US national security concerns return to spotlight as new investment regulations set in
- New regulations give US government more power to block foreign deals for companies involved in critical infrastructure, technology and sensitive personal data
- Rules mark the start of a more stringent reality for cross-border deal makers amid Trump administration’s distrust of Chinese firms
New US regulations went into effect on Thursday to expand the review of foreign investments for potential national security risks, effectively making restrictions that curb China’s access to technology and critical assets permanent.
The regulations extend the reach of the Committee on Foreign Investment in the United States (CFIUS), the inter-agency committee that since 1975 has reviewed the national security implications of foreign investments in US businesses.
Approved in a rare display of bipartisan support in Congress, the revised regulations will now let the US government review any deals involving foreign buyers that take even a “non-controlling” minority stake in a US company if the government finds that critical infrastructure, technology or sensitive personal data are involved. Previously, only deals that involved controlling stakes were reviewed.
The new rules, released by the US Treasury Department, did not mention China as a country of concern. But it is widely believed that the reform, the most significant expansion of the CFIUS jurisdiction in more than 40 years, was intended to curtail the Asian nation's access to advanced technologies and other valuable assets.
The expansion marks the official start of a more stringent reality that cross-border deal makers must face.