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1 1 (December 16, 2019)

handle is hein.crs/govbcxw0001 and id is 1 raw text is: FF. ' riE -SE - $rt h ,, . i Updated December 16, 2019 The Committee on Foreign Investment in the United States What is CFIUS? The Committee on Foreign Investment in the United States (CFIUS) is an interagency committee that serves the President in overseeing the national security implications of foreign investment in the economy. It reviews foreign investment transactions to determine if (1) they threaten to impair the national security; (2) the foreign investor is controlled by a foreign government; or (3) the transaction could affect homeland security or would result in control of any critical infrastructure that could impair the national security. The President has the authority to block proposed or pending foreign investment transactions that threaten to impair the national security. What is the Source of CFIUS Authority? CFIUS initially was created and operated through a series of Executive Orders. In 1988, Congress passed the Exon-Florio amendment to the Defense Production Act (50 U.S.C. App sect. 2170), which codified the CFIUS review process due in large part to concerns over acquisitions of U.S. defense- related firms by Japanese investors. In 2007, amid growing concerns over the proposed foreign purchase of commercial operations of six U.S. ports, Congress passed the Foreign Investment and National Security Act of 2007 (H.R. 556 / P.L. 110-49) to create CFIUS in statute. This statute was amended again in 2018 with the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) (Title XVII, P.L. 115-232), The United States is both the largest recipient of foreign investment and the largest foreign investor in the world. What is the Membership of CFIUS? The committee consists of nine members, including the Secretary of the Treasury, who serves as chair, the Secretaries of State, Defense, Homeland Security, Commerce, and Energy; the Attorney General; the United States Trade Representative; and the Director of the Office of Science and Technology Policy. The Secretary of Labor and the Director of National Intelligence serve as ex officio members of the committee. Executive Order 13456 (January 2008) added five White House representatives, including the Director of the Office of Management and Budget and the Assistant to the President for National Security Affairs. The President can also appoint other Executive officers to serve on the committee on a case-by-case basis. lThe CF,,US Re'\6.w Prce,,\ CFIUS's review process is a voluntary system, except in certain cases, of notification by foreign investors. Firms largely comply with the provision, because foreign acquisitions that do not notify the committee remain subject indefinitely to divestment or other actions by the President. (1) Notification. In the first step of the formal review process, notification to CFIUS can follow a 2-track approach, either an expedited declaration (15 days for review) or a written notification (30 days for review; involves foreign persons in which a foreign government has a substantial interest) of a transaction in a U.S. firm involved in specified industries. Declarations and written notices are distinguished according to three criteria: the length of the submission, the time for CFTUS' consideration of the submission, and the committee's options for disposition of the submission. Key CFIUS Requirements. The President can exercise his authority to suspend or prohibit a foreign investment, subject to a CFIUS review, if he finds that (I) credible evidence exists that the foreign investor might take action that threatens to impair the national security (based on nature of threat; vulnerabilities; and consequences); and (2) no other laws provide adequate and appropriate authority for the President to protect the national security. (2) National Security Review. In the second step, the committee is required to conduct a 45-day national security review if (a) the investment threatens to impair the national security of the United States, including homeland security, critical infrastructure, and critical technologies; and (b) the transaction would result in foreign control of a U.S. entity. The Secretary of the Treasury can exempt a transaction from review if he determines that the transaction will not impair the national security. During the 45-day review, the Director of National Intelligence is required to investigate the national security implications of any proposed foreign investment transaction. In a national security review, CFIUS is required to consider 12 specific factors, including (1) domestic production needed for current and projected national defense requirements; (2) the control of domestic industries and commercial activity by foreign citizens; (3) potential sales of military goods, equipment, or technology to a country that supports terrorism or proliferates missile technology or chemical and biological weapons; (4) U.S. technological leadership in areas affecting U.S. national security; (5) critical infrastructure, major energy assets and critical technologies; and (6) such other factors as the President or the committee determine to be appropriate. (3) National Security Investigation. In the third step, if any member of CFIUS determines that a foreign investment transaction threatens to impair the national security, the transaction undergoes a more comprehensive 45-day national security investigation. During this investigation, CFIUS and the transactors can develop and adopt K~:> gognpo goo g , q 'S a X 11LULANJILiN,

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