The Biden administration and TikTok drafted a “preliminary” agreement to resolve national security concerns raised by ByteDance, the app’s Chinese owner, but face “hurdles” before the agreement can be finalized, The New York Times reported Sept. 26. Under the draft deal, which will need to be approved by the Committee on Foreign Investment in the U.S., TikTok would restructure its “data security and governance” but would not be required to divest itself from ByteDance, the report said. Multiple agencies are skeptical the agreement will sufficiently address the U.S.’s national security concerns, the report said, which “could force changes to the terms and drag out a final resolution for months.”
Made in China 2025, China's public document of its ambitions for technology dominance, came out of Chinese officials' anxiety about their tech vulnerability due to integration of U.S. and Chinese supply chains, panelists said during a Peterson Institute for International Economics webcast Sept. 23 featuring PIIE scholars and an expert on China's foreign economic policy from the University of Maryland, Margaret Pearson.
The Committee on Foreign Investment in the U.S. should require TikTok to cut ties with China-based ByteDance and all other Chinese companies, Sen. Josh Hawley, R- Mo., wrote in a Sept. 19 letter to Treasury Secretary Janet Yellen. Hawley said TikTok’s COO told Congress last week that the company’s Chinese engineers are able to access U.S. user data and that TikTok “has taken no measures to ensure that the employees in China accessing this data are not members of the Chinese Communist Party.”
U.S.-based Snapdragon Chemistry, a drug services company, said China-based pharmaceutical firm Asymchem won't acquire it after the companies failed to receive approval from the Committee on Foreign Investment in the U.S. The two companies, which first announced the acquisition in February, were “unable to agree to mitigation terms that would satisfy” CFIUS, Snapdragon said this month. “We are disappointed this deal was unable to be completed," Snapdragon CEO Matthew Bio said. "The goal of the deal was to expand domestic manufacturing capacity and be able to deliver a full range of drug development services to our clients.”
President Joe Biden this week signed the first executive order to give specific presidential direction to how the U.S. conducts foreign direct investment reviews, a move officials hope will sharpen the country's focus on sensitive technologies, personal data and other national security-related issues.
President Joe Biden plans to sign an executive order today to guide how the U.S. conducts national security reviews over inbound foreign direct investments. The order, which is the first to give formal presidential direction to the Committee on Foreign Investment in the U.S., will add “several national security factors” for CFIUS to consider when reviewing covered transactions and expand on the committee’s “existing statutory factors,” senior administration officials said during a Sept. 14 call with reporters. Biden will specifically direct CFIUS to consider a covered transaction's impact on critical U.S. supply chains, U.S. technological leadership (including for microelectronics and artificial intelligence), U.S. cybersecurity, personal sensitive data and more.
J. Philip Ludvigson, a former Treasury Department official, has joined King & Spalding as a partner in the Washington, D.C.-based International Trade practice, the firm announced. Serving at Treasury from 2019 to 2022, Ludvigson worked in the Office of Investment Security -- the office that chairs the Committee on Foreign Investment in the U.S. -- as the acting deputy assistant secretary and was the founding director for monitoring and enforcement. Prior to his time at Treasury, Ludvigson served as the acting director of foreign investment risk management at the Department of Homeland Security, guiding the agency's CFIUS and Team Telecom participation, the firm said. Ludvigson's practice will center on advising clients on CFIUS jurisdiction and risk-related concerns, King & Spalding said.
Only a small percentage of foreign real estate purchases are reviewed by the Committee on Foreign Investment in the United States, but that may change given an uptick in concern, lawyers at Morgan Lewis said in an Aug. 29 blog post.
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Several companies recently disclosed their filings with the Committee on Foreign Investment in the U.S. or updated the status of their ongoing CFIUS reviews.