CFIUS Reform Gets a Kick Start Early in 110th Congress

CFIUS Reform Gets a Kick Start Early in 110th Congress

Leading members of the House Financial Services Committee today introduced legislation (H.R. 556) to reform the Committee on Foreign Investment in the United States, which is responsible for vetting foreign direct investment in this country (text of legislation). Rep. Carolyn Maloney (D-NY), Rep. Deborah Pryce (R-OH), Rep. Joseph Crowley (D-NY) and Minority Whip Roy Blunt (R-MO), who last year jointly sponsored a bipartisan CFIUS reform bill that unanimously passed the House, have joined together again to introduce the new legislation, which mirrors last year's version. Financial Services Committee Chairman Barney Frank (D-MA) and Ranking Member Spencer Bachus (R-AL) support the legislation and have joined as original co-sponsors.

The bill would make changes to the foreign investment vetting process that include:

* a mandatory 45-day investigation for all acquisitions involving foreign governments,
* requiring CFIUS to consult the Director of National Intelligence,
* automatic congressional notification after each investigation, and
* requiring the Treasury and Homeland Security Secretaries or Deputy Secretaries to sign off on approvals.

Early last year, it was revealed that CFIUS failed to raise red flags about a deal to sell commercial operations at several major U.S. ports to a company controlled by the government of Dubai. Despite the ensuing outrage in the public and in Congress, the House and Senate could not agree upon final legislation and the reform effort lapsed.

"If you had told the public after the Dubai ports fiasco that CFIUS reform would still not be completed a year later, they would have been outraged," said Rep. Maloney. "To me, one of the biggest failings of the last Congress was its inability to strengthen security through balanced CFIUS reform. When it became clear that the vetting system was flawed, Americans expected something to be done about this. We have the opportunity to do something now. This bill reflects a smart and balanced approach that will accomplish the most important goals: better security, while encouraging safe foreign investment."

"This bipartisan, carefully crafted effort should allay many of the public's concerns with CFIUS following last year's Dubai Ports World transaction," said Rep. Pryce. "The legislation enhances American port security, restores public confidence in the process by which foreign investment in the U.S. is analyzed and approved, and ensures certainty and predictability for investors wishing to do business in the United States."

"The fact is the Bush Administration made a mistake regarding the Dubai Ports issue, but it is important we institute a clear set of rules to assure foreign investors the United States is not adverse to direct foreign investment," said House Financial Services Committee Chairman Frank.

"A strong consensus exists regarding the necessity of CFIUS reform, as well as the need to take prompt action," stated Committee Ranking Member Bachus. "Working on a bipartisan basis, I believe we have an opportunity to get this done during the 110th Congress."

"The Dubai Ports World situation exposed serious flaws with the CFIUS process," said House Republican Whip Roy Blunt. "The bill we've introduced mirrors exactly the common-sense fix the House passed unanimously last year. Our approach to the problem protects Americans first without hindering job growth and economic expansion. This CFIUS reform strikes the right balance between homeland security and open engagement with the global economy."

"Without balanced CFIUS reform that clearly spells out the way we monitor foreign investment in the United States, we put our nation's vulnerable infrastructure at greater threat, and risk losing legitimate investment from overseas that helps drive our economy," said Rep. Crowley. "This bill provides a blueprint for a long overdue solution that places national security first while providing the tools necessary to attract and retain new, lawful foreign investment and jobs in the United States."

The bill's sponsor's are (35): Reps. Carolyn B. Maloney (D-NY), Deborah Pryce (R-OH), Joseph Crowley (D-NY), Roy Blunt (R-MO), Barney Frank (D-MA), Spencer Bachus (R-AL), Luis Gutierrez (D-IL), Ron Paul (R-TX), Gary Ackerman (D-NY), Richard Baker (R-LA), Melissa Bean (D-IL), Judy Biggert (R-IL), Emmanuel Cleaver (D-MO), Elijah Cummings (D-MD), Vito Fossella (R-NY), Scott Garrett (R-NJ), Paul Gillmor (R-OH), Al Green (D-TX), Ruben Hinojosa (D-TX), Darlene Hooley (D-OR), Peter King (R-NY), Ron Klein (D-FL), James Langevin (D-RI), Stephen Lynch (D-MA), Donald Manzullo (R-IL), Thaddeus McCotter (R-MI), Gregory Meeks (D-NY), Gary Miller (R-CA), Dennis Moore (D-KS), Gwen Moore (D-WI), Sue Myrick (R-NC), Thomas Reynolds (D-NY), Ileana Ros-Lehtinen (R-FL), David Scott (D-GA), and Lamar Smith (R-TX).

Background

The legislation introduced today would: add the Secretaries of Homeland Security and Commerce as vice-chairs and require their signatures and that of the Treasury Secretary to approve all CFIUS decisions; add the Secretary of Energy as a member of CFIUS; maintain the current 30-day review and 45-day investigation periods; ensure the protection of classified and proprietary business information; fix the Byrd Amendment by mandating that transactions involving a company controlled by a foreign government to undergo the 45-day investigation; establishes CFIUS in statute; and provide separate funding for CFIUS.

The legislation would also restore accountability to the process by: ensuring that all appropriate factors are considered and adding critical infrastructures as a factor; requiring roll call votes before the signatures of the secretaries of the Treasury and Homeland Security; and requiring the President's approval if there is a single dissent on a decision after the investigation.

CFIUS was granted authority to administer the Exon-Florio amendment to the Defense Production Act. As part of this authority, CFIUS reviews foreign acquisitions of U.S. companies to determine if there are any national security concerns, and whether such concerns can be mitigated.

http://maloney.house.gov/index.php?option=content&task=view&id=1266&Itemid=61