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WASHINGTON — The Trump administration said it would begin reviewing foreign investments in American companies more broadly, initiating new powers that give the United States greater authority to block Chinese and other foreign transactions on national security grounds.
The expanded review system, which the administration plans to announce on Wednesday, is aimed primarily at preventing China from capturing American technology by buying, investing or partnering with United States companies.
The investment restrictions are the latest attempt by President Trump to punish Beijing over its trade practices, which the White House says hurt American companies by restricting access to certain Chinese markets and requiring firms to hand over valuable trade secrets and technology as a condition of doing business in China.
The toughened review system comes on top of tariffs that the United States has already placed on $250 billion worth of Chinese imports, and is likely to exacerbate the trade war with Beijing.
The Treasury Department said on Wednesday morning that it would begin a pilot program using new powers that Congress gave it earlier this year when it passed the Foreign Investment Risk Review Modernization Act. The law expanded the purview of the Committee on Foreign Investment in the United States, or Cfius, an interagency panel led by Treasury that can block acquisitions on national security grounds, and the department is moving swiftly to take advantage of the new tools at its disposal.
Currently, only takeovers and controlling stakes can be reviewed. Under the pilot program, Cfius will be able to review so called noncontrolling investments by foreigners in American businesses that make technology that is critical for national security reasons.
Beginning on Nov. 10, the panel will be able to review — and block — a deal if a foreign investor takes a stake in a business that makes sensitive technology and if that investor has the ability to access nonpublic technical information or engage in substantial decision-making over the company, such a seat on its board of directors.
That authority will apply to businesses that design or produce technology related to 27 industries, including telecommunications, semiconductors and computers. Foreign investors will be required to submit declarations notifying the panel of their intentions when making a bid.
In a briefing with reporters on Tuesday evening, senior Treasury Department officials emphasized that the program would not be focused on China and would apply to any foreign investors. But the White House has been looking for ways to prevent China from harnessing American technology in critical sectors, such as the next generation of wireless technology known as 5G.
The legislation, which passed with bipartisan support, gave the Treasury Department 18 months to develop rules to implement the panel’s new powers, but the program to be announced Wednesday will allow the law’s provisions to be put in place more quickly.
The panel has already been stepping up its scrutiny of deals under the Trump administration as the president looks to employ a more protectionist “America first” agenda.
Earlier this year, Cfius scuttled a proposed takeover of Qualcomm, the San Diego-based chip maker, by Singapore rival Broadcom over concerns that it would pose a national security risk by depriving the United States of a telecom leader. It also refused to approve a $1.2 billion deal between MoneyGram, a money transfer company based in Dallas, and Ant Financial, a Chinese electronic payments company.
Mr. Trump was considering a more draconian plan that would have imposed sweeping investment restrictions on China last summer, but instead decided to support the proposal to grant Cfius more power. That decision was seen as a win for Steven Mnuchin, the Treasury secretary, who has been working behind the scenes to defuse the trade dispute.
Mr. Mnuchin is traveling this week to the annual meeting of the World Bank and the International Fund in Bali, Indonesia, where he will have the chance to explain the new changes to his counterparts from countries around the world in person.
https://www.nytimes.com/2018/10/10/business/us-china-investment-cfius.html
The expanded review system, which the administration plans to announce on Wednesday, is aimed primarily at preventing China from capturing American technology by buying, investing or partnering with United States companies.
The investment restrictions are the latest attempt by President Trump to punish Beijing over its trade practices, which the White House says hurt American companies by restricting access to certain Chinese markets and requiring firms to hand over valuable trade secrets and technology as a condition of doing business in China.
The toughened review system comes on top of tariffs that the United States has already placed on $250 billion worth of Chinese imports, and is likely to exacerbate the trade war with Beijing.
The Treasury Department said on Wednesday morning that it would begin a pilot program using new powers that Congress gave it earlier this year when it passed the Foreign Investment Risk Review Modernization Act. The law expanded the purview of the Committee on Foreign Investment in the United States, or Cfius, an interagency panel led by Treasury that can block acquisitions on national security grounds, and the department is moving swiftly to take advantage of the new tools at its disposal.
Currently, only takeovers and controlling stakes can be reviewed. Under the pilot program, Cfius will be able to review so called noncontrolling investments by foreigners in American businesses that make technology that is critical for national security reasons.
Beginning on Nov. 10, the panel will be able to review — and block — a deal if a foreign investor takes a stake in a business that makes sensitive technology and if that investor has the ability to access nonpublic technical information or engage in substantial decision-making over the company, such a seat on its board of directors.
That authority will apply to businesses that design or produce technology related to 27 industries, including telecommunications, semiconductors and computers. Foreign investors will be required to submit declarations notifying the panel of their intentions when making a bid.
In a briefing with reporters on Tuesday evening, senior Treasury Department officials emphasized that the program would not be focused on China and would apply to any foreign investors. But the White House has been looking for ways to prevent China from harnessing American technology in critical sectors, such as the next generation of wireless technology known as 5G.
The legislation, which passed with bipartisan support, gave the Treasury Department 18 months to develop rules to implement the panel’s new powers, but the program to be announced Wednesday will allow the law’s provisions to be put in place more quickly.
The panel has already been stepping up its scrutiny of deals under the Trump administration as the president looks to employ a more protectionist “America first” agenda.
Earlier this year, Cfius scuttled a proposed takeover of Qualcomm, the San Diego-based chip maker, by Singapore rival Broadcom over concerns that it would pose a national security risk by depriving the United States of a telecom leader. It also refused to approve a $1.2 billion deal between MoneyGram, a money transfer company based in Dallas, and Ant Financial, a Chinese electronic payments company.
Mr. Trump was considering a more draconian plan that would have imposed sweeping investment restrictions on China last summer, but instead decided to support the proposal to grant Cfius more power. That decision was seen as a win for Steven Mnuchin, the Treasury secretary, who has been working behind the scenes to defuse the trade dispute.
Mr. Mnuchin is traveling this week to the annual meeting of the World Bank and the International Fund in Bali, Indonesia, where he will have the chance to explain the new changes to his counterparts from countries around the world in person.
https://www.nytimes.com/2018/10/10/business/us-china-investment-cfius.html
