We need strong tools to guard against national security threats to our technology from countries like China. That’s why I’ve spent this year working with my Republican counterpart on the Banking Committee, Senator Mike Crapo, to strengthen the tools the U.S. uses to block national security threats posed by investments from China and other countries. Our provision passed Congress last month on a broad, bipartisan vote, as part of the National Defense Authorization Act. It’s now been sent to the President’s desk and will be signed into law.
Our bill will modernize and strengthen the Committee on Foreign Investment in the United States – known as CFIUS. CFIUS is responsible for screening foreign investments for national security threats, and blocking investments that undermine our national security.
But lately, countries like China have adopted new tactics to acquire our critical technology and know-how, while the laws that give CFIUS its authority haven’t kept up.
That’s why I introduced this bipartisan bill, to ensure CFIUS has the tools it needs to tackle today’s threats. The bill will make these tactics harder by strengthening the review process and enforcement, particularly when it comes to critical technology and investments from state-owned enterprises.
No country has been more aggressive than China in going after American technology in sectors like aviation, robotics, new energy vehicles, and others where the U.S. has established ourselves as a global leader. In just three years, from 2013 to 2015, the number of Chinese acquisitions coming under CFIUS review jumped 38 percent. And China is getting sneakier, finding ways to get around the rules to avoid review all together.
Chinese companies structure deals so they can gain access to sensitive technology and information without triggering a CFIUS review. For example, if a Chinese investor wanted to buy a controlling stake in an American company, CFIUS would review that deal and have the chance to block it. But if Chinese investors instead got seats on that company’s board, they could still have access to the same sensitive technology without triggering a CFIUS review.
Similarly, some foreign investors might enter into a joint venture with an American company, again giving them access to all of the technology, data, and know-how, without CFIUS approval. While that American business may not particularly like joining up with this Chinese company, the Chinese government will coerce them into the joint venture as a condition for continued access to the Chinese market.
This bill is just a first step. I’ve also worked with Republican Senator Chuck Grassley on bipartisan legislation to empower the Department of Commerce to begin screening foreign investments for their long-term economic impact and consequences for American workers and American businesses.
Of course we welcome investment from anyone that will create jobs and grow the U.S. economy – but we need strong safeguards in place to make sure those deals don’t threaten our national security or American jobs. This month, we’re taking an important step in the right direction.
Sherrod Brown is a weekly columnist and represents Ohio in the Senate.