Committee on Foreign Investment in the United States


The Committee on Foreign Investment in the United States is an inter-agency committee of the United States Government that reviews the national security implications of foreign investments in U.S. companies or operations. Chaired by the United States Secretary of the Treasury, CFIUS includes representatives from 16 U.S. departments and agencies, including the Defense, State and Commerce departments, as well as the Department of Homeland Security.
CFIUS was first established by President Gerald Ford's in 1975, initially to study foreign investment. But in the 1980s, fear of Japanese investment led Congress to pass the Exon–Florio Amendment in 1988, which empowered CFIUS to reject deals. From 2013–2015, 20% of CFIUS's cases have to do with investment from China. CFIUS does not acknowledge which deals are under review, does not require the involvement of any of the parties of a deal, and does not publicly announce its findings.

Process

All companies proposing to be involved in an acquisition by a foreign firm are supposed to voluntarily notify CFIUS, but CFIUS can review transactions that are not voluntarily submitted.
CFIUS' primary concern in most reviews is that technology or funds from an acquired U.S. business might be transferred to a sanctioned country as a result of being acquired by a foreign acquirer.
CFIUS reviews begin with a 45-day decision to authorize a transaction or begin a statutory investigation. If the latter is chosen, the committee has another 45 days to decide whether to permit the acquisition or order divestment. Most transactions submitted to CFIUS are approved without the statutory investigation. However, in 2012 about 40% of the 114 cases submitted to CFIUS proceeded to investigation.
CFIUS provides close scrutiny to acquisitions of critical infrastructure, including public health or telecommunications, among others.
CFIUS has looked at the "restrictions on sale of advanced computers to any of a long list of foreign recipients, ranging from China to Iran." CFIUS reviews even deals with firms from U.S. allies, such as BAE Systems' early-2005 acquisition of United Defense. This and the vast majority of transactions submitted to CFIUS are approved without difficulty. But at least one deal has been called off when CFIUS began to take a closer look.

History

In 1975, President Ford created the Committee by. It was composed of the Secretary of the Treasury as the chairman, Secretary of State, Secretary of Defense, Secretary of Commerce, the Assistant to the President for Economic Affairs, and the Executive Director of the Council on Foreign Economic Policy. The Executive Order also stipulated that the Committee would have "primary continuing responsibility within the Executive Branch for monitoring the impact of foreign investment in the United States, both direct and portfolio, and for coordinating the implementation of United States policy on such investment." In particular, CFIUS was directed to:
  1. arrange for the preparation of analyses of trends and significant developments in foreign investments in the United States;
  2. provide guidance on arrangements with foreign governments for advance consultations on prospective major foreign governmental investments in the United States;
  3. review investments in the United States which, in the judgment of the Committee, might have major implications for United States national interests; and
  4. consider proposals for new legislation or regulations relating to foreign investment as may appear necessary.
In 1980, President Jimmy Carter added the United States Trade Representative and substituted the Chairman of the Council of Economic Advisers for the Executive Director of the Council on International Economic Policy by.
In 1988, the Exon–Florio Amendment was the result of national security concerns in Congress caused by the proposed purchase of Fairchild Semiconductor by Fujitsu. The Exon-Florio Amendment granted the President the authority to block proposed mergers, acquisitions, and takeovers that threaten national security. In 1988, President Ronald Reagan added the Attorney General and the Director of the Office of Management and Budget by.
Reagan also delegated the review process to the Committee on Foreign Investment in the United States in the same Executive Order, utilizing the statutory authority the U.S. Congress enacted to enable the President to review foreign investments, in the form of Exon-Florio Amendment.
In 1992, the Byrd Amendment required CFIUS to investigate proposed mergers, acquisitions, and takeovers where the acquirer is acting on behalf of a foreign government and affects national security. In 1993, President Bill Clinton added the Director of the Office of Science and Technology Policy, the National Security Advisor, and the Assistant to the President for Economic Policy by. In 2003, President George W. Bush added the Secretary of Homeland Security by.
The Foreign Investment and National Security Act of 2007 established the Committee by statutory authority, reduced membership to 6 cabinet members and the Attorney General, added the Secretary of Labor and the Director of National Intelligence, and removed 7 White House appointees. In 2008, President Bush added the United States Trade Representative and the Director of the Office of Science and Technology Policy by implementing the law. FINSA requires the President to conduct a national security investigation of certain proposed investment transactions, provides a broader oversight role for Congress, and keeps the President as the only officer with the authority to suspend or prohibit mergers, acquisitions, and takeovers.
In 2018, President Donald Trump signed the Foreign Investment Risk Review Modernization Act, which granted CFIUS new powers over particular types of FDI that mainly concern Chinese investors. These include real estate investing, areas where minority investment through private equity provide access to US tech companies' business information, and US-Chinese joint ventures. CFIUS also gained more appropriations, staffing, authority to enforce a longer review period, and formalizes more thorough material agreement disclosure.

Opinions on the Committee

In February 2006, Richard Perle gave his opinion on CFIUS when he related to CBS News his experience with the panel during the Reagan administration: "The committee almost never met, and when it deliberated it was usually at a fairly low bureaucratic level." He also added, "I think it's a bit of a joke if we were serious about scrutinizing foreign ownership and foreign control, particularly since 9/11."
Others emphasize the crucial role that foreign direct investment plays in the U.S. economy, and the discouraging effect that heightened scrutiny may cause. Foreign investors in the United States, much like U.S. investors elsewhere, bring expertise and infusions of capital into often-struggling sectors of the U.S. economy. In a February 2006 interview with the New York Times, another former Reagan administration official, Clyde V. Prestowitz Jr., noted that the United States "need a net inflow of capital of $3 billion a day to keep the economy afloat.... Yet all of the body language here is 'go away.'"

Notable cases

CFIUS Notifications and Investigations, 1988–2018
YearNotificationsInvestigationsNotices
withdrawn		Presidential
decision
198814101
1989204523
1990295624
1991152101
1992106211
199382000
199469000
199581000
199655000
199762000
199865220
199979000
200072101
200155110
200243000
200341211
200453220
200565220
20061117192
20071386150
200815523230
2009652570
20109335120
20111114060
201211445221
2013974880
201414751120
201514366130
201617279211
2017237172671
2018229158641