Modernizing CFIUS

Although foreign investment has been a critical component of U.S. economic growth since our nation’s founding, such investment has not always been benign. For over four decades, the Committee on Foreign Investment in the United States (“CFIUS”) has been the U.S. government’s primary tool for monitoring and addressing national security concerns arising from acquisitions of domestic businesses by foreign investors. Since its inception, CFIUS has sought to strike a balance between promoting an open investment environment and protecting our nation’s security. Although it has experienced several challenges since its inception, none have been as momentous as those CFIUS has faced in recent years. Factors such as the increase in the complexity of merger and acquisition transactions, advancements in technology, and the economic rise of China exposed jurisdictional gaps in CFIUS, prompting legislative and executive action. Seeking to modernize CFIUS, Congress developed the Foreign Investment Risk Review Modernization Act (“FIRRMA”), legislation aimed at expanding CFIUS’s jurisdiction and better equipping CFIUS to protect U.S. national security interests. The legislation was met with bipartisan support and signed into law by the President in 2018.

While FIRRMA helps solve some of the recent national security concerns raised by foreign investment, it also brings new challenges to CFIUS. This Article tells the story of FIRRMA—what led to it and what the law does—and offers a glimpse of the unique challenges the adoption of FIRRMA will pose to CFIUS in the coming years. In particular, the Article highlights the added complexity of working in parallel with other U.S. government regimes, the rise of “Big Data,” and the need to increase cooperation with U.S. allies.