CFIUS Challenges

The U.S. intelligence community believes with "moderate confidence" that there is likely a "coordinated strategy" to acquire U.S. companies involved with critical technologies by one or multiple foreign companies or governments, according to the latest unclassified annual report of the Committee on Foreign Investment in the United States (CFIUS). As China Trade Extra reports this morning:

This is the first time that CFIUS has made this particular finding, although it has long been required by law to report on whether such a coordinated strategy to acquire critical technologies exists, according to CFIUS sources. CFIUS examines transactions that transfer control of a U.S. company to a foreign person to ensure they do not pose a national security risk.

Among the items considered to be critical technologies under the CFIUS statute are defense goods and services controlled on the U.S. Munitions List, certain items on the Commerce Control List, specially designed nuclear equipment and toxins.

The unclassified version of the report does not provide information on which specific entities are engaged in this coordinated strategy, although such a list is likely included in the classified version, according to a CFIUS lawyer. This lawyer said the finding could affect future transactions from the identified companies or governments, which could conceivably include China.

However, China was only linked to four planned and completed transactions involving critical technologies during 2011 out of a total of 120 such transactions that year, according to statistics published in the unclassified version of the report released Dec. 20. The United Kingdom had the most such transactions at 30.

View CFIUS' annual report to Congress.