Companies are increasingly straying from foreign direct investment, partly due to challenges faced by the ongoing COVID-19 pandemic and a rise in global investment screening, researchers said in a June 3 report. FDI requirements and thresholds have specifically become more “far-reaching” over the past five years, the report said, and businesses continue to face mounting regulatory risks, which has chilled investment in a range of sectors. “Once a hallmark of globalisation” the report said, “FDI has been in trouble for some time.”
A congressional commission said the Commerce Department has “failed” to carry out its export control responsibilities over emerging and foundational technologies, which is hindering the work of other government bodies and allowing some sensitive dual-use technologies to be freely exported from the U.S. The commission said Commerce’s Bureau of Industry and Security, which is in charge of the export control effort, has taken “limited action to strengthen or introduce new controls” since its 2018 congressional mandate and should look to other agencies to help with the process.
The Committee on Foreign Investment in the U.S. approved a $30 million investment by Hanwha Systems, a South Korean defense technology company, into Kymeta, a U.S. satellite communications company, Kymeta announced May 26. Kymeta said CFIUS’ approval “clears the way” for the two companies to close on the transaction, which will help Kymeta’s “global market reach, accelerate production, and improve the overall growth trajectory of the company.” The companies announced the transaction in December.
A House lawmaker recently introduced a bill that would add the U.S. agriculture secretary as a member of the Committee on Foreign Investment in the U.S. The Agricultural Security Risk Review Act, which has been previously introduced both in the House and Senate, would allow the U.S. Department of Agriculture to have input in investment transaction reviews, Rep. Frank Lucas, R-Okla., said May 20. The bill comes during a time when foregn ownership of U.S. agricultural businesses is “steadily” increasing, Lucas said. He called the move “long overdue.” “I know firsthand just how important our agriculture industry is, which is why Congress must remove the hurdles that keep USDA from having a permanent seat at the table with CFIUS’ review of foreign transactions," Lucas said.
Republican Sens. Marco Rubio of Florida and John Cornyn of Texas introduced a bill to bolster the ability of U.S. foreign investment reviews to cover genetic information. The Genomics Expenditures and National Security Enhancement Act would require mandatory filings to the Committee on Foreign Investment in the U.S. for “any deal” that involves a company working with genetic information, Rubio said May 20. Under the bill, CFIUS would be required to consult with the Department of Health and Human Services on any deal that involves a “genetic data transaction,” which would increase “cross-agency awareness” of these transactions. The bill would also require CFIUS to include the Senate’s Select Committee on Intelligence and the Foreign Relations Committee in its briefings.
A U.S. commercial space company announced that it received a draft national security agreement (NSA) from the Committee on Foreign Investment in the U.S., which details requirements and conditions it must meet before CFIUS approves its transaction. The company, Momentus Inc., said it voluntarily notified CFIUS of its proposed business combination with Stable Road Acquisition Corp. but must resolve CFIUS’s “national security concerns” about Momentus’ foreign ownership and control, according to a May 14 news release.
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The Biden administration will likely build on the U.S.’s recently revised investment screening regulations by expanding the list of countries that qualify as excepted foreign states, trade lawyers said. The Committee on Foreign Investment in the U.S. currently only recognizes Australia, Canada and the United Kingdom as excepted states (see 2002270049) -- a designation that reduces the likelihood that CFIUS will heavily intervene in deals from those countries -- but could soon also recognize Japan, said Richard Sofield, a Wiley Rein trade lawyer.
Latham & Watkins hired Damara Chambers, previously with Vinson & Elkins, as a partner in the Litigation & Trial Department and a member of the White Collar Defense & Investigations practice, Latham said in a news release. “Chambers is a leading lawyer who focuses on cross-border investment matters, including national security reviews by the Committee on Foreign Investment in the United States (CFIUS), the Defense Counterintelligence and Security Agency (DCSA), and the Department of Energy, among other agencies,” the firm said.