So you’d like to build a new fabrication facility in China, or just add some capabilities to your existing plant? Well, the U.S. Government may want to have a look at that transaction—and may soon have the authority to stop that transaction.
On October 15, 2020, CFIUS will officially tie mandatory filings to U.S. export control regimes, including the Export Administration Regulations (EAR) and the International Traffic in Arms Regulations (ITAR). While that change may draw a clearer line of what constitutes a mandatory filing, it also pulls your CFIUS review into the complex (and somewhat nerdy) world of export regulations.
Continue Reading Lend Me Your EARs: CFIUS Makes Export Controls a Trigger for Mandatory Filings
In what has become his trademark Trumpian manner, the President announced last Friday that new tariffs and trade restrictions against China are on again, at the same moment that his senior Commerce and Treasury Department negotiators were trying to work out a deal in Beijing. This came just a handful of days after Department of Treasury Secretary Steven Mnuchin announced that the trade war with China was “on hold.” The President has declared again in a tweet Saturday that America “can’t lose” a trade war with China. We’ve debunked that fallacy here. But even if one accepts the premise that we should prosecute a trade war, it’s well established that a micromanaging general quickly loses the confidence of his ground troops. Wars have been lost for less. On trade, the President’s conflicting directives have everyone a little confused. Here are the highlights for the time being:…
Continue Reading Another Day Another Tariff… and Other Recent Restrictions on China
The other day I spoke to a colleague at the U.S. Department of the Treasury who works in the Office of Investment Security and said, “I heard CFIUS filings were going to break last year’s record total.” He just laughed. He said the OIS received one hundred and seventy-some filings in 2016, the most they had ever received in a year.
This year, only in November, they were over 225 submissions!
Of course, all of this was just talk and should not be relied on for statistical analysis. But it gives you a good idea of the flood of CFIUS filings that the Committee is now tasked with reviewing. While my contact was sanguine on the possibility of adding some new folks soon to his office soon, he noted that the OIS staff – whom he called the best of the best – has not yet been increased to meet the surge in demand.
So what does this mean for your inbound investment into the United States? We explore that question and provide a few tips below. In addition to a present snapshot of CFIUS, we have a look at the future of CFIUS as a proposed Senate bill aims to increase scrutiny on foreign investment.
Continue Reading The Waiting Game: When, Why, and How to File with CFIUS in a New Era of Investment Scrutiny
CFIUS has the power to unwind your M&A deal. That power will likely expand. That is the headline.
The Committee on Foreign Investment in the United States (CFIUS) reviews acquisitions by foreign parties of “critical industries” and “critical infrastructure” in the United States. The inter-agency committee’s actions warrant plenty of explanation, and you can find much of it here.…
In a stunning ruling issued on July 15, 2014, the U.S. Court of Appeals for the D.C. Circuit held that review by the Committee on Foreign Investment in the United States (“CFIUS”) and the subsequent unwinding of the investment deprived the foreign investor of due process under the 5th Amendment to the U.S. Constitution. Ralls Corp. v. Comm. on Foreign Investment in the United States, No. 12-cv-01513 (D.C. Cir. Jul. 15, 2014) (a copy of the opinion is here). If upheld, the ruling may require fundamental changes in how CFIUS conducts its reviews and may enhance foreign investors’ ability to influence or challenge the outcome of a review.
Continue Reading Shedding Light on CFIUS: Appeals Court Holds That CFIUS Review Lacks Constitutional Due Process
By: Reid Whitten
On February 25, 2013, the Chinese state oil company, CNOOC, closed a $15.1 billion deal to take over Canadian oil company, Nexen. Along with interests in the Canadian oil sands of Alberta and offshore production in west Africa and the North Sea, CNOOC will acquire more than 200 drilling leases in the Gulf of Mexico, a primary source of U.S. oil. According to Nexen, its existing assets in the area include facilities producing more than 15,000 barrels of oil per day in 2012, with notable exploration potential for future growth.…
Continue Reading Pay Attention to the Man Behind the Curtain: The Mysterious Methods to CFIUS Approval
The Committee on Foreign Investment in the United States (“CFIUS” or the “Committee”) recently submitted its annual report to Congress for calendar year 2010. The report, which provides general information on notices filed, reviews and investigations completed by CFIUS during the year, and the types of security arrangements and conditions that the Committee has employed to mitigate national security concerns, reveals that a larger number of reviews are proceeding to the investigation stage and that the Committee is increasingly conditioning its tacit approval of transactions upon the parties’ adoption and implementation of various mitigation measures.