Trump, Mnuchin could use obscure committee to ignite trade wars
© Greg Nash

During his confirmation hearing Thursday, Treasury Secretary-designate Steven MnuchinSteven Terner MnuchinNew book questions Harris's record on big banks On The Money: US paid record .1B in tariffs in September | Dems ramp up oversight of 'opportunity zones' | Judge hints at letting House lawsuit over Trump tax returns proceed Democrats ramp up oversight efforts over 'opportunity zone' incentive MORE offered a glimpse into an obscure, but powerful government committee that could join an emerging toolkit the Trump administration could use to launch a global trade war.

Asked about the Committee on Foreign Investment in the United States (CFIUS), an interagency committee chaired by the secretary of the treasury, Mnuchin tipped his hand by referring to the committee’s role in “protecting American workers.” 

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But CFIUS is decidedly not about worker protections or economic protectionism.

 

Since its creation in 1975, CFIUS has been charged with reviewing proposed investments in the United States when those deals raise national security concerns, such as the foreign purchase of a firm that holds a technology or commodity of unique importance to our military.

This strict national security focus was reaffirmed by Congress through the Foreign Investment and National Security Act of 2007 and has long been honored by presidents of both parties.

Unfortunately, CFIUS has also long been vulnerable to those who would like to greatly broaden its scope to consider other factors, such as whether the investor’s country of origin has protectionist policies in place that are unfavorable to U.S. firms.

But, dragging this national security committee into the trade wars is wrongheaded for the simple reason that foreign investment into the United States, when it doesn’t pose national security concerns, is unambiguously favorable for our country.

Foreign investment creates jobs and breathes new economic life into our communities, no matter what the policies are of the country of origin. 

CFIUS-led protectionism would proceed with extremely little transparency, given the classified nature of the committee’s work. As a result, a shift toward economic protectionism would only be known when its harmful effects were felt.

Not only would this shift be bad for U.S. workers and the American economy, it would also undermine the ability of CFIUS to do its real job by diffusing its national security mandate. 

As the chair-holding agency of the CFIUS process, the Treasury Department is charged with recognizing the risks that this national security body could be viewed as a protectionist tool.

U.S. Treasury officials have long been vocal in proclaiming the benefits of foreign investment in the United States and clearly articulating the limited (though robust) national security scope of CFIUS’s work.

From this standpoint, Steven Mnuchin’s prospective role as the chair of CFIUS makes his comments particularly troubling. Mr. Mnuchin should clarify his position on CFIUS and reaffirm the committee’s statutory requirement to focus exclusively on national security considerations. 

 

Scott Morris is a senior fellow at the Center for Global Development and former deputy assistant secretary for development finance at the U.S. Treasury department. 


 

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