DeLauro Reintroduces the Foreign Investment and Economic Security Act

WASHINGTON, DC (June 15, 2017) — Congresswoman Rosa DeLauro (CT-03) today led several of her House Democratic colleagues in reintroducing the Foreign Investment and Economic Security Act (FIESA). The legislation would ensure that foreign direct investment does not undermine public interests including economic security and public health and safety.

"After decades of massive bilateral trade deficits due to currency manipulation, economic espionage, and state subsidies by the Chinese government, billions of the American dollars that were sent abroad are now used to buy American industry," said DeLauro. "The strategic threats, beyond simple national security risks, require a holistic approach to foreign investment reviews at CFIUS. We cannot allow foreign entities and investors to potentially undermine the public health, safety, and economic security of the American people. The Foreign Investment and Economic Security Act is a critical step forward in ensuring both a strong economy and our national security. Congress should pass this legislation immediately."

Today, the U.S. government lacks a mechanism to screen for more than just national security threats at the interagency Committee on Foreign Investment in the United States (CFIUS). In response to the potential impact of foreign direct investment on national security, CFIUS was created to review any merger, acquisition, or takeover by foreign investors.

While submitting details of an acquisition for review is voluntary, CFIUS can initiate an investigation to review a merger or acquisition involving a U.S. company by a foreign entity. The CFIUS review process only applies to potential mergers and acquisitions and does not involve greenfield investments by foreign entities. This loophole in the oversight capacity leaves the U.S. potentially vulnerable.

The Foreign Investment and Economic Security Act would strengthen the CFIUS process by including a net-benefit assessment for all deals, to include a review of how potential transactions can impact food safety, public health, productivity, and economic activity. FIESA would also expand the mandate of CFIUS to include reviews of greenfield investments, and it includes specific considerations for transactions involving state-owned enterprises. FIESA defines foreign government control to include access of the buyer to below-market financing from government sources. The bill also gives critical infrastructure special consideration in any investigation by CFIUS.

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