The U.S. Treasury Department wants to strengthen the powers of a little-known secret government commission that reviews deals between U.S. companies and foreign investors.
This comes as high-profile deals involving foreign investment in the United States, including Chinese company ByteDance's ownership of the popular social media app TikTok and Japan's Nippon Steel Corp.'s planned acquisition of Pittsburgh-based U.S. Steel Corp.・Even President Biden was under intense scrutiny. .
The new rulemaking would strengthen the authority of the Interagency Committee on Foreign Investment in the United States (known as CFIUS), which is tasked with investigating corporate transactions due to national security concerns. It has the power to force companies to sell ownership or change major parts of their stock. Hard.
If finalized, this rulemaking would expand the Commission's subpoena powers, allowing the Commission to request more information from parties to a proposed sale and subject it to penalties for misstatements and omissions. and its size will be expanded from $250,000 to $5 million. Failure to make mandatory declarations.
The proposed changes come amid heightened competition among global powers and a focus on national security concerns related to foreign investment as the United States focuses on expanding its domestic supply chain.
President Joe Biden in March announced his opposition to the planned sale of U.S. Steel to Nippon Steel, saying the United States needs to “preserve strong American steel companies supported by American steelworkers.” Japanese Prime Minister Fumio Kishida said at a White House press conference on Wednesday that he hoped discussions on Japan would “move forward in a positive direction for both sides.”
In December, Nippon Steel announced plans to buy the Pittsburgh-based steelmaker for $14.1 billion in cash, raising questions about how the deal would affect unionized workers, supply chains and U.S. national security. There are growing concerns about the impact it will have.
Paul Rosen, the Treasury Department's assistant secretary for investment security, said the rulemaking will “more effectively deter violations, promote compliance, and quickly address national security risks associated with CFIUS reviews.” ”, he said.
John Carlin, a former Justice Department national security secretary and partner at the Paul Weiss law firm, said the proposed rule would “reinforce that corporations are at the forefront of national security policy and that governments are “It shows how seriously we are taking it,” he said.
“Today's announcement is all about adding tools for authorities to investigate and more aggressively and aggressively enforce authorities,” he said. He added that this “acts as an incentive for people to really vet the deal and decide if they should apply.”
He said expanding subpoena powers “makes CFIUS more of an enforcement agency.”
Another transaction under review by CFIUS is ownership of the popular social media app TikTok. CFIUS has been reviewing social media apps since at least 2019, but no action has been taken regarding those reviews. The US House of Representatives subsequently passed a bill forcing ByteDance to sell the app or have it banned in the US.
Asked about TikTok at a press conference in Beijing on Monday, Treasury Secretary Janet Yellen said she supported the administration's efforts to address national security issues related to sensitive personal data. “This is a legitimate concern,” she said.
“Many U.S. social apps are not allowed to operate in China,” Yellen said. “We want to find a way forward.”
J. Philip Ludwigson, a partner at the law firm King & Spalding, said the proposed regulations are “another indicator of an increasingly aggressive posture in protecting national security.” Mr. Ludwigsson is the former Director of CFIUS Oversight and Enforcement.
“CFIUS clearly intends to increase its subpoena power and issue larger and larger fines as necessary,” he said.
The United States has also begun reviewing certain transactions between American and Chinese companies.
President Joe Biden signed an executive order last August to block and regulate U.S.-based high-tech investments in China.
