The Committee on Foreign Investment in the U.S. should review U.S. investments made by Chinese lithium battery supplier Guoxuan High-Tech through its U.S. subsidiary, Gotion Inc., Republicans said in a Sept. 20 letter to Treasury Secretary Janet Yellen. The lawmakers said the company, also known as Guoxuan High-Tech, has invested in lithium battery manufacturing plants in Michigan and Illinois, adding that its owners’ “membership and affiliation” with the Chinese government “requires a rigorous review” by CFIUS.
The House Financial Services Committee this week advanced a bill that would make USDA a permanent member of the Committee on Foreign Investment in the U.S. The Agricultural Security Risk Review Act, which passed the committee with bipartisan support, would address an “overdue” oversight in making the agency a formal part of all CFIUS reviews, Rep. Blaine Luetkemeyer, R-Mo., said during a Sept. 20 committee markup. “While CFIUS is indeed a committee, it benefits from expertise and particular member agencies with relevant expertise,” he said. “Agriculture is too important to go neglected.”
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The Committee on Foreign Investment in the U.S. already has issued two civil monetary penalties this year and plans to impose more before 2024, said Paul Rosen, the head of the Treasury Department’s Office of Investment and Security. Rosen also said CFIUS is increasing its on-site visits to monitor compliance with mitigation agreements and is preparing to formally “refine” regulations surrounding the committee's enforcement powers, case review functions and efforts to track own non-notified transactions.
Treasury Secretary Janet Yellen said the Committee on Foreign Investment in the U.S. is doubling down on enforcement, warning industry lawyers about potential subpoenas or penalties for violating the committee's rules or mitigation agreements. Yellen’s comments came one day after Paul Rosen, who heads CFIUS, said the committee recently hired additional enforcement officials and may add more.
The upcoming U.S. outbound investment restrictions (see 2308090066 and 2308100045) should be overseen by the Office of Foreign Assets Control, not the agency that heads the Committee on Foreign Investment in the U.S., Republicans said this week. Several lawmakers, including Patrick McHenry, the top Republican on the House Financial Services Committee, said the new outbound investment restrictions are similar to a sanctions program as opposed to the case-by-case review process overseen by CFIUS for inbound investments, and said OFAC is better suited to prevent China from benefiting from sensitive American investments.
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The Treasury Department released its agenda for its second annual conference for the Committee on Foreign Investment in the U.S., which will be held Sept. 14 in person at the Treasury building in Washington. Speakers include Treasury Secretary Janet Yellen, CFIUS head Paul Rosen and DHS Secretary Alejandro Mayorkas. The conference will include sessions on CFIUS priorities, investor due diligence, non-notified transactions, compliance and enforcement and how other legal authorities affect CFIUS. Event registration closes Aug. 31.
A pair of U.S. and Israeli 3D printing technology companies said they are submitting disclosures to both the Committee on Foreign Investment in the U.S. and the State Department ahead of their planned $500 million combination, Squire Patton said in an Aug. 24 post. Israeli-based Stratasys plans to acquire U.S.-based Desktop Metal, which was described in an August SEC filing as a “pioneering a new generation of additive manufacturing technologies” focused on the “volume production of end-use parts.” The companies said they submitted a “notice filing” to CFIUS in July and plan to submit a “notice filing” to the State Department “pursuant” to the International Traffic in Arms Regulations.
The Committee on Foreign Investment in the U.S. may continue to see a drop in short-form declarations, particularly if more declarations continue to result in full filings, said Laura Fraedrich, a lawyer with Lowenstein Sandler. She said the decrease in declarations submitted to CFIUS last year -- the first drop since the concept was introduced in 2018 -- highlights the challenges investors face in assessing how best to approach CFIUS.