FIRRMA Act will give Committee on Foreign Investment a needed update
Our great nation has a long history of welcoming foreign investment, which has been an important economic stimulator and source of capital for American innovation, job growth, and global competitiveness. But there is an important balance to strike between the economic benefit of foreign investment and potential threats to our national security. We can only maintain our policy of openness so long as we are able to assure the American people that their national security won’t be jeopardized.
The Committee on Foreign Investment in the United States (CFIUS), an interagency body led by the Treasury Department, is tasked with policing foreign investment for national security concerns. Current law governing CFIUS has not been modernized for over a decade, and its jurisdiction remains limited. The CFIUS review process was not designed, and is not sufficient, to address today’s modern, evolving threats. As such, China and others have cheated the system, exploited the gaps in its authorities, and are structuring their investments in U.S. businesses to evade scrutiny. Most alarmingly, many transactions that could pose national security concerns often go unreviewed altogether.
To circumvent CFIUS review, China will often pressure U.S. companies into arrangements such as joint ventures, coercing them into sharing their technology and know-how. This enables Chinese companies to acquire and then replicate U.S.-bred capabilities on their own soil. China has also been able to exploit minority-position investments in early-stage technology companies to gain access to cutting-edge IP, trade secrets, and key personnel. It has figured out which dual-use emerging technologies are in development and not yet subject to export controls.
As we speak, China is using any means available to turn our own technology and know-how against us and erase our national security advantage. This weaponizing of investment is aimed at vacuuming up U.S. industrial capabilities in cutting-edge technologies such as artificial intelligence (AI) and robotics, which have obvious and important military applications. In fact, General Joe Dunford, Chairman of the Joint Chiefs of Staff, says that by 2025, China will pose the greatest threat to U.S. national security of any nation.
The time to modernize the CFIUS review process to address 21st century national security concerns is now, which is why we introduced the bipartisan Foreign Investment Risk Review Modernization Act (FIRRMA). Our bill strikes a careful balance and gives CFIUS the authority it needs to address very real national security issues without unduly chilling foreign investment in the American economy and slowing American economic growth in the process.
FIRRMA would tailor the authority of CFIUS in a targeted manner to allow it to reach additional types of investments like minority-position investments and overseas joint ventures. Our bill would create a new streamlined filing process to encourage notification of potentially problematic transactions.
Despite critics’ scare tactics, the bill would not sweep up harmless business transactions with no ties to national security, and the bill puts in place reasonable safeguards to prevent this from happening. Importantly, it would improve information-sharing with our partners and create a “safe list” of certain allied countries, for which these new types of transactions would be exempt from review. Lastly, FIRRMA helps to provide much-needed additional resources to the panel while maintaining important safeguards to ensure CFIUS would review transactions only when necessary.
Our bill, in addition to being endorsed by the White House, is supported by current secretaries of Defense, Treasury and Commerce, as well as the attorney general; former secretaries of Defense; leaders of the Intelligence community, respected tech companies and U.S. manufacturers.
CFIUS plays an integral part in our national security apparatus, and the federal government has no higher duty than to protect national security interests both at home and abroad. If we fail to act but continue on the current trajectory, the United States may no longer be the dominant military superpower 10 years from now. Congress must approach this issue with a sense of urgency and unity, and move forward with these much-needed bipartisan modifications.
Cornyn is the Senate majority whip and a member of the Judiciary Committee. Feinstein is ranking member of the Judiciary Committee.