(Bloomberg) — The White House will push Congress to strengthen an inter-agency panel that it will employ as its main tool to curb Chinese investments in sensitive U.S. technologies, according to senior Trump administration officials.
The strategy is a less confrontational approach toward China than many had expected. The administration had considered employing a little-used national emergency law called the International Emergency Economic Powers Act of 1977 to curb prospective investments, people familiar with the plan said earlier this month.
Instead, the White House wants Congress to pass legislation to bolster the Committee on Foreign Investment in the U.S., or CFIUS, so it can prevent Chinese companies from violating intellectual-property rights of American companies, two administration officials said, speaking to reporters Wednesday on the condition of anonymity.
Trump’s choice shows that he is favoring a more measured approach that requires coordination with Congress, rather than working through the executive branch. While the House and Senate companion bills on CFIUS modernization need to be worked out, there is interest from Senator John Cornyn, the No. 2 Republican, in creating a list of countries of special concern. The House proposal includes that, proposing China, Russia, Iran, Venezuela and North Korea among a group of countries whose companies would undergo extra scrutiny.
The CFIUS legislation passed in the House would expand investigations by CFIUS to include minority investments in “critical technology” or “critical infrastructure” and joint ventures where technology companies contribute intellectual property, according to a copy of the proposal seen by Bloomberg. While CFIUS reviews are technically voluntary, the bill would require foreign investors that are at least 25 percent owned by foreign governments to go through CFIUS when they are acquiring at least a 25 percent stake in a U.S. business.
The Treasury Department has been closely involved in drafting the legislation. Congress secured the administration’s full support before proposing it.
Only five takeovers of American firms have been blocked by U.S. presidents on national security grounds since 1990. Of those, Barack Obama blocked two deals during his two terms. Trump has blocked two in six months.
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Source: Investing.com
