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bill Progress


  • Not enacted
    The President has not signed this bill
  • The senate has not voted
  • The house Passed June 26th, 2018
    Roll Call Vote 400 Yea / 2 Nay
      house Committees
      House Committee on Financial Services
      House Committee on Energy and Commerce
      Digital Commerce and Consumer Protection
      House Committee on Oversight and Government Reform
      House Permanent Select Committee on Intelligence
      House Committee on Foreign Affairs
    IntroducedMay 16th, 2018

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What is it?

This bill — known as FIRRMA — would change how the Committee on Foreign Investment in the United States (CFIUS) operates to strengthen the government’s ability to protect national security and enhance confidence in the United States’ longstanding open investment policy. It would do this by expanding the scope of transactions reviewable by CFIUS to more effectively address national security concerns that fall outside the current scope of CFIUS review.

The bill would allow CFIUS — which was last updated 10 years ago and last substantially updated during the Ford Administration — to adjust its procedures to ensure that the process is tailored, efficient, effective, and administrable.  Additionally, it would require an assessment of the resources necessary for CFIUS to sustain its critical work, and would both establish a CFIUS Fund and permit filing fees to help achieve that end.

CFIUS would be required to look at entire industries or sectors, rather than individual proposed acquisitions or takeovers on a case-by-case basis. Additionally, the bill would expand CFIUS jurisdiction to minority position investments, real estate transactions near military bases, and other sensitive national security facilities. It would also update CFIUS’ definition of “critical technologies” to include emerging technologies; add new national security factors to the review process; and strengthen “critical infrastructure” protections.

Finally, this bill would create a “safe list” of certain allied countries. Investments from companies and investors from “safe list” countries would be exempt from CFIUS review.

The bill's full title is the Foreign Investment Risk Review Modernization Act of 2018.

Impact

U.S. companies seeking foreign investment; foreign investors; and the Committee on Foreign Investment in the United States.

Cost

A CBO cost estimate for this bill is unavailable.

More Information

In-DepthRep. Rob Pittenger (R-NC) introduced this bill as part of a bipartisan, bicameral legislative effort to modernize the national security review of potential foreign investments in the United States. Upon introducing this bill in November 2017, Rep. Pittenger said:

“China is buying American companies at a breathtaking pace.  While some are legitimate business investments, many others are part of a backdoor effort to compromise U.S. national security. For example, China recently attempted to purchase a U.S. missile defense supplier using a shell company to evade detection.  The global economy presents new security risks, and so our bipartisan legislation provides Washington the necessary tools to better track and evaluate Chinese investment.”

In January 2018, Rep. Pittenger added:

“The United States has always maintained technological superiority over our enemies. This decisive advantage is now threatened by adversarial states, including China, seeking to utilize cloaked financial investment as a vehicle for stealing our technology and infiltrating our critical infrastructure. We cannot continue to stand still even after adversarial nations have already acquired vital military technology from our own companies. This common sense, bipartisan legislation streamlines and bolsters the CFIUS review process to protect our military, our economy, and hardworking American families.”

The Trump administration endorses this bill and its Senate counterpart as legislation that achieves the twin aims of protecting national security and preserving the United States’ longstanding investment policy. Key administration officials, including Treasury Secretary Mnuchin, Attorney General Sessions, and Defense Secretary Mattis, have also expressed their support for this bill.

The U.S. Chamber of Commerce, United States Council for International Business, National Foreign Trade Council (NFTC), Business Roundtable, and Computing Technology Industry Association (CompTIA) are among the organizations that support the current version of this bill

In a letter to the House Financial Services Committee and Senate Banking Committee these organizations expressed their support for “the broad consensus that the Committee on Foreign Investment in the United States (CFIUS) should focus exclusively on assessing the national security risks of inbound investments, while export controls should address national security risks associated with outbound technology transfers to countries of concern.”

Opponents of the bill argue that this bill would produce overly broad changes, making the government too involved in private economic decisions in a way that fails to truly protect national security while putting private industry at risk. The Brookings Institution’s Theodore H. Moran argues:

“These ‘reforms’ of CFIUS constitute a fundamental departure from the committee’s traditional practice of narrowly identifying national security threats arising from foreign acquisitions, without excluding foreign acquisitions across entire industries, sectors, or areas of the U.S. domestic economy that might reduce the U.S. technological and industrial advantage vis-à-vis another country… U.S. national interests would be best served by maintaining CFIUS’s narrow focus on specific threats that might arise from particular acquisitions within industries. Excluding entire industries, sectors, or areas of the U.S. economy from foreign acquisitions — with zero-sum attention to whether such acquisitions might erode U.S. technological or industrial advantage vis-à-vis the home country of the acquiring firm — could weaken U.S. competitiveness.”

There is one cosponsor of this bill, who is also a Republican. There is a companion bill in the Senate, S.2098, sponsored by Sen. John Cornyn (R-TX)A similar version of this bill introduced in the House last year by Rep. Pittenger, H.R. 4311, attracted 50 bipartisan cosponsors (42 Republicans and eight Democrats).


Of NoteCFIUS was first established in 1975 by Executive Order 11858 to respond to then-growing concerns that the Organization of the Petroleum Exporting Countries (OPEC) investments in U.S. assets were politically motivated. Operating from an understanding that foreign investments in U.S. assets could have major negative national security implications, the Committee was accordingly charged with analyzing trends of foreign investment and considering proposals for changes in the law(s) governing foreign investments in U.S. assets.

Throughout the 1970s and 1980s, concerns over foreign investment in the U.S. focused on hard assets such as ports and energy infrastructure (and semiconductors, to a lesser extent), and such sales’ and investments’ impacts on the U.S. economy.

In 1988, Congress passed the “Exon-Florio” provision of the Defense Production Act of 1950 (DPA), enacted as Section 721 of the DPA, reflecting increased concerns with foreign investments in certain kinds of U.S. firms (at that time, the concern was around Japanese investors). This provision authorized the President to block foreign acquisitions that threatened national security, provided that existing U.S. law did not adequately protect national security already, and that there was credible evidence that a transaction would indeed impair national security. Subsequently, the President’s authority to administer the provision was delegated to CFIUS through Executive Order 12661.

Following Section 721’s enactment, the Treasury Department issued regulations which largely remain in place today. These regulations allowed parties in CFIUS-regulated transactions to provide a “notice” to seek clearance for the transaction, and as an alternative to the Committee seeking to stop the transaction.

A few years later, the 1992 “Byrd Amendment” to Exon-Florio required CFIUS to investigate proposed mergers, acquisitions, or takeovers where the foreign acquirers was controlled by, or acting on behalf of, a foreign government.

At present, CFIUS’ mandate is to consider whether a transaction subject to the Committee’s jurisdiction — a “covered transaction” — may threaten the national security of the United States. For transactions posing such a threat, CFIUS must either to identify acceptable measures the transacting parties can take to mitigate that threat, or recommend that the President block the threatening transaction.


Media:

Summary by Lorelei Yang

(Photo Credit: Jirus Malawong / iStock)

AKA

Foreign Investment Risk Review Modernization Act of 2018

Official Title

To modernize and strengthen the Committee on Foreign Investment in the United States to more effectively guard against the risk to the national security of the United States posed by certain types of foreign investment, and for other purposes.

    It is clear from the Trump family’s business dealings that more oversight is needed in the case of foreign investing, which on both sides of the aisle surely leads directly to policy change. If the point of representative democracy is to support citizens, other countries should not be able to so clearly and blatantly speak louder than American citizens with their dollars. Money shouldn’t talk in politics, and this is one of many critical fronts with which to begin.
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    Something doesn’t smell right here. It may give political entities more leverage in who gets in or not rather than “national interest.” I would put a moratorium on this kind of legislation until the intentions are clear. It sounds like something people will “lap up” as part of “America First” but it may be suspect. How do you get to be a “safe list” country? Trump likes you today? What about tomorrow if you criticize something he says? Many of these comments indicate people don’t understand this bill which is good enough to say clarify this, say what it really does, and tell us who gets the say so before passing it. It doesn’t sound like it’s about security, it’s about preference. In other words, is this trade war or national security? Sounds like trade war disguised as national security. Since I posted this, it looks like it’s well on its way. If it says “security,” it’s likely to get top priority. I just hope the “security” is impartial to all potential enemies, not just the enemy de jour which I noted above. China is the enemy de jour? For instance last year the Port Arthur refinery was sold completely to Saudi Arabian interests. Not a whimper was heard. Remember how much oil they control, 1973-1974 and the resulting damage that caused. A friend to the administration? That’s still what I fear the most about this. Political expediency.
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    Ummm...after the Obama administration and HRC sold 20% of our country’s uranium supply to Russia—with zero benefit to the US—I’d say, decidedly so! Plus our wonderfully astute legislators have sold out our entire country for decades to China and other foreign countries that, at their core, will do anything to undermine our way of life. Was it Mao that said that he would, ‘...hang us with our own rope?’ And that is why our system of capitalism and our bill of rights have been exploited by these countries...and both sides of the aisle are culpable in allowing this to happen. That is why Trump, for the most part, is willing to take the slings and arrows on numerous issues. He has a long game that so many libs, and cowardly Republicans, are not used to. For those persons, they look at what is good for their elitist selves, and the future of our country be damned. Well, no more, folks, no more!
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    Why is this bill focused on China? Clearly we need a closer examination on forgein investment in the trump organization.
    Like (22)
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    This bill creates a hammer when a scalpel is necessary. It’s almost exclusive focus on China is sure to feed into the trade war Trump has started and further hurt the American consumer as well as American business. Ah, the dangers of a narcissist with poor business skills and no concept of history.
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    Yes it’s a matter of national security, this should have been a concern long ago.
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    H.R. 5841 Foreign Investment Risk Review Modernization Act I’m strongly in support of and recommend passage often bill H.R. 5841 - Foreign Investment Risk Review Modernization Act of 2018 (AKA FIRRMA ) Which would change how the Committee on Foreign Investment in the United States (CFIUS) operates to strengthen the government’s ability to protect national security and enhance confidence in the United States’ longstanding open investment policy. It would do this by expanding the scope of transactions reviewable by CFIUS to more effectively address national security concerns that fall outside the current scope of CFIUS review. Most notably, the committee would be required to look at entire industries or sectors, rather than individual proposed acquisitions or takeovers on a case-by-case basis. Supporters argue the bill eliminates loopholes and other issues that allow other nations to — in their view — exploit businesses headquartered in the United States. Foreign investment in U.S. companies can have significant national security implications if the companies make technologies with defense applications — and it serves the U.S. national interest to ensure that such technologies do not fall into the hands of hostile states. 6*26*18 .....
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    Trump and his associates have shown us that we need to do a better job at tracking the involvement of outside governments and our country.
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    Ignorant clumsy isolationism may be popular with The Mad King and his retinue, but it's bad for everyone else.
    Like (10)
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    Only because our President is a thief.
    Like (9)
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    Without a doubt. Perhaps trump & friends might have been charged with money laundering if following foreign investments was watched more carefully.
    Like (9)
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    Yes, yes, yes. I am all for foreign investment but, we should be very certain who is doing the investing.
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    Real estate in prime markets are seeing home prices driven extremely high to where normal, hard-working Americans can't afford to buy property due to foreign investments. American homebuyers get outbid in $ amount and by cash buyers from China and elsewhere. There needs to be a cap on maximum number of investors who can buy homes rather than American families or even American investors.
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    It isn’t fair the US citizens are barred from investing in foreign countries, but foreigners can do almost anything they’d like in the US. Foreigners take advantage of our openness and also use it for espionage. This is a national security risk!
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    Yes. Russian and Chinese and Israeli and other investments are sometimes used for international organized crime money laundering. And we want to be very cautious with investment in tech and infrastructure. Please. It’s national security risk! Do scrutinize foreign investment and foreign investors more thoroughly.
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    It is clear from the Trump family’s business dealings that more oversight is needed in the case of foreign investing, which on both sides of the aisle surely leads directly to policy change. If the point of representative democracy is to support citizens, other countries should not be able to so clearly and blatantly speak louder than American citizens with their dollars. Money shouldn’t talk in politics, and this is one of many critical fronts with which to begin. We need to take dirty money out of politics. Now.
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    This isn’t reform or security. It’s political expediency. Read the actual legislation. It’s in double-speak. Security? It’s clearly profit. Not all of us are stupid.
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    In case you were not looking, Under Trump we have now exceeded the national debt higher than WWII it is now raising higher than any time ion record. Trump and the republicans tax cut and tariffs is bankrupting America, just like his businesses! This means people on any social programs, like social Security, Medicare, healthcare, food stamps or any social program will be cut, to fund the deficit created by Trump and the Republican Party tax breaks for the corporations and the wealthy! The republicans states and people wanted to make it on their own, they will get too.
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    Foreign Investors are concerned about their money and not the well being of the United States.
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    To me, it looks like the arguments against this bill may very well be arguments that more scrutiny is needed on foreign money going to the pockets of the elected officials
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