Export Compliance Daily is providing readers with the top stories for July 12-16 in case you missed them. You can find any article by searching the title or by clicking on the hyperlinked reference number.
Several U.S. and foreign companies in June and July provided updates to their transactions that require foreign investment reviews and approvals. The deals include a signed national security agreement (NSA) with the Committee on Foreign Investment in the U.S., plans to file joint CFIUS declarations and a stalled purchase involving a South Korean semiconductor company.
Republican lawmakers again threatened to remove export control responsibilities from the Commerce Department if it doesn’t move faster to issue restrictions over emerging and foundational technologies, doubling down on criticism levied at agency officials for months. The latest threat, sent in a June 15 letter to Commerce Secretary Gina Raimondo and signed by 10 Republican senators, highlights the tension between an agency that wants to avoid rushing into overbroad controls that could harm U.S. companies and lawmakers who say Commerce is neglecting a congressional mandate to restrict sensitive exports to China.
A Chinese private equity fund manager must obtain approval from the Committee on Foreign Investment in the U.S. before completing its transaction with a South Korean semiconductor company, a June 4 Securities and Exchange Commission filing said. Beijing-based Wise Road Capital and South Korea-based Magnachip Semiconductor, which has offices in the U.S., were told by CFIUS last month to submit a “notice concerning” Wise Road's buy of Magnachip, Magnachip said, which is now “conditioned on the receipt of CFIUS approval.” The two companies plan to file a joint voluntary notice, and Magnachip said it expects the deal's timeline to be delayed. Magnachip added that it doesn’t believe the transaction “will require any approval” in South Korea but plans to cooperate with the South Korean government if it has questions.
Countries need to revise their foreign direct investment screening environments, which are contributing to a global drop in FDI, said Simon Evenett, a trade and economics professor at the University of St. Gallen. Evenett, who co-wrote a recent report arguing for a policy reset around FDI (see 2106030034), said a rise in screening tools is chilling investments and creating uncertainty over a range of industries.
President Joe Biden said the U.S. is committed to an open investment environment and remains the “most attractive place in the world” for business despite the sometimes rigorous foreign investment screening by the Committee on Foreign Investment in the U.S. While the U.S. “will always protect our national security, and certain foreign investments will be reviewed” by CFIUS, the U.S. wants to maintain a “level playing field,” Biden said in a June 8 statement. “We believe that our country -- and our world -- are safer, more resilient, and more prosperous because of the investment of foreign-owned companies in the United States,” he said. “As the United States faces increasing competition for the jobs and industries of the future, we will remain the destination of choice for investors around the world.”
Export Compliance Daily is providing readers with the top stories for June 1-4 in case you missed them. You can find any article by searching on the title or by clicking on the hyperlinked reference number.
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.