Subcommittee Examines CFIUS
Washington,
December 14, 2017 -
The Subcommittee on Monetary Policy and Trade held a hearing today to examine the operations and challenges of the multi-agency Committee on Foreign Investment in the United States (CFIUS). The panel examines proposed foreign investments in the U.S. and can advise the president to block deals on national security grounds.
“The statute under which CFIUS operates has not been updated in a decade, and clearly we should think about modernizing it,” said Subcommittee Chairman Andy Barr (R-KY). “This hearing is the beginning of the Committee’s study of CFIUS and will be followed by further hearings soon. In considering any reforms, the Committee will seek to ensure that CFIUS has the tools and resources it needs to examine foreign investment, while at the same time maintaining a welcoming investment climate so that U.S. companies have the capital needed to grow.”
Key Takeaways
- The free flow of capital is a bedrock tenet of the United States economy.
- While foreign investment can be a force for good, it must not be welcomed unthinkingly. Investment that might weaken the U.S. is not good or welcomed; it must be guarded against.
- The statute under which CFIUS operates has not been updated in a decade and there should be serious consideration to modernize it.
Topline Quotes from Witnesses
“Any analysis of foreign direct investment should begin by recognizing its important contribution to the U.S. economy. My former boss, then Treasury Secretary Baker, described foreign investment as America’s economic ‘ace in the hole’ because such investment represented a foreign company’s strong vote of confidence in the U.S. market and American workers.” -- The Honorable Robert M. Kimmitt, Senior International Counsel, WilmerHale and former Deputy Secretary and General Counsel, U.S. Department of the Treasury
“The cases coming before the Committee are growing in their complexity, and I firmly believe that certain countries are actually testing the CFIUS process and seeking the gaps to overcome CFIUS. Resources are needed to adequately perform the due diligence on the cases that come before CFIUS in the time frames required by the CFIUS legislation.” -- The Honorable Alan F. Estevez, Deloitte Consulting and former Principal Deputy Under Secretary of Defense for Acquisition, Technology, and Logistics, Department of Defense
“Efforts to reform CFIUS should be undertaken carefully and deliberately. Ensuring fairness, predictability and efficiency in national security reviews must remain tenets of the CFIUS process.” -- Nancy McLernon, President and CEO, Organization for International Investment
“For each possible change in CFIUS’s scope, however, it is vital to weigh the costs. For example, if there is even a small expansion in the scope of CFIUS’s review authority, then some companies may be less willing to invest in the United States with the actual or perceived extra burden and time involved in closing a transaction, particularly if there is not a significant expansion in staff. Will investing in other countries become more desirable as a result of any changes? With every expansion in scope, there will be a corresponding and exponential expansion in burdens and costs generally. More regulations lead to more words, which leads to more analyses of those words in novel fact patterns, leading to more filings, more reviews, more mitigation agreements, and on and on.” -- The Honorable Kevin J. Wolf, Partner, Akin Gump Strass Hauer & Feld LLP, and former Assistant Secretary of Commerce for Export Administration, U.S. Department of Commerce
