Foreign Investment And National Security Act Of 2007

Floor Speech

FOREIGN INVESTMENT AND NATIONAL SECURITY ACT OF 2007 -- (House of Representatives - July 10, 2007)

Mr. THOMPSON of Mississippi. Mr. Speaker, I stand here today as Chairman of the

Committee on Homeland Security in support of H.R. 556, the Foreign Investment and National Security Act of 2007. This bill provides necessary reform by formalizing and streamlining the structure and duties of the Committee on Foreign Investment in the United States, CFIUS. This reform combines an understanding of the need for ensuring that foreign investment in the U.S. is in the security interests of the American public with an appreciation for global commerce in the 21st century. Indeed, this bill addresses many of the concerns raised about CFIUS over the past year, especially with regard to 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 CFIUS review will be conducted. This bill sends an important message to the country and the world: The United States will continue to encourage the international flow of commerce in a manner that demands the security of our country.

Mr. Speaker, 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; Director of National Intelligence (ex officio); and Secretary of Labor (ex officio); and (3) The heads of any other executive department, agency, or office, as the President determines appropriate, generally on a case-by-case basis.

Under this bill, CFIUS will conduct a review of any transaction by or with any foreign person which could result in the foreign control of any person engaged in interstate commerce in the U.S. to determine the effects of the transaction on the national security of the U.S. CFIUS will determine whether to conduct an investigation of the effects of the transaction on the national security of the U.S. if the initial review of the transaction results in the determination that: The transaction threatens to impair the national security of the U.S. and that the threat has not been mitigated during or prior to the review of the transaction; the transaction is a foreign government-controlled transaction; the transaction would result in control of any critical infrastructure of or within the U.S. by or on behalf of any foreign person, if CFIUS determines that the transaction could impair national security, and that such impairment to national security has not been mitigated by assurances provided to CFIUS; or

The lead agency recommends, and CFIUS concurs, that an investigation be undertaken.

Mr. Speaker, I believe that our colleagues in the Senate made remarkable contributions to this bill. For example, I think that its determination to eliminate the option for CFIUS to conduct a second 45-day review at the end of the investigation stage was a wise one. As a result of this change, CFIUS will be required to be efficient and will demonstrate our country's recognition of the importance of not hampering foreign investment that avoids hindering our national security. The Congressional Research Service's independent report, for instance, found that, for all the merger and acquisition activity in 2005, 13 percent of it was from foreign firms acquiring U.S. firms. This is up from 9 percent nearly 10 years before. This statistic shows that foreign investment in the U.S. is vital to our economy.

I must mention, however, my concern with one of the changes to the bill, as passed by my colleagues in the Senate, which eliminates an important role of the Secretary of Homeland Security. Both bills establish the Secretary of the Treasury as the Chairperson of CFIUS. Whereas the original House-passed bill required that the Secretaries of Homeland Security and Commerce be Vice Chairpersons of CFIUS, the current bill eliminates the Vice Chairpersons and, instead, calls for the Secretary of the Treasury to designate, as appropriate, a member or members of CFIUS to be the ``lead agency or agencies'' on behalf of CFIUS for each covered transaction, and for negotiating any mitigation agreements or other conditions necessary to protect national security. In addition, the lead agency or agencies will work on all matters related to the monitoring of the completed transaction. The ``lead agency'' role is particularly important because if the Secretary of the Treasury and the head of the lead agency jointly determine that a transaction will not impair the national security of the U.S. in certain cases, then an investigation will not be required.

The Department of Homeland Security has played a vital role with regard to CFIUS cases in the past and has an unparalleled institutional understanding of such cases. In its involvement with such cases, it represents the need to protect our homeland from attack and to ensure that our critical infrastructure is protected and available to the American public during, and in the aftermath of, an attack. In 2006, the Department was involved in each of the 113 CFIUS filings and, in 15 instances, the Department requested mitigation agreements. Thus far in 2007, the Department has been involved in each of the 80 filings and has requested five mitigation agreements. Furthermore, a large number of these filings regard the ownership of critical infrastructure, which is a major initiative of the Department. The Department's past involvement with CFIUS and its mission to protect our country only underscores its need to be second to none when CFIUS reviews cases. That the Department no longer has a clearly articulated leadership role in this process negates its understanding of such matters and undercuts a developing expertise of this new Department. Once this bill is enacted into law, I hope that the Secretary of the Treasury will appoint the Department of Homeland Security as one of the lead agencies in all CFIUS cases, unless there is an explicit reason to do otherwise. The need to protect our homeland is too vital--and the Department's role therein too intrinsic--for it to be left without a leadership position in all CFIUS filings.

This bill, nevertheless, brings the necessary reform to the CFIUS process. Incidents such as Dubai Ports World and China National Offshore Oil Corporation's attempted bid for control of an oil company, Unocal, raised an increased awareness regarding transactions that should receive CFIUS review. Importantly, though, this bill does not represent an isolationist reaction to these incidents but, instead, balances the need for continued foreign investment in the U.S. with the need to review that investment's impact on national security and our critical infrastructure.

Only through this legislation will CFIUS have a formal budget, membership, and a 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 Chairman FRANK as well as Representative CAROLYN MALONEY and Representative JOSEPH CROWLEY of New York. I would also like to thank my colleagues in the Senate.

I encourage my colleagues to pass this legislation with strong bipartisan support.

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