Cornyn Bill to Strengthen CFIUS Review Process Passes Senate

In: All News   Posted 06/18/2018

WASHINGTON – A bipartisan bill authored by U.S. Senator John Cornyn (R-TX) to strengthen the Committee on Foreign Investment in the United States (CFIUS) passed the Senate as part of the National Defense Authorization Act. The legislation, the Foreign Investment Risk Review Modernization Act (FIRRMA), would help stop China and other bad actors from eroding our military advantage by stealing or otherwise acquiring sensitive dual-use technology by investing in U.S. companies.

“China exploits loopholes in our existing safeguards to acquire sensitive, cutting-edge technology and then turns this technology against us to undermine our military advantage,” Sen. Cornyn said. “Modernizing and strengthening the CFIUS review process is a matter of national security, and I was glad my legislation was included in this important bill.”

Background on FIRRMA:

The Committee on Foreign Investment in the United States (CFIUS) is an interagency committee tasked with reviewing foreign investments in the U.S. and determining whether or not such investments pose a risk to national security. The CFIUS review process has not been modernized in nearly a decade, and gaps in the current process have allowed foreign adversaries to weaponize their investment in U.S. companies and obtain sensitive dual-use U.S. technologies, many of which have potential military applications.  These investment-driven technology transfers have jeopardized the United States’ ability to maintain our historical military advantage and have, in turn, weakened our defense industrial base.

The Foreign Investment Risk Review Modernization Act (FIRRMA) would update the CFIUS review process to address 21st century national security concerns, like investment-driven technology transfers designed to sidestep the Committee’s limited jurisdiction. Specifically, FIRRMA would:

  • Expand the CFIUS jurisdiction to include minority position investments, as well as real estate transactions near military bases or other sensitive national security facilities.
  • Create a new national security review system, under the export control process, for overseas joint ventures and related arrangements through which critical technologies are transferred to foreign companies.
  • Update the Committee’s definition of “critical technologies” to include emerging and foundational technologies that could be essential for maintaining the U.S. technological advantage over countries that pose threats, such as China.
  • Allow foreign investors to submit “light filings” to CFIUS for certain types of transactions.
  • Authorizes CFIUS to exempt certain otherwise covered transactions if all foreign investors are from a country that meets certain criteria, such as being a U.S. treaty ally and having a mutual investment security arrangement.