House seeks study into foreign purchases

A bipartisan group of House members wants the Government Accountability Office to study whether a Treasury Department-led government security panel needs to be bolstered to protect U.S. national security from threats posed by foreign acquisitions.

The request was made in a letter from 16 members to the congressional watchdog agency last week to examine whether the Committee on Foreign Investment in the United States, known as CFIUS, needs to be strengthened.

“There have not been substantial structural updates to CFIUS composition or authority since its inception, despite a rapidly changing foreign investment climate, the rise of technology and information warfare, and new state-owned or -controlled companies that are structured as independent entities but are largely directed by foreign governments,” states the letter organized by Rep. Robert Pittenger, North Carolina Republican. “This evolving nature of possible national security threats requires that both the executive branch and the Congress revisit the CFIUS process to determine whether it is fully empowered to address these concerns.”

The lawmakers voiced concerns about recent foreign acquisitions or attempted purchases of American firms by Chinese state-run companies in the telecommunications, media and agriculture sectors.

Chinese companies backed by the communist government in Beijing often benefit from illegal subsidies aimed at gaining a foothold in American markets. The acquisitions “may pose a strategic rather than overt national security threat,” the lawmakers said.

One purchase, ChemChina’s $43 billion purchase of the agricultural company Syngenta, has raised food security and safety concerns.

Dalian Wanda, a Chinese conglomerate, has purchased major U.S. movie studios, including Legendary Entertainment and Paramount studios, along with the AMC and Carmike theater chains.

Those takeovers prompted fears of “China’s efforts to censor topics and exert propaganda controls on American media,” the House members stated.

“Both of these examples raise serious security questions about what authority CFIUS currently has, or may need to be added, to address these concerns,” they added.

The GAO was asked to review whether existing procedures are adequate for CFIUS in the areas of export-controlled goods, cybersecurity and counterintelligence, as well as whether they will be capable of countering Chinese hacking and other nefarious activities in the United States.

The members also requested that GAO review whether CFIUS should include additional government officials, including the FBI director, the director of national intelligence and key Cabinet officials.

The review also will include discussion of whether foreign acquisitions involving states like China should be subject to automatic review. Currently, CFIUS review is not required for all foreign purchases.

In addition to Mr. Pittenger, the letter was signed by 13 Republicans and two Democrats, including several committee leaders.

Full report…
Washington Times/Inside the Ring/Item 2
Sept. 22, 2016