Revamping CFIUS—and Going Too Far



Gary Clyde Hufbauer | Peterson Institute for International Economics

If there is one economic issue that seems to unite Republicans and Democrats in Congress with the Trump administration, it is the fear that foreign investments could jeopardize American national security, especially when the partnerships involve China, Russia, and some other countries. To address these concerns, Senator John Cornyn (R-TX) has proposed legislation to enlarge the government’s mandate in these areas. However well-intentioned, the legislation as currently drafted would expand government bureaucracy, hamper the global competitiveness of US corporations, and subject the process to unwarranted political considerations.

The major problem with the Cornyn approach lies in its proposal to restrict outward investment and technology transactions by US firms. The vehicle for the legislative approach is to revamp the mandate of the Committee on Foreign Investment in the United States (CFIUS), which was created in 1975 to screen foreign takeovers of US firms for any threat to US national security. The focus was on inward investment and technology acquisition. Under the Cornyn proposal, the CFIUS mandate would be expanded to cover US outward investment and accompanying technology in other countries…

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