Bill Modernizing CFIUS Signed into Law
President Trump signed the Foreign Investment Risk Review Modernization Act (FIRRMA) into law as a part of the Fiscal Year 2019 National Defense Authorization Act:
The CFIUS review process hasn’t been updated in more than a decade, which has allowed bad actors to exploit gaps in our safeguards to gain a competitive edge on the United States. We can no longer allow dual-use military technology to be vacuumed up by countries like China. The enactment of FIRRMA is vital to ensuring CFIUS can focus on modern-day national security risks without hindering U.S. investment or trade efforts. I applaud the President for signing this important legislation into law.
Provisions in FIRRMA strongly reflect the Senate’s version of the bill, which has the support of the Administration:
- It maintains the expansion of CFIUS jurisdiction to cover minority investments, any change in a foreign investor’s rights regarding a U.S. business, any vehicle designed to evade CFIUS, and the purchase, lease, or concession of certain real-estate by or to a foreign person.
- Importantly, the final text retains the ability of CFIUS to review non-controlling, non-passive investments, especially those involving critical technology, critical infrastructure, and exposure of sensitive personal data.
- It also maintains the changes to export control laws which address concerns about the transfer of technology through joint ventures and other arrangements, and it strengthens enforcement of export controls.
- The final text allows CFIUS to recommend technologies to the interagency process developed in the bill in order to identify emerging and critical technologies, and sets reporting requirements on these recommendations.
- Further, it maintains mandatory declarations for transactions where a foreign government has a substantial interest and retains the full discretion of CFIUS to craft mandatory declarations where a business involved in critical technology is a party to the transaction.
Senator Cornyn and Senator Dianne Feinstein (D-CA) originally introduced the Foreign Investment Risk Review Modernization Act (FIRRMA) to update and strengthen the Committee on Foreign Investment in the United States (CFIUS) review process to address 21st century national security concerns. CFIUS is an interagency committee tasked with reviewing foreign investments in the U.S. and determining whether or not such investments pose a risk to national security. Gaps in the current CFIUS review process have allowed foreign adversaries to weaponize investment in U.S. companies and transfer sensitive dual-use U.S. technologies, which jeopardizes our historical military advantage and weakens our defense industrial base