The House Subcommittee on Digital Commerce and Consumer Protection held a hearing last year to examine whether the Committee on Foreign Investments in the United States (CFIUS) process for reviewing investments needs updating.
Subcommittee Chairman Bob Latta (R-OH) said CFIUS must strike a balance between supporting investment and strengthening national security.
“While more foreign investment in America is generally a good thing when more jobs are created for our citizens, concerns have arisen that some other investments could be the work of foreign governments that want access to advanced U.S. technology or infrastructure,” Latta said. “CFIUS is the organization charged with examining who is investing in national security-related U.S. companies, and why. Today, we are going to examine whether CFIUS has the proper tools to do that job, what tasks are already assigned to other government bodies—including export control agencies—and what steps are already being taken through regulation to reform CFIUS.”
Richard Ashooh, assistant secretary, export administration, U.S. Department of Commerce, discussed CFIUS’s ability to keep up with emerging technology challenges.
“This is a critical issue for us. We’re spending a great deal of our resources and focus on adapting to the trend you just identified. We have technical advisory committees that include private sector individuals and companies that are those early-stage innovators. We are relying on them, in fact, we reorganized them around emerging technologies,” Ashooh said.
The hearing also featured a discussion of the Foreign Investment Risk Review Modernization Act of 2017 (FIRRMA), a bill introduced to improve investment security.
“The United States must address this serious and growing challenge in a comprehensive manner that goes well beyond the scope of this hearing. Such a strategy should certainly include enhancing our military and cyber capabilities, upgrading our export control system, and modernizing CFIUS, among other elements. The FIRRMA bill is one important step,” Clay Lowery, managing director of Rock Creek Global Advisors, said. “That said, Congress should review and revise the language in the bill to clarify its intent. For instance, the inbound investment provision should make clear that the concern about minority investments in critical technology or critical infrastructure companies is not about the companies per se, but about any critical technology associated with those companies. I also am concerned that the FIRRMA bill appears to exempt CFIUS from judicial review for even procedural matters – potentially limiting due process and review of the government’s actions.”.
Derek Scissors, the resident scholar at the American Enterprise Institute, said some approaches to CFIUS reform do not seem to take the Chinese threat to national security seriously.
“There has been discussion of time limits on a reform bill, as if the People’s Republic of China will change its mind about acquiring foreign technology in 2026. Rather than sun-setting CFIUS reform, the emphasis should be on speeding it up, given that technology loss has occurred for many years and the harm to national security is ongoing,” Scissors said.