Updated August 3, 2023
The Committee on Foreign Investment in the United States
The Committee on Foreign Investment in the United States
Membership of CFIUS. The committee consists of nine
(CFIUS) is an interagency committee chaired by the
members: the Secretary of the Treasury (chair), Secretaries
Secretary of the Treasury. It serves the President in
of State, Defense, Homeland Security, Commerce, and
overseeing the national security risks of certain foreign
Energy; Attorney General; U.S. Trade Representative; and
direct investment (FDI) in the U.S. economy. CFIUS
Director of the Office of Science and Technology Policy.
jurisdiction includes the review of mergers, acquisitions,
The Secretary of Labor and Director of National
and takeovers that could result in foreign control of a U.S.
Intelligence (DNI) serve as ex-officio members. Five White
business; certain noncontrolling investments in businesses
House offices are observers or participate in CFIUS, as
involved in critical technologies, critical infrastructure, or
appropriate, e.g., the Council of Economic Advisers and
sensitive personal data (so-called “TID U.S. businesses”);
National Security Council. The President can appoint other
and certain real estate transactions. At the recommendation
officials to serve on a case-by-case basis.
of CFIUS, the President may suspend or prohibit
CFIUS Review Process
transactions that threaten to impair U.S. national security.
The review process begins with notification by the parties
For additional background, see CRS Report RL33388, The
to the transaction, which is a voluntary step except in
Committee on Foreign Investment in the United States
certain cases. Even when notification is not mandatory,
(CFIUS).
firms have an incentive to do so to receive potential “safe
The United States is the world’s largest foreign investor and
harbor” from CFIUS, which limits future action after a
recipient of foreign investment. U.S. policy supports a
transaction is cleared. Non-notified transactions remain
rules-based and open investment environment domestically
subject indefinitely to future CFIUS review and possible
and globally to promote U.S. economic growth and ensure
divestment or other actions mandated by the President. As
that the United States remains a premier FDI destination.
directed by FIRRMA, CFIUS has increased attention and
The Biden Administration has stated that it will retain an
resources to monitoring non-notified transactions of
open U.S. investment posture, while ensuring the CFIUS
concern. CFIUS may also unilaterally initiate a review.
review process “remains responsive to an evolving national
security landscape and the nature of the investments that
The President can exercise authority to suspend or prohibit
pose related risks.” Congressional and stakeholder debate
a foreign investment, subject to a CFIUS review, if he/she
over CFIUS activities has intensified amid growing concern
finds that (1) credible evidence exists that the foreign
that certain foreign investments by firms directed,
person might take action that threatens to impair national
controlled, or funded by a foreign government, notably the
security; and (2) no other laws provide “adequate and
People’s Republic of China (PRC), raise additional national
appropriate authority” to protect the national security risks.
security risks. These debates involve oversight of CFIUS
reforms mandated by Congress in 2018. The 118th Congress
Notification. A party’s notification of a transaction to
is considering various legislation to address perceived
CFIUS can follow two-tracks: a declaration, an abbreviated,
jurisdiction gaps and evolving priorities.
short-form filing (30-day assessment); or a traditional
written notice (45-day review). Declarations and notices are
Source of Authority. CFIUS derives its authorities from
generally distinguished by: submission length, timeline for
Section 721 of the Defense Production Act (DPA), as
CFIUS’ consideration, and CFIUS’ options for disposition
amended (50 U.S.C. §4565), and implementing regulations
of the submission. A declaration is mandatory in two cases:
(31 C.F.R. Chapter VIII). CFIUS initially was created and
(1) where a foreign government is acquiring a “substantial
operated through a series of Executive Orders. In 1988,
interest” in TID U.S. businesses; and (2) where a covered
Congress passed the “Exon-Florio” amendment to the DPA
transaction involves a TID U.S. business that produces,
(50 U.S.C. App. §2170), which codified the review process,
designs, manufactures, develops, etc. a critical technology
at the time largely driven by concerns over Japanese
subject to export licensing/controls.
acquisitions of U.S. defense-related firms. In 2007, amid
concerns over the proposed foreign purchase of commercial
National Security Review. Treasury and a co-lead agency
operations of U.S. ports, Congress passed the Foreign
conduct a 45-day review to determine the effects of the
Investment and National Security Act of 2007 (P.L. 110-
transaction on U.S. national security, informed by a DNI
49), which formally gave CFIUS statutory authority. In
threat analysis. CFIUS’ “risk-based assessment” considers
2018, Congress passed the Foreign Investment Risk Review
the threat, vulnerabilities, and consequences to national
Modernization Act (FIRRMA, Title XVII, P.L. 115-232),
security related to the transaction. In its assessment, CFIUS
which expanded CFIUS’ jurisdiction and review process in
is to consider an illustrative list of national security factors.
key ways. FIRRMA was intended to “strengthen and
Factors include: the domestic production needed for
modernize” CFIUS and enhance its ability to address
projected national defense requirements; the control of
concerns involving nonpassive, noncontrolling investments
domestic industries and commercial activity by foreign
in TID business and real estate transactions in proximity to
citizens; effects on potential sales of military goods,
military installations, or part of maritime ports or airports.
equipment, or technology to a country that supports
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terrorism or proliferates missile technology or chemical and
2022, CFIUS adopted mitigation measures for 41 notices
biological weapons; U.S. technological leadership in areas
(14% of total notices). In 12 cases, parties abandoned the
affecting national security; and effects on U.S. critical
transaction after CFIUS said it was unable to identify
infrastructure, including major energy assets, and critical
mitigation measures that would resolve its concerns, or
technologies. In September 2022, amid an evolving national
after proposed measures were not accepted by the parties.
security landscape, President Biden issued E.O. 14083 to
Table 2. Transactions Reviewed by CFIUS, 2018-2021
elaborate and expand on the factors in statute. These
2018
2019 2020 2021 2022 Total
include the transaction’s effect on resilience of U.S. critical
Declarations
20
94
126
164
154
558
supply chains and technological leadership; aggregate
Notices
229
231
187
272
286
1,205
industry investment trends; cybersecurity risks; and risks to
Investigations
158
113
88
130
162
651
U.S. person’s sensitive data. See CRS In Focus IF12415.
Notices
64
30
28
72
87
281
National Security Investigation. The transaction proceeds
Withdrawn
to a 45-day investigation if CFIUS finds the transaction:
Presidential
1
1
1
0
0
3
threatens to impair U.S. national security and the risk has
Decision
not been mitigated; is foreign-government controlled; or
Source: CFIUS Annual Report to Congress, July 2023.
would result in foreign control of any U.S. critical
Issues for Congress
infrastructure. A 15-day extension is permitted in the event
Congress remains engaged in oversight of implementation
of “extraordinary circumstances.” CFIUS can negotiate and
of FIRRMA and CFIUS activities. Some Members say that,
impose mitigation agreements or conditions on the parties
despite FIRRMA, PRC state-directed investments require a
to address concerns identified; a lead agency is tasked with
more proactive and strategic approach. Some are concerned
monitoring compliance. In October 2022, Treasury issued
that PRC investments, particularly in emerging tech and
its first Enforcement and Penalty Guidelines, emphasizing
new operations, may evade or fall outside current oversight
compliance with mitigation measures as a priority.
authorities. Members have introduced various related
Presidential Decision. If CFIUS determines the transaction
legislation in the 118th Congress. In July 2023, the Senate
poses unresolved concerns, it may recommend to the
passed amendments to the National Defense Authorization
President that the deal be suspended or prohibited, unless
Act for FY2024 (S. 2226) that would expand CFIUS’
the parties choose to abandon the transaction. The President
jurisdiction over agricultural land of a certain size and value
has 15 days to take action. Presidents have prohibited seven
and investments in U.S. companies engaged in agriculture
transactions, the majority in the past decade (Table 1). In
or related biotechnology; ban PRC and some others’
the latest action, President Trump ordered PRC ByteDance
investments in these areas; and add the Department of
Ltd. to divest from Musical.ly, a social media firm. This
Agriculture as a CFIUS member. These efforts stem in part
2017 acquisition formed the basis of U.S. operations of
from reports of an uptick in PRC land purchases and
TikTok. The Justice Department has not defended the
Treasury’s determination in 2022 that it did not find
divestment order in court in response to a legal challenge by
jurisdiction to review a PRC firm’s land purchase in North
TikTok, and has sought a national security agreement with
Dakota near a U.S. Air Force base. Other issues include
the firm, despite CFIUS’ determination in referring the case
• How will Treasury implement any new agriculture-
to the President that mitigation was not feasible.
related responsibilities in regulation and practice?
Table 1. Presidential Blocks of Foreign Transactions
• How well is CFIUS balancing an open U.S. investment
Year
U.S. Business Acquirer
Sector
posture with the aim to protect national security? How
1990
MAMCO
CATIC
Aerospace
should CFIUS protect critical technologies in ways that
2012
4 wind farms
Ralls Corp.
Renewables
promote competitiveness and a market-driven economy?
(Sany Group)
• Five years post FIRRMA, how sufficient are CFIUS’
2016
Aixtron SE
Grand Chip
Semiconductor
current authorities to achieve policy objectives? How
(China IC Fund)
has E.O. 14083 affected CFIUS reviews in practice?
2017
Lattice
Canyon Bridge
Semiconductor
• There appear to be incentives for parties to a transaction
Capital Partners
2018
Qualcomm
Broadcom
Semiconductor
to use declarations, which are shorter and have fast
turnaround relative to notices. To what extent is
2020
StayNTouch
Shiji Information Software
Treasury clearing transactions based on declarations and
Technology Co.
2020
Musical.ly
ByteDance
Digital platform
in what instances should full filing notices be required?
•
Source: Presidential Orders.
How is the Commerce Department’s process of
Recent Activity
identifying “emerging and foundational technologies”
for export controls facilitating or hindering CFIUS
CFIUS must report annually to Congress on its activities
reviews of transactions related to such technologies?
(Table 2). In most years since FIRRMA’s enactment, there
•
has been a steady increase in transactions reviewed. In
In what ways has CFIUS improved coordination with
2022, CFIUS reviewed 440 filings (154 declarations, 286
allies and partners in information sharing and in
notices). CFIUS cleared 90 declarations, and requested
investment screening efforts as mandated by FIRRMA?
parties submit a subsequent written notice in 32% of cases.
Cathleen D. Cimino-Isaacs, Specialist in International
Five declarations involved real estate transactions. Nearly
Trade and Finance
60% of total notices proceeded to an investigation. In 87
cases, parties withdrew the notice during investigation to
Karen M. Sutter, Specialist in Asian Trade and Finance
address issues, and the majority refiled with CFIUS. In
IF10177
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The Committee on Foreign Investment in the United States
Disclaimer
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https://crsreports.congress.gov | IF10177 · VERSION 27 · UPDATED