Committee on Foreign Investment in the United States

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The Committee on Foreign Investment in the United States (CFIUS) is an inter-agency committee chaired by the Secretary of the Treasury, which has the power to review any foreign acquisition, merger or takeover of a U.S. corporation. The Committee must complete an initial review within 30 days, and it may take an additional 15 days to undertake an extended review. If if finds that an acquistion may harm national security, it may recommend that the President block that acquisition under the Exon-Florio Provision (Section 721) of the Defense Production Act of 1950.

The Exon-Florio Provision was adopted in 1988 over concerns about Japanese acquisitions of U.S. firms. The collapse of the Japanese Bubble Economy and the evaporation of much of the available Japanese export capital made that problem go away. However other concerns soon replaced anxiety about America's ally Japan. The People's Republic of China has long been envisioned as a potential rival super power. The law was further amended in 1992 through section 837(a) of the national Defense Authorization Act for Fiscal Year 1993 (a.k.a. the Byrd Amendment) to empower CFIUS to investigate acquisitions, takeovers and mergers where the acquirer is controlled or acting on behalf of a foreign government or would result in a person engaged in intyerstate commerce having the power or affect national security. Five factors that may be considered in blocking such a transfer of ownership include:

  • need for projected domestic production for national security
  • capability and capacity of domestic industries
  • whether control of domestic industry and commercial activity affects national security
  • potential effects of transactions on sales of miltiary technology etc. to countries supporting terrorism or engaged in ABC weapons or missile proliferation
  • potential effects on U.S. technological leadership



Besides the Secretary of the Treasury, the other members are the Secretaries of State, Defense, and Commerce, the Attorney General, the Director of the Office of Management and Budget, the U.S. Trade Representative, and the Chairman of the Council of Economic Advisers.

In 1993, in response to a sense of Congress resolution, CFIUS membership was expanded by Executive Order 12860 to include the Director of the Office of Science and Technology Policy, the Assistant to the President for National Security Affairs and the Assistant to the President for Economic Policy. In February 2003, the Secretary of Homeland Security was added to CFIUS. This brought the membership of CFIUS to twelve under the chairmanship of the Secretary of Treasury.


The Committee on Foreign Investment in the United States ("CFIUS") was originally established by Executive Order 11858 in 1975 mainly to monitor and evaluate the impact of foreign investment in the United States. In 1988, the President, pursuant to Executive Order 12661, delegated to CFIUS his responsibilities under Section 721.

Notable Foreign Acquisitions


  • Toshiba bought Westinghouse, a maker of nuclear reactors.
  • Alcatel bought Lucent, the successor to Bell Labs.
  • Dubai International Capital, a company owned by the UAE government, got permission to buy Doncasters, a British defense firm with several plants in the U.S. that make turbine blades for tanks and aircraft.
  • Dubai Ports World, an UAE company, was granted permission to buy six US ports, but they withdrew in face of Congressional opposition.


  • CNOOC, a Chinese oil company, bid for Unocal, but it withdrew before the CFIUS review was finished.
  • Lenovo bought the personal computer operations of IBM.
  • BAE bought United Defense.


  • James Jackson. "The Exon-Florio National Security Test for Foreign Investment." CRS Report for Congress Order Code RS22197, February 27, 2006.

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