The Committee on Foreign Investment in the United States (CFIUS) Page: 13 of 70
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The Committee on Foreign Investment in the United States (CFIUS)
process. Prior to this transaction, CFIUS reviews and investigations were portrayed and
considered to be final. As a result, firms were willing to subject themselves voluntarily to a
CFIUS review, because they believed that once an investment transaction was scrutinized and
approved by the members of CFIUS the firms could be assured that the investment transaction
would be exempt from any future reviews or actions. This administrative change, however, meant
that a CFIUS determination may no longer be a final decision, and it added a new level of
uncertainty to foreign investors seeking to acquire U.S. firms. A broad range of U.S. and
international business groups objected to this change in the Bush Administration's policy.28
The Amended CFIUS Process
In the first session of the 110th Congress, Representative Maloney introduced H.R. 556, the
National Security Foreign Investment Reform and Strengthened Transparency Act of 2007, on
January 18, 2007. The House Financial Services Committee approved it on February 13, 2007,
with amendments, and the full House amended and approved it on February 28, 2007, by a vote
of 423 to 0. On June 13, 2007, Senator Dodd introduced S. 1610, the Foreign Investment and
National Security Act of 2007 (FINSA). On June 29, 2007, the Senate adopted S. 1610 in lieu of
H.R. 556 by unanimous consent. On July 11, 2007, the House accepted the Senate's version of
H.R. 556 by a vote of 370-45 and sent the measure to President Bush, who signed it on July 26,
2007.29 On January 23, 2008, President Bush issued Executive Order 13456 implementing the
law.
Similar to the Exon-Florio Amendment, CFIUS Risk Assessment
FINSA grants the President the authority to In assessing the risk posed to national security by a
block or suspend proposed or pending foreign foreign investment transaction, CFIUS considers three
"mergers, acquisitions, or takeovers" of issues:
"persons engaged in interstate commerce in 1. What is the threat posed by the foreign investment in
the United States" that threaten to impair the terms of intent and capabilities?
national security. Congress directed, however, 2. What aspects of the business activity pose
that before this authority can be invoked the vulnerabilities to national security?
President must conclude that (1) other U.S. 3. What are the national security consequences if the
vulnerabilities are exploited?
laws are inadequate or inappropriate to protect vulnerabilitiesareexploited?
the national security; and (2) he/she must have
"credible evidence" that the foreign interest exercising control might take action that threatens to
impair the national security. According to CFIUS, it has interpreted this last provision to mean an
investment that poses a risk to the national security. In assessing the national security risk, CFIUS
looks at (1) the threat, which involves an assessment of the intent and capabilities of the acquirer;
(2) the vulnerability, which involves an assessment of the aspects of the U.S. business that could
impact national security; and (3) the potential national security consequences if the vulnerabilities
were to be exploited.30
28 Kirchgaessner, Stephanie, "US Threat to Reopen Terms of Lucent and Alcatel Deal Mergers," Financial Times,
December 1, 2006. P. 19; Pelofsky, Jeremy, "Businesses Object to US move on foreign Investment," Reuters News,
December 5, 2006.
29 The law is designated as P.L. 110-49.
30 See the CFIIUS website at https://www.treasury.gov/press-center/press-releases/Pages/j10401.aspx.Congressional Research Service 9
Congressional Research Service
9
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Jackson, James K. The Committee on Foreign Investment in the United States (CFIUS), report, June 27, 2018; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc1213095/m1/13/: accessed April 24, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.