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US Seeks Tighter Security Reviews of Foreign Tech Investments

Sept. 18, 2019
The regulations would give more oversight to the Committee on Foreign Investment, and focus on critical infrastructure and sensitive data.

The Trump administration proposed new regulations on Tuesday to toughen national-security reviews of foreign investments in U.S. companies involved in technology and infrastructure.

The proposed regulations seek to implement a 2018 law that gave an inter-agency review panel known as the Committee on Foreign Investment in the United States, or CFIUS, greater authority to examine foreign transactions. The new rules expand the timeline and scope of covered transactions, including certain real estate deals involving foreign persons and sensitive data.

“Today’s proposed regulations will provide clarity and certainty to investors regarding CFIUS’s enhanced authorities to address national security risks that arise from certain foreign investments, and continue modernizing the CFIUS process,” Treasury Secretary Steven Mnuchin said in a statement.

The proposed rules would apply to investments in U.S. businesses with critical technology subject to export controls or other regulations, as well as emerging technologies that the Commerce Department will identify, according to a senior Treasury official.

Critical infrastructure includes telecommunications, energy and transportation, and sensitive personal data includes geolocation, financial or health-related information that may be exploited at the risk of national security, including data related to targeted populations such military personnel, the official said.

The rules also target real estate deals involving or near specific airports, maritime ports and military installations, but they generally don’t focus on transactions involving single housing units or most real estate in urban areas, the official said.

The regulations do not target any particular country, the official said. A limited list of exempted countries is expected to be published when the rule is published in February.

Last year, President Donald Trump scuttled a proposed takeover of U.S. chipmaker Qualcomm Inc. by Broadcom Inc., citing the national-security concerns flagged by CFIUS. The prior September, Trump blocked the sale of Lattice Semiconductor Corp. to a Chinese-backed investor, and at least a half-dozen other technology deals have collapsed under scrutiny from the panel during the president’s first term.

The Treasury Department will be accepting written comments on the proposed regulations through Oct. 17, and is obligated by law to implement a final version of the new rules by Feb. 13 of next year.

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