ZCZC
BCN-17
US-CHINA-ECONOMY-TRADE-INVESTMENTS
US tightens restrictions on foreign investment in key sectors
WASHINGTON, Oct 11, 2018 (BSS/AFP) – The US government on Wednesday
announced a plan for tougher oversight of foreign investment in key
technology industries, a move seen as largely targeted at China.
President Donald Trump has accused China of rampant theft of American
technology and used that as justification for imposing punitive tariffs on
thousands of products amounting to more than $250 billion in annual imports.
The new rules, which take effect November 10, updated 30-year-old statutes
giving the president broad powers to block foreign investments in sensitive
industries or those deemed harmful to US national security.
The reform allows the Committee on Foreign Investment in the United States
(CFIUS) to review any investment, not just company takeovers, in an American
firm in one of 27 key sectors.
“These temporary regulations address specific risks to US critical
technology,” Treasury Secretary Steven Mnuchin said in a statement on
Wednesday.
Those include aeronautics, telecommunications, computers, semiconductors
and batteries, a senior US Treasury official told reporters.
The industries were selected because they are ones where “the threat of
erosion of technological superiority from foreign direct
investment…requires immediate attention,” the official said. But the
products subject to higher scrutiny only account for 2.5 percent of the
total.
The official said the rules did not target a particular country, but
CFIUS, an intergovernmental panel overseen by the Treasury, has blocked
takeovers by Chinese investors. In some cases just the prospect of a review
has discouraged deals.
In announcing the reform in August, Trump made it clear the focus would be
on Beijing and the threats to national security. He said China “won’t be
stealing our companies anymore, especially companies that are quite complex.”
MORE/HR/1108
ZCZC
BCN-18
US-CHINA-ECONOMY-TRADE-INVESTMENTS 2 WASHINGTON
Congress approved the law known as FIRRMA with bipartisan support, and
Treasury is implementing new rules under a pilot program until the final
version takes effect in 15 months.
There are three criteria for increased scrutiny: any foreign investment,
even a minority stake; whether the foreign investor gets a seat on the board
of directors of the US tech company; and whether the foreign investor can
influence the company’s decision-making process.
Treasury has not indicated how small a foreign stake would trigger the
additional oversight but has said it hopes to complete reviews within 30
days.
The official said Washington was preparing additional regulations to
protect artificial intelligence and infrastructure.
According to the latest figures available, the CFIUS looked at 172
transactions in 2016 and launched 79 investigations with a single negative
decision.
BSS/AFP/HR/1110