Senate sends CFIUS reform act to president

The National Defense Authorization Act includes several provisions to reform reviews by the Committee on Foreign Investment in the U.S. as well as export controls.    The Senate passed and sent legislation to the president for signature on Wednesday that would reform operations of the Committee on Foreign Investment in the United States (CFIUS) and revamp several areas of export controls.
   By a vote of 87-10, the Senate approved the conference version of the National Defense Authorization Act (NDAA) for Fiscal Year 2019, which includes the provisions of the Foreign Investment Risk Review Modernization Act (FIRRMA), which was introduced in the Senate and House earlier this year.
   The House passed the conference NDAA legislation on July 26 by a vote of 359-54.
   The provisions would expand CFIUS’ jurisdiction to certain new types of transactions and include several measures to modernize and streamline the CFIUS review process for foreign investments least likely to raise national security issues.
   Among CFIUS’ authorities are the ability to retroactively unwind non-notified transactions and block notified transactions before they occur.
   The bill would require the president to establish and lead a regular, ongoing interagency process to identify emerging and foundational technologies essential to U.S. national security, which the secretary of state may then propose be added to the list of technologies controlled by the relevant multilateral export control regimes.
   If the multilateral export control regime doesn’t add the identified technology to its control list within three years after the date the U.S. proposes any addition to any list, the applicable U.S. agency head “may determine whether national security concerns warrant the continuation of unilateral export controls with respect to that technology,” the legislation states.
   The interagency review process should take into account the effectiveness of export controls imposed pursuant to that process on limiting the proliferation of emerging and foundational technologies to foreign countries, it says.
   The bill also would require the Commerce secretary to revise the objectives of the Commerce Department Emerging Technology and Research Advisory Committee to include advising the interagency process that would be established with respect to emerging and foundational technologies.
   A Wednesday press release from the office of Sen. John Cornyn, R-Texas, who introduced the upper chamber’s version of FIRRMA, said the bill’s export control language addresses concerns about the transfer of technology through joint ventures and other arrangements.
   “We cannot continue to let bad actors, like China, erode our national security advantage by circumventing our laws,” Cornyn said in a statement. “FIRRMA takes a narrowly tailored approach to address these national security risks without chilling foreign investment or restricting our ability to engage in trade. This bill will modernize the process and help put an end to the backdoor transfer of dual-use technology that has gone unchecked for too long.”