After a drawn-out presidential campaign fought predominantly on economic grounds, president-elect Barack Obama has pledged policy changes that will impact upon FDI.

The Obama manifesto outlines moves to eliminate all capital gains taxes on start-up and small businesses in order to encourage innovation and job creation. The administration is also poised to make it more difficult for US corporations to shelter overseas income in offshore tax havens. US tax policies will also be updated to encourage investment and job creation.

John Engler, president of Washington lobbying group the National Association of Manufacturers (NAM), welcomed the pledges. “Our country’s high tax costs make it more difficult for manufacturers of all sizes and in all industry sectors to compete in the global marketplace,” he said. “US companies face significantly higher tax rates than their competitors overseas.”

A moratorium on new free trade deals is also expected, with a tougher stance on labour and environmental standards that opens up foreign markets to support high-value US jobs. “America needs a trade policy that, particularly in a period of slower economic growth, promotes fair trade and the ability to sell more around the world,” said Mr Engler.

With two-thirds of the world’s production and consumption taking place outside US borders, the creation of American jobs and an increased standard of living in the US depends more than ever on competing and selling US products around the world, according to Mr Engler. “Fair trade policies, coupled with domestic policies that would boost our competitiveness, such as tax, energy, regulatory, worker training, are critical for our future.”

Mr Obama has pledged that job creation will be his top priority. The most recent figures show that US unemployment rate surged to 6.5% in October from 6.1% the previous month, according the US Department of Labour. Many forecasters expect the unemployment rate to top 8% by the end of 2009.

Other areas in which the Obama administration is planning to institute reforms include an energy policy that balances economic growth with responsible management of US resources and preservation of biological diversity; full funding of basic R&D so that the government can lay the groundwork for the economy’s future success; and the avoidance of regulation that puts a disproportionate burden on small and medium-sized manufacturers, but strengthens institutions dedicated to analysis and review.