Today's Article
Why conquer a nation
by force when
you can
simply buy its
companies?
The American Spark
As International Tensions Increase, Foreign Investment Questioned

By Cliff Montgomery - Mar. 31st, 2018

Why conquer a nation by force when you can simply buy its companies?

It is the little-discussed, inherent weakness of capitalism: The system works like a game, and whoever owns
the ball controls that game.

If those purchasing the ball have a potential grudge against your people, who knows what fresh changes to

the game might occur that ensure the new owners win - and that you lose?

That has long been the leading concern of the Committee on Foreign Investment in the United States
(CFIUS), a federal inter-agency panel.

With international tensions now at a fever pitch, for many the work of the Committee has taken on an added
significance.

Below, the
American Spark quotes the entire summary of an eye-opening report on the panel recently
published by the Congressional Research Service:


The Committee on Foreign Investment in the United States (CFIUS) is an interagency body comprised of
nine Cabinet members, two
ex officio members, and other members as appointed by the President, that
assists the President in overseeing the national security aspects of foreign direct investment in the U.S.
economy.

“While the group often operated in relative obscurity, the perceived change in the nation’s national security
and economic concerns following the September 11, 2001, terrorist attacks and the proposed acquisition of
commercial operations at six U.S. ports by Dubai Ports World in 2006 placed CFIUS’s review procedures
under intense scrutiny by Members of Congress and the public.

“Prompted by this case, some Members of Congress questioned the ability of Congress to exercise its
oversight responsibilities given the general view that CFIUS’s operations lacked transparency.

“The current CFIUS process reflects changes Congress initiated in the first session of the 110th Congress,
when the House and Senate adopted S. 1610, the Foreign Investment and National Security Act of 2007
(FINSA).

“In the 115th Congress, various measures have been introduced that could have broad implications for

CFIUS’s operations and activities.

“Generally, efforts to amend CFIUS have been spurred by a specific foreign investment transaction that raised
national security concerns. Despite various changes to the CFIUS statute, some Members and others are
questioning the nature and scope of CFIUS’s reviews.

“The CFIUS process is governed by statute that sets a legal standard for the President to suspend or block a
transaction if no other laws apply and if there is ‘credible evidence’ that the transaction threatens to impair the
national security, which is interpreted as transactions that pose a national security risk.

“The U.S. policy approach to international investment traditionally has been to establish and support an open
and rules-based system that is in line with U.S. economic and national security interests. [But] The current
debate over CFIUS reflects long standing concerns about the impact of foreign investment on the economy
and the role of economics as a component of national security.

“Some Members question CFIUS’s performance and the way the Committee reviews cases involving foreign
governments, particularly with the emergence of state-owned enterprises.

“Some policymakers have suggested expanding CFIUS’s purview to include a broader focus on the economic
implications of individual foreign investment transactions and the cumulative effect of foreign investment on
certain sectors of the economy or by investors from individual countries.

“Changes in U.S. foreign investment policy have potentially large economy-wide implications, since the United
States is the largest recipient and the largest overseas investor of foreign direct investment.

“To date, only four investments have been blocked by previous Presidents, although proposed transactions
may have been terminated by the firms involved
in lieu of having a transaction blocked.

“President Obama used the FINSA authority in 2012 to block an American firm, Ralls Corporation, owned by
Chinese nationals, from acquiring a U.S. wind farm energy firm located near a DOD facility and to block a
Chinese investment firm in 2016 from acquiring Aixtron, a Germany-based firm with assets in the United
States.

“In 2017, President Trump blocked the acquisition of Lattice Semiconductor Corp. by the Chinese investment
firm Canyon Bridge Capital Partners; in 2018, he blocked the acquisition of Qualcomm by Broadcom.”



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