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Committee on Foreign Investment in the United States

The Committee on Foreign Investment in the United States (CFIUS, commonly pronounced "Cifius" /ˈsɪfiəs/) is an inter-agency committee of the United States Government that reviews the national security implications of foreign investments in U.S. companies or operations. Chaired by the United States Secretary of the Treasury, CFIUS includes representatives from 16 U.S. departments and agencies, including the Defense, State and Commerce departments, as well as (most recently) the Department of Homeland Security.

CFIUS was first established by President Gerald Ford's Executive Order 11858 in 1975, initially to study foreign investment. But in the 1980s, fear of Japanese investment (and in particular a proposed purchase of Fairchild Semiconductor by Fujitsu) led Congress to pass the Exon–Florio Amendment in 1988, which empowered CFIUS to reject deals. From 2013-2015, 20% of CFIUS's cases have to do with investment from China. CFIUS does not acknowledge which deals are under review, does not require the involvement of any of the parties of a deal, and does not publicly announce its findings.[1]


All companies proposing to be involved in an acquisition by a foreign firm are supposed to voluntarily notify CFIUS, but CFIUS can review transactions that are not voluntarily submitted.

CFIUS' primary concern in most reviews is that technology or funds from an acquired U.S. business might be transferred to a sanctioned country as a result of being acquired by a foreign acquirer.[2]

CFIUS reviews begin with a 30-day decision to authorize a transaction or begin a statutory investigation. If the latter is chosen, the committee has another 45 days to decide whether to permit the acquisition or order divestment. Most transactions submitted to CFIUS are approved without the statutory investigation.[3] However, in 2012 about 40% of the 114 cases submitted to CFIUS proceeded to investigation.[4]

CFIUS provides close scrutiny to acquisitions of critical infrastructure, including public health or telecommunications, among others.[5]

CFIUS has looked at the "restrictions on sale of advanced computers to any of a long list of foreign recipients, ranging from China to Iran."[6] CFIUS reviews even deals with firms from U.S. allies, such as BAE Systems' early-2005 acquisition of United Defense. This and the vast majority of transactions submitted to CFIUS are approved without difficulty. But at least one deal has been called off when CFIUS began to take a closer look.[7]


In 1975, President Ford created the Committee by Executive Order 11858.[8][9] It was composed of the Secretary of the Treasury as the chairman, Secretary of State, Secretary of Defense, Secretary of Commerce, the Assistant to the President for Economic Affairs, and the Executive Director of the Council on International Economic Policy. The Executive Order also stipulated that the Committee would have "primary continuing responsibility within the Executive Branch for monitoring the impact of foreign investment in the United States, both direct and portfolio, and for coordinating the implementation of United States policy on such investment." In particular, CFIUS was directed to:[10]

  1. arrange for the preparation of analyses of trends and significant developments in foreign investments in the United States;
  2. provide guidance on arrangements with foreign governments for advance consultations on prospective major foreign governmental investments in the United States;
  3. review investments in the United States which, in the judgment of the Committee, might have major implications for United States national interests; and
  4. consider proposals for new legislation or regulations relating to foreign investment as may appear necessary.

In 1980, President Jimmy Carter added the United States Trade Representative and substituted the Chairman of the Council of Economic Advisers for the Executive Director of the Council on International Economic Policy by Executive Order 12188.[9][11]

In 1988, the Exon–Florio Amendment was the result of national security concerns in Congress caused by the proposed purchase of Fairchild Semiconductor by Fujitsu.[9][12][13] The Exon-Florio Amendment granted the President the authority to block proposed mergers, acquisitions, and takeovers that threaten national security.[9] In 1988, President Ronald Reagan added the Attorney General and the Director of the Office of Management and Budget by Executive Order 12661.[9][14] Reagan also delegated the review process to the Committee on Foreign Investment in the United States in the same Executive Order, utilizing the statutory authority the U.S. Congress enacted to enable the President to review foreign investments, in the form of Exon-Florio Amendment.

In 1992, the Byrd Amendment required CFIUS to investigate proposed mergers, acquisitions, and takeovers where the acquirer is acting on behalf of a foreign government and affects national security.[9] In 1993, President Bill Clinton added the Director of the Office of Science and Technology Policy, the National Security Advisor, and the Assistant to the President for Economic Policy by Executive Order 12860.[9][15] In 2003, President George W. Bush added the Secretary of Homeland Security by Executive Order 13286.[9][16]

The Foreign Investment and National Security Act of 2007 (FINSA) established the Committee by statutory authority, reduced membership to 6 cabinet members and the Attorney General, added the Secretary of Labor and the Director of National Intelligence, and removed 7 White House appointees.[9] In 2008, President Bush added the United States Trade Representative and the Director of the Office of Science and Technology Policy by Executive Order 13456 implementing the law.[9][17] FINSA requires the President to conduct a national security investigation of certain proposed investment transactions, provides a broader oversight role for Congress, and keeps the President as the only officer with the authority to suspend or prohibit mergers, acquisitions, and takeovers.[9]

In 2018, President Donald Trump signed the Foreign Investment Risk Review Modernization Act (FIRRMA), which gave CFIUS new powers over particular types of FDI that mainly concern Chinese investors. These include real estate investing, areas where minority investment through private equity provide access to US tech companies' business information, and US-Chinese joint ventures. CFIUS also gained more appropriations, staffing, authority to enforce a longer review period, and formalizes more thorough material agreement disclosure.[18]

Opinions on the CommitteeEdit

In February 2006, Richard Perle gave his opinion on CFIUS when he related to CBS News his experience with the panel during the Reagan administration: "The committee almost never met, and when it deliberated it was usually at a fairly low bureaucratic level." He also added, "I think it's a bit of a joke if we were serious about scrutinizing foreign ownership and foreign control, particularly since 9/11."[19][20]

Others emphasize the crucial role that foreign direct investment plays in the U.S. economy, and the discouraging effect that heightened scrutiny may cause. Foreign investors in the United States, much like U.S. investors elsewhere, bring expertise and infusions of capital into often-struggling sectors of the U.S. economy. In a February 2006 interview with the New York Times, another former Reagan administration official, Clyde V. Prestowitz Jr., noted that the United States "need[s] a net inflow of capital of $3 billion a day to keep the economy afloat.... Yet all of the body language here is 'go away.'"[21]

Notable casesEdit

  • 1990: President George H. W. Bush voided the sale of MAMCO Manufacturing to a Chinese agency, ordering China National Aero-Technology Import & Export Corporation to divest themselves of Seattle-based MAMCO[22]
  • 2000: Japanese NTT Communications' acquisition of Verio[citation needed]
  • 2005: The acquisition of IBM's personal computer and laptop unit by Lenovo was approved by President George W. Bush[23]
  • 2005: The acquisition of Sequoia Voting Systems of Oakland, California, by Smartmatic, a Dutch company contracted by Hugo Chávez's government to replace that country's elections machinery[24]
  • 2005: In June 2005 a CNOOC Group (a major Chinese State-owned oil and gas corporation) subsidiary (CNOOC limited, publicly listed on the New York NYSE and Hong Kong stock exchanges) made an $18.5 billion cash offer for American oil company Unocal Corporation, topping an earlier bid by ChevronTexaco. While this offer was not opposed by the CFIUS and the Bush Administration, it was criticized by several Congressmen and, following a vote in the United States House of Representatives, the bid was referred to President George W. Bush, on the grounds that its implications for national security needed to be reviewed. On July 20, 2005 Unocal Corporation announced that it had accepted a buyout offer from ChevronTexaco for $17.1 billion, which was submitted to Unocal stockholders on August 10. On August 2 CNOOC Limited announced that it had withdrawn its bid, citing political tensions in the United States.
  • 2006: State-owned Dubai Ports World's planned acquisition of P&O, the lessee and operator of many terminals, mostly for container ships, in several ports, including in New York-New Jersey and others in the US. This acquisition was initially approved by the CFIUS and then President G.W. Bush, but was eventually opposed by Congress (Dubai Ports World controversy).
  • 2010: Russian interests acquired a controlling interest in Uranium One, which has 20 percent of U.S. uranium extraction capacity.[25] The Nuclear Regulatory Commission approved the deal because Uranium One only has a license for uranium recovery, not uranium export.[26] All voting members of CFIUS voted in favor including Jose Fernandez, the State Department's representative, a fact that became significant in the wake of allegations against Hillary Clinton from author Peter Schweizer.[27]
  • 2012: Ralls Corporation, owned by the Chinese Sany Group,[28] was ordered by President Barack Obama to divest itself of four small wind farm projects located too close to a U.S. Navy weapons systems training facility in Boardman, Oregon.[23]
  • 2016: President Obama blocked the buying by a Chinese company of the U.S. assets of the German company Aixtron SE.[29] Separately, the New York Times reported that "United States officials blocked" a $2.6 billion deal by Philips to sell Lumileds division to GO Scale Capital and GRS Ventures over concerns regarding Chinese applications of gallium nitride.[30]
  • 2017: President Trump blocked the acquisition by a Chinese purchaser of Lattice Semiconductor.[31]
  • 2018: President Trump blocked Singapore-based Broadcom Limited from purchasing Qualcomm in a hostile takeover, citing national security concerns raised by CFIUS.[32]

Notifications and investigationsEdit

CFIUS Notifications and Investigations, 1988–2015[33][34][35][36]

Year Notifications Investigations Notices
1988 14 1 0 1
1989 204 5 2 3
1990 295 6 2 4
1991 152 1 0 1
1992 106 2 1 1
1993 82 0 0 0
1994 69 0 0 0
1995 81 0 0 0
1996 55 0 0 0
1997 62 0 0 0
1998 65 2 2 0
1999 79 0 0 0
2000 72 1 0 1
2001 55 1 1 0
2002 43 0 0 0
2003 41 2 1 1
2004 53 2 2 0
2005 65 2 2 0
2006 111 7 19 2
2007 138 6 15 0
2008 155 23 23 0
2009 65 25 7 0
2010 93 35 12 0
2011 111 40 6 0
2012 114 45 22 1
2013 97 48 8 0
2014 147 51 12 0
2015 143 66 13 0

See alsoEdit


  1. ^ Granville, Kevin (March 5, 2018). "Cfius, Powerful and Unseen, Is a Gatekeeper on Major Deals". The New York Times. Retrieved April 1, 2019.
  2. ^ Schlager, Ivan; Beahn, John; Gafni, Jonathan; Tuesley, Malcolm; Gruenspecht, Joshua; Kabealo, John. "Implications of National Security Reviews on Foreign Acquisitions of US Businesses". Transaction Advisors. ISSN 2329-9134.
  3. ^ Sills, Gay Hartwell (2006). "Committee on Foreign Investments in the United States (CFIUS)". U.S. Department of Treasury, Office of the Assistant Secretary International Affairs, Office of International Investment. Archived from the original on March 25, 2006. Retrieved March 26, 2006.
  4. ^ Steptoe & Johnson LLP (January 13, 2014). "CFIUS Report: Significant Increase In Scuttled Deals". Retrieved January 20, 2014.
  5. ^ Richardson, Jeffrey. "A Modern Approach to Tackling CFIUS Concerns". Transaction Advisors. ISSN 2329-9134.
  6. ^ Rash, Wayne (January 24, 2005). "Suppose IBM-Lenovo Deal Doesn't Happen".
  7. ^ McCarthy, Ellen (March 24, 2006). "Purchase by Israeli Firm Called Off". Washington Post. p. A06.
  8. ^ Executive Order 11858 of May 7, 1975, 40 FR 20263
  9. ^ a b c d e f g h i j k United States House Committee on Ways and Means (December 2010). Overview and Compilation of U.S Trade Statues. I. Government Printing Office. pp. 290–291. ISBN 978-0-16-087511-3.
  10. ^ Jackson, James K. (July 3, 2018). The Committee on Foreign Investment in the United States (CFIUS) (PDF). Washington, DC: Congressional Research Service. p. 3. Retrieved July 8, 2018.
  11. ^ Executive Order 12188 of January 2, 1980, 45 FR 969
  12. ^ Omnibus Trade and Competitiveness Act of 1988, sec. 5021, Pub.L. 100–418, 102 Stat. 1425, enacted August 23, 1988
  13. ^ "Cold Feet: Fujitsu drops its Fairchild bid". TIME Magazine. March 30, 1987.
  14. ^ Executive Order 12661 of December 27, 1988, 54 FR 779
  15. ^ Executive Order 12860 of September 3, 1993, 58 FR 47201
  16. ^ Executive Order 13286, sec. 57, of February 28, 2003
  17. ^ Executive Order 13456 of January 23, 2008
  18. ^ Jalinous, Farhad; Mildorf, Karalyn; Schomig, Keith (August 13, 2018). "CFIUS Reform Becomes Law: What FIRRMA Means for Industry". White & Case. Retrieved April 1, 2019.
  19. ^ "Bush, Congress In Dark About Port Deal". CBS News. February 22, 2006. Archived from the original on March 10, 2006.
  20. ^ Matthews, Chris (February 23, 2006). "Bush kep in the dark about ports deal". MSNBC. Retrieved July 29, 2017.
  21. ^ Porter, Eduardo (March 10, 2006). "Dubai Deal's Collapse Prompts Fears Abroad on Trade With U.S." The New York Times. (free registration required to access content)
  22. ^ Bush, George (February 1, 1990). "Message to the Congress on the China National Aero-Technology Import and Export Corporation Divestiture of MAMCO Manufacturing, Incorporated". Federation of American Scientists. Retrieved September 28, 2012.
  23. ^ a b "Obama blocks Chinese purchase of small Oregon wind farm project". The Oregonian. Associated Press. September 28, 2012. Retrieved September 28, 2012.
  24. ^ Golden, Tim (October 31, 2006). "Voting Machine Company Submits to Inquiry". The New York Times. Retrieved April 30, 2010.
  25. ^ Qiu, Linda (June 30, 2016). "Donald Trump inaccurately suggests Clinton got paid to approve Russia uranium deal". Politifact. Retrieved July 29, 2017.
  26. ^ "NRC APPROVES TRANSFER OF CONTROL OF URANIUM RECOVERY LICENSES TO RUSSIAN FIRM" (PDF). January 29, 2017. Archived from the original (PDF) on January 29, 2017. Retrieved October 17, 2017.
  27. ^ "No 'Veto Power' for Clinton on Uranium Deal". April 28, 2015. Retrieved October 17, 2017.
  28. ^ Banerjee, Neela, and Don Lee, "Obama blocks Chinese firm's Oregon wind farm projects", LA Times, September 29, 2012. Retrieved 2012-10-02.
  29. ^ McLaughlin, David (December 2, 2016). "Obama Blocks Chinese Takeover of Aixtron as U.S. Security Risk". Bloomberg News. Retrieved February 27, 2017.
  30. ^ Paul Mozur; Jane Perlez (February 5, 2016). "Concern Grows in U.S. Over China's Drive to Make Chips". The New York Times. p. B1. Retrieved February 27, 2017.
  31. ^ Swanson, Ana (September 13, 2017). "Trump Blocks China-Backed Bid to Buy U.S. Chip Maker". New York Times. Retrieved December 4, 2017.
  32. ^ "Trump Blocks Broadcom Takeover of Qualcomm on Security Risks". March 12, 2018. Retrieved March 13, 2018.
  33. ^ Graham, Edward M; David M. Marchick (May 2006). US National Security and Foreign Direct Investment. Peterson Institute. p. 57. ISBN 978-0-88132-391-7.
  34. ^ CFIUS, "Covered Transactions, Withdrawals, and Presidential Decisions 2006-2008" Archived 2009-08-06 at the Wayback Machine, Accessed March 27, 2009.
  35. ^ CFIUS, "Covered Transactions, Withdrawals, and Presidential Decisions 2008-2010", Accessed August 25, 2011.
  36. ^ Jackson, James (October 23, 2019). "The Committee on Foreign Investment in the United States (CFIUS)" (PDF) (RL33388). Congressional Research Service. p. 35. Retrieved November 1, 2019.

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