US House of Representatives Holds CFIUS Hearing
On Thursday, December 14, 2017, the House Financial Services Subcommittee on Monetary Policy and Trade held a hearing titled “Examining the Operations of the Committee on Foreign Investment in the United States (CFIUS).” The hearing focused on CFIUS’s current effectiveness, the challenges it faces in the current economic environment, and potential improvements to increase its productiveness. In general, much of the discussion focused on the need for additional resources and on H.R.4311, the Foreign Investment Risk Review Modernization Act of 2017 (FIRRMA), a bill introduced by Rep. Robert Pittenger (Republican-North Carolina) that would reform the CFIUS process.
The testifying witnesses generally agreed that existing CFIUS laws strike the right balance in encouraging foreign direct investment (FDI) while also protecting the national security interests of the United States. The witnesses and lawmakers all agreed that it is important for the United States to maintain its reputation of being a desirable place to invest. Throughout the hearing, witnesses suggested that existing law already covers much of the “expansion” proposed under FIRRMA. For example, FIRRMA would add statutory language for CFIUS to consider proximity concerns, but CFIUS already considers the location of a facility in its review of a covered transaction.
Chairman Andy Barr (Republican-New York) asked each panelist to offer one policy recommendation to improve the CFIUS process. All the witnesses stressed the need to provide CFIUS with additional resources. Most discussed the fact that any reform in Congress needs to be broader than just CFIUS, which is just one tool available to the United States to protect its national security. The debate should also include export controls and new mechanisms to identify emerging technologies of concern to US national security interests. According to Chairman Barr, the subcommittee plans to hold a number of additional CFIUS hearings in early 2018.