an overall loss of 223,000 U.S. manufacturing jobs during the same time.
- Fueling American Innovation: American scientists and engineers employed by international companies are leading our nation’s innovation advantage. International employers spend more than $71 billion on research and development activities, or 13 percent of America’s private-sector R&D.
- Making America’s Economy More Resilient: International companies help broaden the U.S. economy, open new markets and give other countries a stake in America’s economic success, which is good for the U.S. economy and global stability.
FARA’s Origins: The Foreign Agents Registration Act (FARA) was enacted in 1938 in response to the rise of foreign propaganda, particularly from Nazi Germany. The law aimed to ensure transparency by requiring agents representing foreign principals to register with the U.S. government, disclose their activities, and submit periodic reports.
While it has been modified several times, FARA has remained focused on targeting foreign propaganda and covert influence, not hindering legitimate business operations of international companies that create jobs and contribute to the U.S. economy.
Congressional Intent Is Clear: FARA requires the public disclosure of those who represent foreign interests. Congress has consistently reaffirmed a fundamental distinction between the Lobbying Disclosure Act (LDA) and FARA when it comes to international companies’ advocacy reporting.
As the Senate noted in 1997 when it passed a LDA technical corrections bill, “[Congress’s] intention is to reaffirm the bright line distinction between governmental and non-governmental representations. Agents of private commercial foreign principals will be exempt from FARA requirements so long as they register under the LDA.”
The Importance of the LDA Exemption: Requiring U.S. employees of domestic subsidiaries to file as a “foreign agent” and publicly disclose copies of every “informational material” they disseminate – from spreadsheets to text messages – would create a clear and arbitrary disadvantage for many major U.S. employers.
Elected officials would be less inclined to visit facilities and meet with employees in their district, greatly hampering the ability of American workers to raise policy concerns with their elected representatives.
Additionally, registered lobbyists of domestic subsidiaries already disclose their company’s international affiliations and advocacy. As required by Section 4(b)(4) of the Lobbying Disclosure Act (LDA), Question 14 of the Lobbying Registration Form (LD-1) – under a bold heading titled “FOREIGN ENTITIES” – requires broad disclosure of foreign-parent corporations and other foreign entities affiliated with the registrant.
The LDA exemption recognizes that foreign-affiliated businesses operating in the U.S. should not be treated as agents of foreign influence but rather as legitimate participants in the American economy.
The ‘Commercial Exemption’ Is Insufficient: In an undated letter sent to Senate Foreign Relations and Judiciary Committee leaders made public late last year, the U.S. Department of Justice exceeded what was asked of it and openly lobbied for the elimination of LDA protection, casually asserting that the “commercial exemption” would be sufficient for subsidiaries “engaged in ordinary commercial activities.”
Even an elementary example of global commerce disproves that assertion. Imagine a domestic subsidiary of a popular toy company raising concerns with their elected U.S. representatives about a proposed retaliatory tariff on imported plastic building blocks, that effort should meet FARA’s Commercial Exemption standard of acting “in furtherance of the bona fide trade or commerce” of the U.S. subsidiary. But to the extent that work aligns with an effort by a foreign government to oppose the same tariff for broader reasons, it could be found to “directly promote the public or political interests” of that foreign government, thus exposing that major U.S. employer to potential FARA prosecution.
No Apparent Abuses: While FARA-related prosecutions are uncommon, recent high-profile indictments and DOJ’s increased attention to non-filers demonstrate that prosecution under FARA is quite possible and that the regulated community has redoubled its compliance efforts accordingly.
In fact, the absence of even any credible controversies (much less actual violations) involving international businesses reflects the absence of any basis for radically reshaping FARA’s scope or its application to commercially-oriented lobbying activities of domestic subsidiaries. Therefore, any efforts to update FARA should focus on strengthening its enforcement and targeting agents of foreign governments.