The U.S. may run into challenges enforcing aspects of its new outbound investment restrictions on China, especially for intercompany transfers and investments, Sarah Bauerle Danzman, a former State Department official, said during a webinar hosted by the Center for a New American Security last week. She said investors will likely need more guidance on the issue whenever the Treasury Department releases regulations for the regime.
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The Congressional Research Service this month issued an updated version of its overview of the Committee on Foreign Investment in the U.S. The report notes Congress is proposing legislation to expand CFIUS jurisdiction over certain land purchases and potentially add the USDA secretary as a permanent member of the committee (see 2307280052 and 2307180022). CRS listed several items Congress should be considering, such as how the Treasury Department will implement any “new agriculture-related responsibilities in regulation and practice”; how “sufficient are CFIUS’ current authorities” now that five years have passed since the Foreign Investment Risk Review Modernization Act was enacted; and how the Commerce Department’s process of identifying emerging and foundational technologies for export controls is “facilitating or hindering CFIUS reviews of transactions related to such technologies.”
Rep. Rick Larsen, D-Wash., one of the shrinking number of members of Congress who advocate for engaging with China rather than punishing it, recently published a white paper of his views on how to manage competition with China, how to use both offensive and defensive measures to compete with China, how to improve U.S. governance and competitiveness, and how to identify areas of cooperation.
The U.S. needs to better protect agricultural technology from Chinese theft and push Beijing to reduce tariffs on U.S. crops, American farmers told lawmakers last week. Speaking during a panel in Iowa organized by the House Select Committee on China, at least one farmer said U.S. trade policy should focus more on securing free trade deals, which would help exporters become less reliant on China.
The Committee on Foreign Investment in the U.S. is reaching out to companies to warn them of a recent frequently asked question from May that may create “significant obstacles” for tech startups and others trying to raise capital, Wilson Sonsini said in a client alert last week. The CFIUS guidance clarified that the completion date of a transaction is the date when the foreign person obtains any equity interest in the U.S. business, and law firms at the time warned the clarification could lead to problems for parties that for years relied on "springing rights" for minority investments -- deals that allow an investor to acquire equity but not in a way that would make their stake a covered transaction under CFIUS (see 2305300058).
The Committee on Foreign Investment in the U.S. continued to see an increase in notices last year and initiated the most investigations since 2017, CFIUS said in its annual report to Congress released this week. The committee received 286 notices during calendar year 2022, a slight increase from the 272 it received in 2021, and began 162 investigations into transactions, 32 more than in 2021 and close to double the amount from 2020.
The Senate last week passed its version of the FY 2024 National Defense Authorization Act with several trade-related amendments, including one that could establish a notification regime for, but not restrict, certain outbound investments (see 2307260029).
The Senate this week voted to attach amendments to its version of the FY 2024 National Defense Authorization Act, including one that could establish a notification regime for certain outbound investments and another that could ban China, Russia, North Korea and Iran from investing in American farmland and agricultural businesses.
The Committee on Foreign Investment in the U.S. is investigating whether TuSimple Holdings is complying with a national security agreement between CFIUS and the U.S.-based self-driving truck and autonomous freight shipping technology company, TuSimple said. The company said it’s “cooperating with the inquiry,” which is examining “information shared by TuSimple U.S.” with its China-based businesses: Hydron and Hydron’s partners.