NCPA - National Center for Policy Analysis


July 17, 2006

The Committee on Foreign Investment in the United States (CFIUS) reviews the national security implications of foreign acquisitions of U.S. companies or operations.  The agency generated much controversy when it scuttled the purchase by Dubai Ports World of key U.S. ports.

Some observers believe this case and others were politically motivated and therefore, harmful to U.S. global investors.  They make a strong case for reforming CFIUS, which is made up of representatives of federal agencies.  However, there are two important problems in pending congressional legislation to change the organization, says Stuart Anderson, Executive Director of the National Foundation for American Policy.  

The Senate's Shelby-Sarbanes bill would:

  • Allow governors and members of Congress to be notified of foreign investments under review by CFIUS; such reviews are now confidential, so the opportunity is ripe for political mischief (or even corruption) under such a change in the law.
  • Put foreign investors at a disadvantage by creating for them a separate timeline from domestic investors; the bill would take CFIUS review times beyond the current 30-day period, which now matches up with the existing Hart-Scott-Rodino antitrust reviews required of both U.S. and foreign investors.

Ultimately, the real losers will be U.S. companies, shareholders and entrepreneurs unable to obtain a fair market value for their assets, says Anderson.

Source: Stuart Anderson, Letter to the Editor: "Foreign Investment Bill Will Hurt U.S. Business," Wall Street Journal, July 17, 2006.

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