The Subcommittee on National Security, Illicit Finance, and International Financial Institutions recently held a hearing to explore the vital role of the Committee on Foreign Investment in the United States (CFIUS) in safeguarding national security while fostering an open investment climate.
Subcommittee Chair Warren Davidson (OH-08) emphasized the importance of CFIUS in reviewing foreign investments that may pose security threats.
He stated, “CFIUS plays a vital role in protecting our national security by scrutinizing foreign investments that could potentially threaten it. At the same time, it is essential that we maintain an open investment environment that allows the United States to benefit from foreign capital investment and innovation.”
Rep. Young Kim (CA-40) also spoke on the significance of foreign direct investment (FDI) to the U.S. economy.
She remarked, “Foreign direct investment has been a key part of making America one of the greatest countries in the world, and it has ensured that Americans remain employed and FDI related employments in the United States is really highest in the state of California with 15% related to that.”
Rep. Andy Barr (KY-06) discussed the recent decision regarding Nippon Steel, a technologically advanced steel company from Japan.
He characterized the investment as one that enhances competition in the steel market and bolsters U.S. national security.
Barr noted, “Nippon-Steel is a company, a very technologically advanced steel company, domiciled by an ally nation, Japan. This was an investment that was providing competition and preventing a monopoly in the United States on steelmaking. It strengthened U.S. Steel and enhanced U.S. national security.”
He praised CFIUS for reevaluating the investment without political influence and praised the president for following the advice of CFIUS on the matter.
Rep. Roger Williams (TX-25) expressed concerns over the Biden Administration’s Outbound Investment Rule, which requires U.S. companies to self-assess whether their foreign transactions may raise national security issues without clear guidance.
He stated, “As the global economy becomes more competitive, especially in advanced technologies like AI and semiconductors, American investors are trying to position the capital where it matters most. Under the Biden Administration’s Outbound Investment Rule, U.S. firms are now required to self-determine if a transaction might raise national security concerns without clear guidance or a published list of restricted entities. This creates legal uncertainty, compliance risk, and it could drive up the cost of doing business abroad.”
Witnesses at the hearing reinforced the assertion regarding CFIUS’s significance.
Jonathan Samford, President and Chief Executive Officer of Global Business Alliance, highlighted the impact of international companies on the U.S. economy.
He said, “As you may know, international companies like these have invested over $5 trillion into the U.S. economy, directly employ 8.4 million U.S. workers and offer compensation that is seven percent higher than the U.S. private-sector average. The average compensation at an international company in America is $89,300.”
Samford also pointed out that nearly one in four manufacturing workers in the U.S. earn their paychecks from international companies that choose to invest and create jobs domestically.
He emphasized that international companies not only provide necessary capital but also bring valuable expertise, promoting American innovation and fostering a more competitive workforce.
“America’s global economic leadership is grounded in its openness, reliability, and adherence to the rule of law. A security-focused CFIUS process that welcomes trusted capital fuels innovation, manufacturing, and job growth, aligning national security with economic competitiveness,” he concluded.
Brian Reissaus, Senior Advisor for National Security at Freshfields US LLP, reiterated CFIUS’s role as a protective measure against investments that could threaten U.S. security.
He stated, “CFIUS serves as a critical safeguard against foreign investment that poses a genuine threat to our national security. CFIUS does this through its singular focus on reviewing transactions for cognizable national security risks that could reasonably result from the transaction under review.”
Reissaus called for any modifications to investment security policy to emulate the rigorous approach taken during the crafting of the FIRRMA legislation, encompassing thorough stakeholder engagement to assess defined risks.
He articulated how the Outbound Investment Security Program could benefit from similar scrutiny to clarify ambiguities that currently pose compliance challenges for the private sector.
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