National Security Foreign Investment Reform And Strengthened Transparency Act of 2007

Floor Speech

NATIONAL SECURITY FOREIGN INVESTMENT REFORM AND STRENGTHENED TRANSPARENCY ACT OF 2007 -- (House of Representatives - February 28, 2007)

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Mr. THOMPSON of Mississippi. Mr. Chairman, I stand here today as chairman of the Committee on Homeland Security in support of H.R. 556, the National Security Foreign Investment Reform and Strengthened Transparency Act of 2007. This bill provides needed reform by formalizing and streamlining the structure and duties of the Committee on Foreign Investment in the United States (CFIUS). Indeed, this bill addresses many of the concerns raised about CFIUS during the past twelve months, especially its current lack of transparency and oversight. This bill rectifies these concerns by formally establishing CFIUS and its membership, while also streamlining how and when a CFIUS review will be conducted.

Mr. Chairman, the bill formalizes the CFIUS membership and requires the following to serve: (1) Secretaries of Treasury, Homeland Security, Commerce, Defense, State, and Energy; (2) Attorney General; Chair of the Council of Economic Advisors; the U.S. Trade Representative; Director of Office of Management and Budget; Director of National Economic Council; and (3) The Director of Office of Science and Technology Policy; the President's assistant for national security affairs; and any other designee of the President from the Executive Office.

Under this bill, the Treasury Department will be the Chair with the Secretaries of Commerce and Homeland serving as the Vice Chairs. CFIUS will conduct a review of any national security related business transaction in which the outcome could result in foreign control of any business engaged in interstate commerce in the U.S. After reviewing the proposed business transaction, CFIUS will make a determination, the outcome of which could require conducting a full investigation if one of four circumstances exists: (1) Transaction involves a foreign government-controlled entity; (2) Transaction threatens to impair national security and the review cannot mitigate those concerns; (3) National Intelligence Director identifies intelligence concerns and CFIUS could not agree upon methods to mitigate the concerns; or, (4) Any one (1) CFIUS Member votes against approving the transaction.

Incidents such as the Dubai Ports World (DPW) and the China National Offshore Oil Corporation's attempted bid for control of oil company Unocal raised and increased awareness around transactions that should receive CFIUS review. These incidents highlighted the need for meaningful CFIUS reform.

The bill balances the need for continued foreign investment in the United States, but reviewing that investment to determine if it would impair or threaten national security or critical infrastructure.

This bill establishes accountability to key Cabinet level agencies and, much like other corporate reform, requires personal action by the Secretaries of Treasury, Commerce, and Homeland Security. Congressional Research Service's independent report found that for all merger and acquisition activity in 2005, 13 percent of it was from foreign firms acquiring U.S. firms. This is up from 9 percent almost 10 years before. This statistic shows that foreign investment in the U.S. is vital to the economy. Only through this legislation, will CFIUS have a formal budget, membership and clear mission--protecting American security while maintaining a free and growing economy.

In closing, let me thank my colleagues on the Financial Services Committee for their leadership on this legislation, especially my Democratic colleagues Representative Carolyn Maloney and Joseph Crowley of New York for their efforts.

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