House advances foreign investment modernization act

The U.S. House of Representatives overwhelmingly advanced legislation Tuesday that updates the Committee on Foreign Investment in the United States (CFIUS) in its ability to improve the foreign investment review process.

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The Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA), sponsored by Rep. Robert Pittenger (R-NC), was approved by a vote of 400-2.

CFIUS is a cross-agency panel that screens proposed foreign investments for national security risks. It has not been updated since 2007 and requires modernization to keep up with the increasing number of foreign investment deals.

“This bill is a comprehensive reform of the Committee on Foreign Investment in the United States (CFIUS) – the first update of its kind in over a decade,” House Financial Services Committee Chairman Rep. Jeb Hensarling (R-TX) said. “CFIUS is authorized to review foreign investment transactions that may threaten our national security, and although these authorities have been wielded carefully, Congress must remain vigilant when delegating additional powers that may have far-reaching effects.”

Specifically, the bill addresses potential national security threats, particularly those from China, by closing loopholes in CFIUS’s jurisdiction. The bill also seeks to give U.S. businesses and foreign investors legal and regulatory certainty by clarifying terms involving technologies and infrastructure.

“For over two years, we have fought for CFIUS reform and the implementation of stronger policies to combat strategic and disruptive Chinese activities,” Pittenger said. “Today, I am grateful that the House is taking action on this issue. This landmark legislation will take enormous steps to improve our foreign investment review process to prevent further transfers of military applicable technologies to the Chinese government.”

Foreign investment added $894 billion in value to the U.S. economy in 2016. However, with a surge of investment by the Chinese in U.S. assets resulting in the theft of American intellectual property, it is critical for Congress to modernize both CFIUS and U.S. export controls, and our export controls, Rep. Andy Barr (R-KY) said.

“We can do this by closing loopholes and preventing adversaries from obtaining access to sensitive personal data and critical technology or gaining influence over the management or operations of critical infrastructure in the United States,” Barr said. “At the same time, preserving an open investment climate is critical to American competitiveness and economic strength, which is itself a component of American national security.”