Committee on Foreign Investment in the United States

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The Committee on Foreign Investment in the United States (or CFIUS) is an agency of the United States Government that reviews the national security implications of foreign acquisitions of U.S. companies or operations. Chaired by the Secretary of the Treasury, CFIUS includes representatives from 11 U.S. agencies, including the Defense, State and Commerce departments, as well as (most recently) the Department of Homeland Security.

Companies proposing to be involved in an acquisition by a foreign firm are supposed to voluntarily notify CFIUS, but CFIUS can review transactions that are not voluntarily submitted. CFIUS reviews begin with a 30-day decision to authorize a transaction or begin a statutory investigation. If the latter is chosen, the committee has another 45 days to decide whether to permit the acquisition or order divestment. Most transactions submitted to CFIUS are approved without the statutory investigation.<ref>Sills, Gay Hartwell (2006). Committee on Foreign Investments in the United States (CFIUS). U.S. Department of Treasury, Office of the Assistant Secretary International Affairs, Office of International Investment. Retrieved on 2006-03-26. </ref>

CFIUS has looked at the "restrictions on sale of advanced computers to any of a long list of foreign recipients, ranging from China to Iran."<ref>Rash, Wayne. "Suppose IBM-Lenovo Deal Doesn't Happen", eWeek.com, January 24, 2005.</ref> CFIUS reviews even deals with firms from U.S. allies, such as BAE Systems' early-2005 acquisition of United Defense. This and the vast majority of transactions submitted to CFIUS are approved without difficulty. But at least one deal has been called off when CFIUS began to take a closer look.<ref>McCarthy, Ellen. "Purchase by Israeli Firm Called Off", Washington Post, March 24, 2006, p. A06.</ref>

Some important cases include:

The 2005 acquisition by Lenovo, the largest personal computer company in China, of IBM's personal computer and laptop unit
State-owned China National Offshore Oil Corporation's attempted acquisition of UNOCAL (2005)
State-owned Dubai Ports World's planned acquisition of P&O, the operator of many US ports, including New York (2006)
NTT Communications' acquision of Verio (2000)
The 2005 acquisition of Sequioa Voting Systems of Oakland, California, by Smartmatic, a Dutch company contracted by Hugo Chavez's government to replace that country's elections machinery<ref>http://www.nytimes.com/2006/10/31/us/politics/31vote.html</ref>

[edit] Opinions on the Committee

In February 2006, Richard Perle gave more insight into CFIUS when he related to CBS News his experience on the panel during the Reagan administration, "The committee almost never met, and when it deliberated it was usually at a fairly low bureaucratic level." He also added, "I think it's a bit of a joke if we were serious about scrutinizing foreign ownership and foreign control, particularly since 9/11."<ref>"Bush, Congress In Dark About Port Deal", CBS News, February 22, 2006.</ref>

Others emphasize the crucial role that foreign direct investment plays in the U.S. economy, and the discouraging effect that heightened scrutiny and protectionism can cause. Foreign investors in the United States, much like U.S. investors elsewhere, bring expertise and infusions of capital into often-struggling sectors of the U.S. economy. In a February 2006 interview with the New York Times, another former Reagan administration official, Clyde V. Prestowitz Jr., noted that the United States "need[s] a net inflow of capital of $3 billion a day to keep the economy afloat.... Yet all of the body language here is 'go away.'"<ref>Porter, Eduardo. "Dubai Deal's Collapse Prompts Fears Abroad on Trade With U.S.", The New York Times, March 10, 2006. (free registration required to access content)</ref> And, as Secretary Powell once remarked, "money, capital, is a coward; it will go nowhere where it is put in fear."<ref>Powell, Colin. "Remarks at Sovereign Credit Rating Conference", United States Department of State, April 23, 2002.</ref>