Foreign Lobbying through Domestic Subsidiaries

• In Event: Firms, Lobbying, Tariffs, and Policy Outcomes

Abstract

How do foreign firms ensure that their interests are represented in domestic politics? In this paper, I study the practice of foreign firms’ lobbying through domestic subsidiaries in the US. This practice helps foreign firms avoid disclosing their lobbying activities under the rigorous Foreign Agents Registration Act (FARA), and allows US subsidiaries to serve as political agents of their foreign parents who are impacted by US policies. By examining all lobbying reports filed with the Lobbying Disclosure Act (LDA) in 2015 and 2016 on behalf of corporate clients, I find US subsidiaries of foreign firms to lobby intensively on issue areas that impact their foreign parents. Moreover, these subsidiaries tend to lobby more often, and to spend more on lobbying activities than American firms of similar size located in the same industry and state. Foreign direct investment in the US therefore partly serves as a means to buy political influence.

Author

• Jieun Lee, University at Buffalo, SUNY