CFIUS Reform Under FIRRMA (CRS Report for Congress)
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| Release Date |
Revised Feb. 21, 2020 |
| Report Number |
IF10952 |
| Report Type |
In Focus |
| Authors |
James K. Jackson, Cathleen D. Cimino-Isaacs |
| Source Agency |
Congressional Research Service |
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Summary:
Some Members of Congress, the Trump Administration,
and some U.S. businesses have raised concerns over the
risks to continued U.S. technological leadership to support
national defense and economic security due to growing
foreign direct investment (FDI), primarily by Chinese
firms, in U.S. high-tech companies. On August 13, 2018,
President Trump signed into law new rules governing
foreign investment national security reviews. Known as the
Foreign Investment Risk Review Modernization Act
(FIRRMA) of 2018 (Title XVII, P.L. 115-232), the
legislation amends the current process for the Committee on
Foreign Investment in the United States (CFIUS) (under
P.L. 110-49) to review, on behalf of the President, the
national security implications of FDI in the United States.
CFIUS is an interagency body comprised of nine Cabinet
members, two ex officio members, and others as appointed
that assists the President in overseeing the national security
risks of FDI in the U.S. economy. Since its inception in
1975, CFIUS has confronted shifting concepts of national
security and a changing global economic order that is
marked by the rise of such emerging economies as China
and state-led firms that are playing a more active role in the
global economy. The FIRRMA-amended CFIUS process
maintains the President’s authority to block or suspend
proposed or pending foreign “mergers, acquisitions, or
takeovers” of U.S. entities, including through joint
ventures, that threaten to impair the national security.
To exercise his authority under CFIUS, the President must:
(1) conclude that other U.S. laws are inadequate or
inappropriate to protect national security; and (2) have
“credible evidence” that the foreign interest exercising
control might take action that threatens to impair U.S.
national security. In addition, final determinations by the
President are not subject to judicial review.
