President Donald Trump may be in China trying to drum up Chinese investment in the U.S. But back in Washington, lawmakers have unveiled a new set of proposed laws designed to limit Chinese investment in U.S. companies, especially in critical high tech sectors such as artificial intelligence, robotics and aerospace.
On Wednesday, U.S. Senator John Cornyn of Texas and Representative Robert Pittenger of North Carolina, together with other bipartisan lawmakers, introduced a new bill called the Foreign Investment Risk Review Modernization Act, to "strengthen the process by which the Committee on Foreign Investment in the United States (CFIUS) reviews foreign investments in the U.S."
The bill is expected to make it tougher for foreign investors, especially Chinese investors, to invest in critical technology companies in the U.S. The new bill comes amid increasing protectionism under the Trump administration, as the U.S. government has blocked several investments from China, including the high-profile proposed acquisition of Lattice Semiconductor Corp by Chinese state-backed Canyon Bridge Capital Partners.
“By exploiting gaps in the existing CFIUS review process, potential adversaries, such as China, have been effectively degrading our country’s military technological edge by acquiring, and otherwise investing in, U.S. companies,” Sen. Cornyn said in a press release. “This undermines our national security and highlights the imperative of modernizing the CFIUS review process to address 21st century threats.”
The bill would expand the scope of review procedures, require mandatory declarations, extend timelines for notification procedures, and impose filing fees.The bill also updates CFIUS definition of “critical technologies” to include emerging technologies that could be essential for maintaining the U.S. technological advantage over countries that pose threats.
The bill defines “critical technology” as “technology, components, or technology items that are essential or could be essential to national security,” and including “emerging technologies that could be essential for maintaining or increasing the technological advantage of the United States over countries of special concern with respect to … national security, or gaining such an advantage over such countries in areas where such an advantage may not currently exist.”
"Presumably this category includes artificial intelligence, robotics, aerospace, etc., and could be far reaching," wrote Rob Hunter, partner at Baker & McKenzie LLP in a note, "To be sure, CFIUS can already reach investments in this category where the foreign acquirer takes “control.” However, some investments that might not amount to ‘control’ would also be captured where the buyer would have access to non-public information held by a critical technology company."