The House voted 222-210 last week to pass its China competition bill, which includes a variety of provisions that could expand U.S. export controls, sanctions and investment screening authorities. Although the America Competes Act faced objections from Republicans who argued it wasn’t tough enough on China and didn’t include strong enough export control measures (see 2202020039), several provisions could lead to more China sanctions and further restrict exports of critical American technologies.
David Plotinsky, former acting chief and principal deputy chief of the Department of Justice's Foreign Investment Review Section, joined Morgan Lewis as a partner in the Washington, D.C.-based Federal Cybersecurity and Communications Reliability Division, the firm announced. In his new role, Plotinsky will work on issues relating to "national security, telecommunications, and foreign investment in the United States," including matters at the Committee on Foreign Investment in the United States, the firm said. While at DOJ, Plotinsky led the agency's work before CFIUS.
Lawmakers submitted a host of amendments to the House’s recently released China competition bill, including measures that would introduce new export controls and sanctions authorities and requirements. One submission, a 115-page amendment from Rep. Michael McCaul, R-Texas, would create more congressional oversight of the Commerce Department’s emerging and foundational technology control effort and calls for expanded export restrictions against Chinese military companies.
The U.S. needs to more aggressively monitor transactions that aren't reported to the Committee on Foreign Investment in the U.S., said Nazak Nikakhtar, former acting head of the Bureau of Industry and Security. Nikakhtar, speaking during a Jan. 27 panel discussion hosted by China Tech Threat, said that the transfer of technologies to China, particularly semiconductor production equipment, has allowed it to outpace America in hypersonic missiles and has “placed the U.S. and the world in incredible jeopardy.”
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The Committee on Foreign Investment in the U.S. is investigating a Chinese investment in California-based Icon Aircraft after receiving allegations that the aircraft manufacturer may be transferring sensitive technology to China, The Wall Street Journal reported Jan. 18. CFIUS began the review in late November after receiving a memo from a group of Icon’s American shareholders, the report said. In the memo, the shareholders said a Chinese company, Shanghai Pudong Science and Technology Investment Co. (PDSTI), has been “installing board members and executives, pressuring others and laying plans to transfer Icon’s technology to China.” In addition to CFIUS, the FBI opened a separate criminal probe and is investigating potentially illegal technology transfers from Icon to China, the report said. Icon said its aircraft don’t have military applications and the company “doesn’t see PDSTI’s investment as a national-security concern,” according to the report. The company also told the WSJ that it expects the CFIUS review to be completed at the end of February. A spokesperson for the Treasury Department, which chairs CFIUS, declined to comment. The FBI and Icon didn’t immediately respond to requests for comment.
The U.S. should try to use existing tools to better screen outbound investments rather than create a new investment regime, which could burden American companies and damage U.S. competitiveness, two former U.S. officials and an international investment expert said. But one member of a bipartisan congressional commission said a new outbound investment regime is necessary to better protect U.S. critical technologies and national security.
The Treasury Department earlier this month added New Zealand to its list of excepted foreign states that benefit from certain exemptions to the Committee on Foreign Investment in the U.S. process. New Zealand, along with the U.K., will have until February 2023 to meet certain foreign investment criteria and cement its position as an excepted foreign state. Treasury announced this month that Australia and Canada had met that criteria and will remain eligible for the provision, which provides certain foreign countries exemptions to the CFIUS process, sometimes allowing them to skip CFIUS clearance altogether (see 2201050039 and 2109030039). New Zealand qualifies as an excepted foreign state because of its intelligence-sharing relationship with the U.S., “among other factors,” Treasury said Jan. 5. The agency also pointed to New Zealand’s “collective defense arrangement and cooperation” with the U.S.
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Australia and Canada have met certain investment screening requirements and will remain eligible for the Treasury Department’s foreign excepted state provision, the agency said Jan. 5. Treasury also extended for one year the deadline by which certain U.S. allies must prove that they have a robust foreign investment screening process, which will allow those countries to also qualify for the exemption.