Updated July 25, 2023
The Committee on Foreign Investment in the United States
Overview
concerns involving noncontrolling investments in TID
The Committee on Foreign Investment in the United States
businesses and real estate transactions in proximity to
(CFIUS) is an interagency committee that is chaired by the
military installations, or part of maritime ports or airports.
Secretary of the Treasury and serves the President in
Membership of CFIUS. The committee consists of nine
overseeing the national security risks of certain foreign
members, including the Secretary of the Treasury (chair),
direct investment (FDI) in the U.S. economy. CFIUS
the Secretaries of State, Defense, Homeland Security,
jurisdiction includes the review of mergers, acquisitions,
Commerce, and Energy; Attorney General; U.S. Trade
and takeovers that could result in foreign control of a U.S.
Representative; and Director of the Office of Science and
business; certain nonpassive, noncontrolling investments in
Technology Policy. The Secretary of Labor and Director of
U.S. businesses involved in critical technologies, critical
National Intelligence (DNI) serve as ex-officio members.
infrastructure, or sensitive personal data (so-called “TID
businesses”); a
Five White House offices are observers or participate in
nd certain real estate transactions. At the
CFIUS, as appropriate, e.g., the Council of Economic
recommendation of CFIUS, the President has the authority
Advisers and National Security Council. The President can
to suspend or prohibit transactions that threaten to impair
appoint other officials to serve on a case-by-case basis.
U.S. national security.
CFIUS Review Process
The United States is both the world’s largest recipient of
foreign investment and largest foreign investor. The United
The review process begins with notification by the parties
States traditionally has supported a rules-based and open
to the transaction, which is a voluntary step except in
investment environment domestically and internationally to
certain cases. Even when notification is not mandatory,
promote U.S. economic growth and other policy objectives,
firms have an incentive to do so to receive potential “safe
such as ensuring that the United States remains a premier
harbor” from CFIUS, which limits future action after a
destination for FDI. The Biden Administration has stated
transaction is cleared. Non-notified transactions remain
that the United States is committed to open investment,
subject indefinitely to future CFIUS review and possible
while ensuring the CFIUS review process “remains
divestment or other actions mandated by the President. As
responsive to an evolving national security landscape and
directed by FIRRMA, CFIUS has increased attention and
the nature of the investments that pose related risks.”
resources to monitoring non-notified transactions of
Congressional and stakeholder debate over CFIUS activities
concern. CFIUS may also unilaterally initiate a review.
has intensified amid growing concern that certain foreign
The President can exercise authority to suspend or prohibit
investments by firms directed, controlled, or funded by a
a foreign investment, subject to a CFIUS review, if he/she
foreign government, notably the People’s Republic of
finds that (1) credible evidence exists that the foreign
China (PRC), raise additional national security risks. These
person might take action that threatens to impair national
debates involve oversight of CFIUS reforms mandated by
security; and (2) no other laws provide “adequate and
Congress in 2018. The 118th Congress is considering
appropriate authority” to protect the national security risks.
various legislation to address perceived jurisdiction gaps
and evolving priorities.
Notification. A party’s notification of a transaction to
Source of CFIUS Authority. CFIUS derives its authorities
CFIUS can follow two-tracks: a declaration, an abbreviated,
short-form filing (30-day assessment); or a traditional
from Section 721 of the Defense Production Act (DPA), as
amended (50 U.S.C. § 4565), and implementing regulations
written notice (45-day review). Declarations and notices are
(31 C.F.R. Chapter VIII). CFIUS initially was created and
generally distinguished by: submission length, timeline for
CFIUS’ consideration, and CFIUS’ options for disposition
operated through a series of Executive Orders. In 1988,
Congress passed the “Exon-Florio” amendment to the DPA
of the submission. A declaration is mandatory in two cases:
(50 U.S.C. App sect. 2170), which codified the foreign
(1) where a foreign government is acquiring a “substantial
interest” in U.S. TID businesses; and (2) where a covered
investment review process, at the time largely driven by
concerns over Japanese acquisitions of U.S. defense-related
transaction involves a U.S. TID business that produces,
firms. In 2007, amid concerns over the proposed foreign
designs, manufactures, develops, etc. a critical technology
purchase of commercial operations of six U.S. ports,
subject to export licensing/controls.
Congress passed the Foreign Investment and National
National Security Review. Treasury and a co-lead agency
Security Act of 2007 (P.L. 110-49), which formally gave
conduct a 45-day review to determine the effects of the
CFIUS statutory authority. In 2018, Congress passed the
transaction on U.S. national security, informed by a DNI
Foreign Investment Risk Review Modernization Act
threat analysis. CFIUS’ “risk-based assessment” considers
(FIRRMA, Title XVII, P.L. 115-232), which expanded
the threat, vulnerabilities, and consequences to national
CFIUS’ jurisdiction and review process in key ways.
security related to the transaction. In its assessment, CFIUS
FIRRMA was intended to “strengthen and modernize”
is to consider an illustrative list of national security factors.
CFIUS and enhance its ability in particular to address
Factors include: the domestic production needed for
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link to page 2 link to page 2 The Committee on Foreign Investment in the United States
projected national defense requirements; the control of
272 notices). CFIUS cleared most declarations (120), and
domestic industries and commercial activity by foreign
requested parties submit a subsequent written notice in 18%
citizens; effects on potential sales of military goods,
of cases. Nearly half of total notices proceeded to an
equipment, or technology to a country that supports
investigation. In more than 70 cases, parties withdrew the
terrorism or proliferates missile technology or chemical and
notice during the investigation to address issues, and the
biological weapons; U.S. technological leadership in areas
majority refiled with CFIUS. In 2021, CFIUS adopted
affecting national security; and effects on U.S. critical
mitigation measures with respect to 31 notices (or 11% of
infrastructure, including major energy assets, and critical
total notices). In nine cases, parties abandoned the
technologies. In September 2022, amid an evolving national
transaction after CFIUS informed it was unable to identify
security landscape, President Biden issued E.O. 14083 to
mitigation measures that would resolve its concerns, or
elaborate and expand on the factors in statute. These
after proposed measures were not accepted by the parties.
include the transaction’s effect on resilience of U.S. critical
Table 2. Transactions Reviewed by CFIUS, 2017-2021
supply chains and technological leadership; aggregate
industry investment trends; cybersecurity risks; and risks to

2017
2018 2019 2020 2021 Total
U.S. person’s sensitive data.
Declarations
n.a.
20
94
126
164
404

Notices
237
229
231
187
272
1,156
National Security Investigation. The transaction proceeds
Investigations
172
158
113
88
130
661
to a 45-day investigation if CFIUS finds the transaction:
Notices
70
64
30
28
72
264
threatens to impair U.S. national security and the risk has
Withdrawn
not been mitigated; is foreign-government controlled; or
Presidential
1
1
1
1
0
4
would result in foreign control of any U.S. critical
Decision
infrastructure. A 15-day extension is permitted in the event
Source: CFIUS Annual Report to Congress, August 2022.
of “extraordinary circumstances.” CFIUS can negotiate and
Issues for Congress
impose mitigation agreements or conditions on the parties
Congress remains engaged in oversight of FIRRMA
to address concerns identified; a lead agency is tasked with
implementation and CFIUS activities. Some Members say
monitoring compliance. In October 2022, Treasury issued
that, despite FIRRMA, PRC state-directed investments
its first Enforcement and Penalty Guidelines, emphasizing
require a more proactive and strategic approach. Some are
compliance with mitigation measures as a priority.
concerned that PRC investments, particularly in emerging
Presidential Decision. If CFIUS determines the transaction
technologies and new operations, may evade or fall outside
poses unresolved concerns, it may recommend to the
current oversight authorities. Legislation proposed in the
President that the transaction be suspended or prohibited,
118th Congress would authorize CFIUS to review and
unless the parties choose to abandon the transaction. The
potentially prohibit foreign purchases of U.S. agricultural
President has 15 days to take action. Presidents have
land, and add the Department of Agriculture as a full
prohibited seven transactions to date, the majority in the
CFIUS member. These efforts stem in part from Treasury’s
past decade (Table 1). In the latest action, President Trump
determination in late 2022 that it did not find jurisdiction to
ordered PRC ByteDance Ltd. to divest from Musical.ly, a
review a PRC firm’s purchase of land in North Dakota in
social media firm. This 2017 acquisition formed the basis of
proximity to a U.S. Air Force facility. Other issues include
U.S. operations of TikTok. The Justice Department has not
• How well is CFIUS balancing an open U.S. investment
defended the divestment order in court in response to a
posture with the aim to protect national security? How
legal challenge by TikTok, and instead has sought a
should CFIUS protect critical technologies in ways that
national security agreement with the firm, despite CFIUS’
promote competitiveness and a market-driven economy?
determination in referring the case to the President that
• Five years post FIRRMA, how sufficient are CFIUS’
mitigation was not feasible.
current authorities to achieve policy objectives? How
Table 1. Presidential Blocks of Foreign Transactions
has E.O. 14083 affected CFIUS reviews in practice?
Year
U.S. Business Acquirer
Sector
• There appear to be incentives for parties to a transaction
1990
MAMCO
CATIC
Aerospace
to use declarations, which are shorter and have fast
2012
4 wind farms
Ralls Corp.
Renewables
turnaround relative to notices. To what extent is
(Sany Group)
Treasury clearing transactions based on declarations and
2016
Aixtron SE
Grand Chip
Semiconductor
in what instances should full filing notices be required?
(China IC Fund)
• How is the Commerce Department’s process of
2017
Lattice
Canyon Bridge
Semiconductor
identifying “emerging and foundational technologies”
Capital Partners
for export controls facilitating or hindering CFIUS
2018
Qualcomm
Broadcom
Semiconductor
reviews of transactions related to such technologies?
2020
StayNTouch
Shiji Information Software
•
Technology Co.
In what ways has CFIUS improved coordination with
2020
Musical.ly
ByteDance
Digital platform
allies and partners in information sharing and in
Source: Presidential Orders.
investment screening efforts as mandated by FIRRMA?
For more, see CRS Report RL33388, The Committee on
Recent Activity
Foreign Investment in the United States (CFIUS).
CFIUS must report annually to Congress on its activities
(Table 2). In most years since FIRRMA’s enactment, there
Cathleen D. Cimino-Isaacs, Specialist in International
has been a steady increase in transactions reviewed. In
Trade and Finance
2021, CFIUS reviewed 436 transactions (164 declarations,
Karen M. Sutter, Specialist in Asian Trade and Finance
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The Committee on Foreign Investment in the United States

IF10177


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https://crsreports.congress.gov | IF10177 · VERSION 25 · UPDATED

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