U.S. Senators John Cornyn (R-TX) and Dianne Feinstein (D-CA), along with the Chairman of the Senate Select Committee on Intelligence, Richard Burr (R-NC), today introduced the Foreign Investment Risk Review Modernization Act (FIRRMA) to modernize and strengthen the process by which the Committee on Foreign Investment in the United States (CFIUS) reviews acquisitions, mergers, and other foreign investments in the United States for national security risks.
"By exploiting gaps in the existing CFIUS review process, potential adversaries, such as China, have been effectively degrading our country's military technological edge by acquiring, and otherwise investing in, U.S. companies," Sen. Cornyn said. "This undermines our national security and highlights the imperative of modernizing the CFIUS review process to address 21st century threats. This bill takes a measured approach by providing long overdue reforms to better protect our country, while also working to ensure that beneficial foreign investment is not chilled."
"This bill focuses on providing CFIUS with updated tools to address present and future security needs," Sen. Feinstein said. "Senator Cornyn and I have been working on this bill for the last eight months, and we hope to build on the progress we've already made to update CFIUS and address national security threats."
"The CFIUS process is key to proactively identifying and mitigating foreign efforts to acquire critical U.S. technology and know-how through investment," Sen. Burr said. "I am pleased to cosponsor this much needed legislation that will strengthen CFIUS by expanding its jurisdiction and modernize its processes."
Senators Marco Rubio (R-FL), Amy Klobuchar (D-MN), John Barrasso (R-WY), Gary Peters (D-MI), James Lankford (R-OK), Joe Manchin (D-WV), and Tim Scott (R-SC) are original co-sponsors of the bill. U.S. Representative Robert Pittenger (NC-09) introduced companion legislation in the U.S. House of Representatives along with Representatives Devin Nunes (CA-22), Chris Smith (NJ-04), Joe Heck (NV-03), Dave Loebsack (IA-02), Sam Johnson (TX-03), and John Culberson (TX-07).
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 transfer 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 certain joint ventures, minority position investments, and real estate transactions near military bases or other sensitive national security facilities.
Update the Committee's definition of "critical technologies" to include emerging 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.
Add new national security factors for CFIUS to consider in its analyses.
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.
The Trump Administration Has Urged Reform of the Committee on Foreign Investment in the United States:
Secretary of Defense, James Mattis: CFIUS is outdated and "needs to be updated to deal with today's situation."
Director of National Intelligence, Dan Coats: We should do "a significant review of the current CFIUS situation to bring it up to speed."
National Security Agency Director and Commander of U.S. Cyber Command, Michael Rogers: We need to reassess the CFIUS process and "make sure it's optimized for the world of today and tomorrow."
Attorney General, Jeff Sessions: "We have looked at that hard in the Department of Justice. I have talked with attorneys and agents who have investigated these cases. They are really worried about our loss of technology. We certainly need additional legislation. Just as you said, you can buy an interest in a company and gain access to the same type of technology. The CFIUS program is not able to be effective enough."