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On August 13, 2018, the President signed into law new legislation that will impose heightened oversight of investments by Chinese persons in U.S. businesses. The Foreign Investment Risk Review Modernization Act (FIRRMA) provides greater specificity about the types of investments that the Committee on Foreign Investment in the United States (CFIUS), an inter-agency committee of the U.S. government, may review and in turn block due to their potential threats to the national security of the U.S. The new law affects foreign direct investments from any country, but China is one of the countries it is particularly likely to affect.
Despite the rapid rise in Chinese investment in the U.S. in recent years, there has been some early speculation that the Trump Administration would not allow the level of Chinese investment to continue at the same rate.
Proposals to limit Chinese investment continue to be floated in Congress. Recent developments suggest however that these concerns are overblown. Prospects for Chinese investment remain bright. At the same time, the Committee on Foreign Investment in the U.S. (CFIUS) retains considerable discretionary authority to block foreign direct investments from China and elsewhere, or to dictate changes to the terms of the deal. Threats to U.S. national security, including the safety of our country’s infrastructure, remain key criteria for CFIUS in its scrutiny of inbound transactions.
The International Practice Group of Garvey Schubert Barer is a cross-disciplinary group of attorneys practicing in areas ranging from business transactions, immigration, maritime, government regulatory work, transportation and logistics, and estate planning. The group members include bilingual and multicultural attorneys who are well-versed in handling these subject matters in a cross-border context. The firm’s attorneys have been actively practicing in the international arena since the early 1970s.