Business Groups Support Proposed CFIUS Reforms to Enhance National Security

Washington, D.C. - Four leading U.S. business groups today outlined their views on H.R. 5337, the "Reform of National Security Reviews and Foreign Direct Investment Act." The groups indicated their belief that the legislation meets the objectives of the sponsors to protect national security while preserving the benefits of foreign investment in the United States.

The comments were delivered in testimony by former USTR General Counsel John K. Veroneau, partner, DLA Piper Rudnick Gray Cary, before the House Financial Services Committee Subcommittee on Domestic and International Monetary Policy, Trade and Technology. Mr. Veroneau testified on behalf of Business Roundtable, The Financial Services Forum, the Organization for International Investment and the U.S. Chamber of Commerce.

"We support strong measures to assure that national security interests are served," said Veroneau. "Some provisions in the bill, however, add regulatory burdens that serve no national security interest."

Veroneau stressed the importance U.S. business places on restoring confidence in the review process employed by the Committee on Foreign Investment in the United States (CFIUS), and detailed several provisions in H.R. 5337 that the business community would actively support, including:

• Creation of a clear statutory role for the Director of National Intelligence for review of proposed acquisitions;
• Providing an extended period for investigation if security issues are not resolved;
• Authorizing CFIUS to reconsider previously approved transactions if security agreements are seriously breached; and
• Requiring acquisitions by foreign state-owned entities to undergo a 45-day investigation period.

Veroneau identified the following areas of the legislation that could be improved:

• The requirement that the Director of National Intelligence (DNI) have no less than 30 days to complete its security assessment could unnecessarily prolong CFIUS cases.
• The need for CFIUS to have the flexibility to approve non-controversial transactions, especially those where the foreign government is a minority investor, without having to go through a full 45-day review, in addition to the 30-day DNI review.
• Reporting requirements that are unduly extensive and detailed would invite politicization of the process and divert CFIUS resources away from national security reviews and investigations.

"Foreign direct investment in the United States is important for job creation and economic development. We should encourage rather than discourage such investment," Veroneau stated. "No president should ever hesitate to block an acquisition that truly threatens national security. But, it is important that the process by which such risks are considered does not hamper legitimate foreign investment."

A complete copy of Mr. Veroneau's testimony can be viewed by clicking here.

Together, Business Roundtable, The Financial Services Forum, the Organization for International Investment and the U.S. Chamber of Commerce represent a broad range of U.S. businesses employing tens of millions of Americans. The organizations recognize the critical importance of foreign investment to both the U.S. economy and to the over five million American jobs it supports.

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