https://crsreports.congress.gov
Updated December 16, 2019
The Committee on Foreign Investment in the United States
Overview
What is CFIUS? The Committee on Foreign Investment in
the United States (CFIUS) is an interagency committee that
serves the President in overseeing the national security
implications of foreign investment in the economy. It
reviews foreign investment transactions to determine if (1)
they threaten to impair the national security; (2) the foreign
investor is controlled by a foreign government; or (3) the
transaction could affect homeland security or would result
in control of any critical infrastructure that could impair the
national security. The President has the authority to block
proposed or pending foreign investment transactions that
threaten to impair the national security.
What is the Source of CFIUS Authority? CFIUS initially
was created and operated through a series of Executive
Orders. In 1988, Congress passed the “Exon-Florio”
amendment to the Defense Production Act (50 U.S.C. App
sect. 2170), which codified the CFIUS review process due
in large part to concerns over acquisitions of U.S. defense-
related firms by Japanese investors. In 2007, amid growing
concerns over the proposed foreign purchase of commercial
operations of six U.S. ports, Congress passed the Foreign
Investment and National Security Act of 2007 (H.R. 556 /
P.L. 110-49) to create CFIUS in statute. This statute was
amended again in 2018 with the Foreign Investment Risk
Review Modernization Act of 2018 (FIRRMA) (Title XVII,
P.L. 115-232), The United States is both the largest
recipient of foreign investment and the largest foreign
investor in the world.
What is the Membership of CFIUS? The committee
consists of nine members, including the Secretary of the
Treasury, who serves as chair, the Secretaries of State,
Defense, Homeland Security, Commerce, and Energy; the
Attorney General; the United States Trade Representative;
and the Director of the Office of Science and Technology
Policy. The Secretary of Labor and the Director of National
Intelligence serve as ex officio members of the committee.
Executive Order 13456 (January 2008) added five White
House representatives, including the Director of the Office
of Management and Budget and the Assistant to the
President for National Security Affairs. The President can
also appoint other Executive officers to serve on the
committee on a case-by-case basis.
The CFIUS Review Process
CFIUS’s review process is a voluntary system, except in
certain cases, of notification by foreign investors. Firms
largely comply with the provision, because foreign
acquisitions that do not notify the committee remain subject
indefinitely to divestment or other actions by the President.
(1) In the first step of the formal review process,
notification to CFIUS can follow a two-track approach,
either an expedited declaration (15 days for review) or a
written notification (30 days for review; involves foreign
persons in which a foreign government has, a substantial
interest) of a transaction in a U.S. firm involved in specified
industries. Declarations and written notices are
distinguished according to three criteria: the length of the
submission, the time for CFIUS’ consideration of the
submission, and the committee’s options for disposition of
the submission
(2) National Security Review: In the second step, the
committee is required to conduct a 45-day national security
review if (a) the investment threatens to impair the national
security of the United States, including homeland security,
critical infrastructure, and critical technologies; and (b) the
transaction would result in foreign control of a U.S. entity.
The Secretary of the Treasury can exempt a transaction
from review if he determines that the transaction will not
impair the national security. During the 45-day review, the
Director of National Intelligence is required to investigate
the national security implications of any proposed foreign
investment transaction.
In a national security review, CFIUS is required to consider
12 specific factors, including (1) domestic production
needed for current and projected national defense
requirements; (2) the control of domestic industries and
commercial activity by foreign citizens; (3) potential sales
of military goods, equipment, or technology to a country
that supports terrorism or proliferates missile technology or
chemical and biological weapons; (4) U.S. technological
leadership in areas affecting U.S. national security; (5)
critical infrastructure, major energy assets and critical
technologies; and (6) such other factors as the President or
the committee determine to be appropriate.
(3) National Security Investigation. In the third step, if any
member of CFIUS determines that a foreign investment
transaction threatens to impair the national security, the
transaction undergoes a more comprehensive 45-day
national security investigation. During this investigation,
CFIUS and the transactors can develop and adopt
