Updated May 17, 2024
The Committee on Foreign Investment in the United States
The Committee on Foreign Investment in the United States
of State, Defense, Homeland Security, Commerce, and
(CFIUS) is an interagency committee chaired by the
Energy; Attorney General; U.S. Trade Representative; and
Secretary of the Treasury. It serves the President in
Director of the Office of Science and Technology Policy.
overseeing the national security risks of certain foreign
The Secretary of Labor and Director of National
direct investment (FDI) in the U.S. economy. CFIUS
Intelligence (DNI) serve as ex-officio members. Five White
jurisdiction includes the review of mergers, acquisitions,
House offices are observers or participate in CFIUS, as
and takeovers that could result in foreign control of a U.S.
appropriate (e.g., the Council of Economic Advisers and
business; certain noncontrolling investments in businesses
National Security Council). The President can appoint other
involved in critical technologies, critical infrastructure, or
officials to serve on a case-by-case basis.
sensitive personal data (so-called “TID U.S. businesses”);
CFIUS Review Process
and certain real estate transactions. At the recommendation
The review process begins with notification by the parties
of CFIUS, the President may suspend or prohibit
to the transaction, which is a voluntary step except in
transactions that threaten to impair U.S. national security.
certain cases. Even when notification is not mandatory,
The United States is the world’s largest foreign investor and
firms have an incentive to do so to receive potential “safe
recipient of foreign investment. U.S. policy supports a
harbor” from CFIUS, which limits future action after a
rules-based and open investment environment domestically
transaction is cleared. Non-notified transactions remain
and globally to promote U.S. economic growth and ensure
subject indefinitely to future CFIUS review and possible
that the United States remains a premier FDI destination.
divestment or other actions mandated by the President. As
The Biden Administration has stated that it will retain an
directed by FIRRMA, CFIUS has increased attention and
open U.S. investment posture, while ensuring the CFIUS
resources to monitoring non-notified transactions of
review process “remains responsive to an evolving national
concern. CFIUS may also unilaterally initiate a review.
security landscape and the nature of the investments that
pose related risks.” Congressional and stakeholder debate
The President can exercise authority to suspend or prohibit
over CFIUS activities has intensified amid growing concern
a foreign investment, subject to a CFIUS review, if he/she
that certain foreign investments by firms directed,
finds that (1) credible evidence exists that the foreign
controlled, or funded by a foreign government, notably the
person might take action that threatens to impair national
People’s Republic of China (PRC), raise additional national
security; and (2) no other laws provide “adequate and
security risks. These debates involve oversight of CFIUS
appropriate authority” to protect the national security risks.
reforms mandated by Congress in 2018. The 118th Congress
is considering various legislation to address perceived
Notification. A party’s notification of a transaction can
jurisdiction gaps and evolving priorities.
follow two-tracks: a declaration, an abbreviated, short-form
filing (30-day assessment); or a traditional written notice
Source of Authority. CFIUS derives its authorities from
(45-day review). Declarations and notices are generally
Section 721 of the Defense Production Act (DPA), as
distinguished by submission length, timeline for CFIUS’s
amended (50 U.S.C. §4565), and implementing regulations
consideration, and CFIUS’s options for disposition of the
(31 C.F.R. Chapter VIII). CFIUS initially was created and
submission. A declaration is mandatory in cases where (1) a
operated through a series of Executive Orders. In 1988,
foreign government is acquiring a “substantial interest” in
Congress passed the “Exon-Florio” amendment to the DPA
TID U.S. businesses, and (2) a transaction involves a TID
(50 U.S.C. App. §2170), which codified the review process,
U.S. business that produces, designs, manufactures, etc. a
at the time largely driven by concerns over Japanese firms’
critical technology 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’s “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’s 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
terrorism or proliferates missile technology or chemical and
Membership of CFIUS. The committee consists of nine
biological weapons; U.S. technological leadership in areas
members: the Secretary of the Treasury (chair), Secretaries
affecting national security; and effects on U.S. critical
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link to page 2 link to page 2 The Committee on Foreign Investment in the United States
infrastructure, including major energy assets, and critical
proceeded to an investigation. In 87 cases, parties withdrew
technologies. In September 2022, amid an evolving national
the notice during investigation to address issues, and the
security landscape, President Biden issued E.O. 14083 to
majority refiled with CFIUS. CFIUS adopted mitigation
elaborate and expand on the factors in statute. These
measures for 41 notices (14% of total notices). In 12 cases,
include the transaction’s effect on resilience of U.S. critical
parties abandoned the deal after CFIUS said it was unable
supply chains and technological leadership; aggregate
to identify mitigation that would resolve its concerns, or
industry investment trends; cybersecurity risks; and risks to
after proposed measures were not accepted by the parties.
U.S. person’s sensitive data. See CRS In Focus IF12415.
Table 2. Transactions Reviewed by CFIUS, 2018-2022
National Security Investigation. The transaction proceeds

2018
2019 2020 2021 2022 Total
to a 45-day investigation if CFIUS finds the transaction
Declarations
20
94
126
164
154
558
threatens to impair U.S. national security and the risk has
Notices
229
231
187
272
286
1,205
Investigations
158
113
88
130
162
651
not been mitigated; is foreign-government controlled; or
Notices
64
30
28
72
87
281
would result in foreign control of any U.S. critical
Withdrawn
infrastructure. A 15-day extension is permitted in the event
Presidential
1
1
1
0
0
3
of “extraordinary circumstances.” CFIUS can negotiate and
Decision
impose mitigation agreements or conditions on the parties
Source: CFIUS Annual Report to Congress for CY2022, July 2023.
to address concerns identified; a lead agency is tasked with
Issues for Congress
monitoring compliance. In October 2022, Treasury issued
its first Enforcement and Penalty Guidelines, emphasizing
Congress remains engaged in oversight of implementation
compliance with mitigation measures as a priority. In April
of FIRRMA and CFIUS activities. Some Members say that,
2024, Treasury issued a proposed rule to update mitigation
despite FIRRMA, PRC and other state-directed investments
and enforcement provisions of CFIUS regulations.
require a more proactive and strategic approach. Some are
concerned that PRC investments, particularly in emerging
Presidential Decision. If CFIUS determines the transaction
tech and new operations, may evade or fall outside current
poses unresolved concerns, it may recommend to the
authorities. Some Members have introduced related
President that the deal be prohibited, unless the parties
legislation in the 118th Congress. A Senate version of the
choose to abandon the transaction. The President has 15
National Defense Authorization Act for FY2024 (S. 2226)
days to take action. Presidents have prohibited eight
would have expanded CFIUS jurisdiction over agricultural
transactions, the majority in the past decade (Table 1). In
land and investments in U.S. companies in agriculture or
2020, President Trump ordered PRC ByteDance Ltd. to
biotechnology; banned PRC and some others’ investments
divest from Musical.ly, a social media firm; this 2017
in these areas; and added the Secretary of Agriculture as a
acquisition formed the basis of U.S. operations of TikTok.
CFIUS member. These efforts stem in part from reports of
After a legal challenge by TikTok, the Justice Department
an uptick in PRC land purchases and Treasury’s 2022
sought a national security agreement with the firm, despite
decision that it did not find jurisdiction to review a PRC
CFIUS’s determination in referring the case to the President
firm’s land purchase in North Dakota near a U.S. Air Force
that mitigation was not feasible (see CRS In Focus
base. Some in Congress have expressed concerns about
IF12640). In May 2024, President Biden ordered a PRC
Japanese firm Nippon Steel’s proposed acquisition of U.S
cryptocurrency mining firm to divest its real estate
Steel Corporation, announced in December 2023, which is
acquisition and operations located one mile from Francis E.
reportedly under CFIUS review. Other issues include
Warren Air Force Base, a strategic missile base.
• How well is CFIUS balancing an open U.S. investment
Table 1. Presidential Blocks of Foreign Transactions
posture with the aim to protect national security? How
Year
U.S. Business Acquirer
Sector
should CFIUS protect critical technologies in ways that
1990
MAMCO
CATIC
Aerospace
promote competitiveness and a market-driven economy?
2012
4 wind farms
Ralls Corp.
Renewables
• Six years post FIRRMA, how sufficient are CFIUS’s
(Sany Group)
current authorities to achieve policy objectives? How
2016
Aixtron SE
Grand Chip
Semiconductor
has E.O. 14083 affected CFIUS reviews in practice?
(China IC Fund)
• There appear to be incentives for parties to a transaction
2017
Lattice
Canyon Bridge
Semiconductor
Capital Partners
to use declarations, which are shorter and have fast
2018
Qualcomm
Broadcom
Semiconductor
turnaround relative to notices. To what extent is CFIUS
2020
StayNTouch
Shiji Information Software
clearing transactions based on declarations and in what
Technology Co.
instances should full filing notices be required?
2020
Musical.ly
ByteDance
Digital platform
• How is the Commerce Department’s process of
2024
Real estate
MineOne
Crypto mining
identifying “emerging and foundational technologies”
Source: Presidential orders.
for export controls facilitating or hindering CFIUS
Recent Activity
reviews of transactions related to such technologies?
• In what ways has CFIUS improved coordination with
CFIUS must report annually to Congress on its activities
allies and partners in information sharing and in
(Table 2). In most years since FIRRMA, there has been an
investment screening efforts as mandated by FIRRMA?
increase in transactions reviewed. In 2022, CFIUS reviewed
440 filings (154 declarations, 286 notices). CFIUS cleared
Cathleen D. Cimino-Isaacs, Specialist in International
90 declarations, and requested parties submit a subsequent
Trade and Finance
written notice in 32% of cases. Five declarations involved
Karen M. Sutter, Specialist in Asian Trade and Finance
real estate transactions. Nearly 60% of total notices
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The Committee on Foreign Investment in the United States

IF10177


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https://crsreports.congress.gov | IF10177 · VERSION 29 · UPDATED

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