The Committee on Foreign Investment in the U.S. recently opened investigations into “dozens” of completed deals involving Chinese investments that were not officially notified to CFIUS, a July 15 report from The Capitol Forum said. The deals -- which mostly took place within the past five years -- involved Chinese investments in U.S. technology, heavy industry and entertainment companies, the report said. Since May, CFIUS has “substantially” increased scrutiny of non-notified deals, the report said. The Treasury Department did not comment. Industry has seen a notable increase in CFIUS scrutiny on transactions involving medical supplies and sensitive technologies, especially those associated with Chinese investors (see 2005290027). CFIUS is also closely monitoring Chinese investors trying to take advantage of companies struggling due to the COVID-19 pandemic (see 2006230057).
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U.S. and Chinese trade tensions could last for years and require a more clear, consistent approach from the U.S., experts told the U.S.-China Economic and Security Review Commission June 24. The U.S. should not address competition challenges through decoupling, they said, but should instead invest more heavily in technology research, pursue more involvement at international standards bodies and work with trade partners to counter China’s rise.
The Committee on Foreign Investment in the U.S. is closely monitoring Chinese investors who are trying to take advantage of struggling U.S. companies, trade lawyers said. CFIUS is also focusing on the semiconductor sector, where Chinese entities are hoping to evade recent U.S. rules that impose more strict license restrictions on sales of semiconductors and other technology to China and Huawei (see 2005150058), the lawyers said.
Amid rising U.S.-China technology competition, Congress will continue to push for increased restrictions on inbound Chinese investment, said Rep. Darin LaHood, R-Ill. LaHood also said the Trump administration -- which has experienced success using tariffs and export controls to gain ground in trade negotiations -- will likely continue to leverage those measures, particularly against China.
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The Committee on Foreign Investment in the U.S. is increasing scrutiny on transactions involving basic medical supplies and sensitive technologies, trade lawyers said. Companies may also be seeing more CFIUS-related delays and a heavier involvement by political appointees in the CFIUS process as the Trump administration seeks to place more pressure on China, the lawyers said.
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The Treasury Department issued a proposed rule to modify mandatory declaration requirements for certain transactions involving critical technologies. Under the rule, transactions would require a declaration if the critical technology would normally be subject to a U.S. export license. This would be a change from certain declaration requirements for the Committee on Foreign Investment in the U.S. outlined under a 2018 pilot program, which based those decisions on whether the transactions met criteria established by the North American Industry Classification System.
Parties will soon be able to submit information for transactions relating to U.S. foreign investment reviews through an online portal, the Treasury Department said May 18. Treasury will launch a web portal later this month to allow filers to submit information through a case management system, which will send all “transaction-related information” to the Committee on Foreign Investment in the U.S. Filers who plan to submit a notice or declaration later this month should create an account at ID.me, an online identity verification program that is required to access the CFIUS CMS. Treasury said it will release more information about the CMS before its release. The agency implemented the Foreign Investment Risk Review Modernization Act (see 2002200002) earlier this year and recently announced CFIUS filing fees for certain transactions (see 2004280027).