Trump Eases Threat of Foreign Investment Restrictions as Congress Advances Reform Bill
The House of Representatives approved June 26 by a 400-2 vote the Foreign Investment Risk Review Modernization Act (H.R. 5841), which would expand the reviews conducted by the Committee on Foreign Investment in the U.S. President Trump has indicated that if this bill becomes law he may suspend his efforts to impose new investment restrictions and enhanced export controls on China.
A press release from the House Financial Services Committee states that CFIUS needs to be modernized to keep pace with the growing number and complexity of foreign investment deals. “CFIUS is authorized to review foreign investment transactions that may threaten our national security, and although these authorities have been wielded carefully, Congress must remain vigilant when delegating additional powers that may have far-reaching effects,” said Committee Chairman Jeb Hensarling, R-Texas.
An earlier press release from bill sponsor Rep. Robert Pittenger, R-N.C., said FIRMMA would (a) expand CFIUS jurisdiction, (b) update the CFIUS definition of “critical technologies” to include emerging technologies that could be essential for maintaining the U.S. technological advantage over countries that pose threats, (c) add new national security factors to the review process, and (d) strengthen the government’s ability to protect critical infrastructure from foreign government disruption. At the same time, the press release stated, the bill makes clear that the U.S. must “maintain its enthusiastic support for foreign investment, which is crucial for U.S. jobs, innovation, and productivity.”
President Trump has previously announced plans for investment restrictions and enhanced export controls on China in response to a Section 301 investigation concluding that Beijing is coercing U.S. companies into transferring their technology and intellectual property to Chinese enterprises. However, in a June 27 statement Trump indicated that he could put those actions on hold in favor of FIRMMA, which would apply to investments from all countries. Having concluded that this bill “will provide additional tools to combat the predatory investment practices that threaten our critical technology leadership, national security, and future economic prosperity,” Trump said he plans to direct his administration “to implement it promptly and enforce it rigorously, with a view toward addressing the concerns regarding state-directed investment in critical technologies identified in the Section 301 investigation.” On the other hand, if the bill does not pass Congress or is watered down, Trump said he would work to “deploy new tools” to protect U.S. technology and intellectual property.