At the time of a paradigm change Foreign Investment, Strategic Assets and National Security is a timely analysis of the changing attitude towards foreign investment in major economies, namely the United States of America, the People's Republic of China, Australia, Canada, and Germany, France and the United Kingdom as representatives of the European Union.Foreign investment has grown steadily for decades, and the de-regulation of international trade and investment was a widely accepted trend, particularly in developed countries. Increasingly, however, this development is encountered by opposition. Globalisation and socio-economic effects of mergers and acquisitions of domestic firms by foreign investors receive less support from the general public. Concerns about national security, protection of new technologies and competitiveness are raised. This leads national and regional legislators to develop new mechanisms to control foreign investments, particularly in light of national security. The widely adopted and traditional ex post approach linked to investment treaties is now enhanced by an increased focus on the phase prior to the actual implementation of the investment.This legal development and the new screening systems are captured in this book and it is explained how the present paradigm change is affecting the legal rules in practice. It is a must read for everyone working in the field.
This third volume in the Springer Studies in Law and Geoeconomics series continues to advance the interdisciplinary field of investment control. With a primary focus on geoeconomic strategies, this book examines the evolving legal and regulatory frameworks that govern foreign direct investment (FDI). The volume addresses critical issues such as investment screening, foreign subsidies, and the balance between national security and economic interests. By exploring these themes through an international, transnational, and comparative law perspective, the book offers valuable insights into the mechanisms and implications of investment controls in a globalized economy. Contributors provide a detailed analysis of current practices and propose innovative approaches to the challenges posed by FDI in contemporary geopolitical contexts. This book is an essential resource for policymakers, legal scholars, and practitioners involved in the regulation of international investments.
The Committee on Foreign Investment in the United States (CFIUS) is comprised of nine members, two ex officio members, and other members as appointed by the President representing major departments and agencies within the federal executive branch. While the group generally has operated in relative obscurity, the proposed acquisition of commercial operations at six U.S. ports by Dubai Ports World in 2006 placed the group's operations under intense scrutiny by Members of Congress and the public. Prompted by this case, some Members of the 109th and 110th Congresses questioned the ability of Congress to exercise its oversight responsibilities given the general view that CFIUS's operations lack transparency. Other Members revisited concerns about the linkage between national security and the role of foreign investment in the U.S. economy. Some Members of Congress and others argued that the nation's security and economic concerns have changed since the September 11, 2001, terrorist attacks and that these concerns were not being reflected sufficiently in the Committee's deliberations. In addition, anecdotal evidence seemed to indicate that the CFIUS process was not market neutral. Instead, a CFIUS investigation of an investment transaction may have been perceived by some firms and by some in the financial markets as a negative factor that added to uncertainty and may have spurred firms to engage in behavior that may not have been optimal for the economy as a whole. On July 12, 2016, Senator Charles Grassley introduced S. 3161 to include the Secretary of Agriculture as a permanent member of the CFIUS and to include the national security impact of foreign investments on agricultural assets as part of the criteria the Committee uses in deciding to recommend that the President block a foreign acquisition.
In recent years, China, the US, and the EU and its Member States have either promulgated new national laws and regulations or drastically revised existing ones to exert more rigorous government control over inward foreign direct investment (FDI). Such government control pertains to the establishment of an ex-ante review regime of FDI in the host state in sectors that are considered as 'sensitive' or 'strategic', with an aim to mitigate the security-related implications. This book conducts a systematic and up-to-date comparative study of the national security review regimes of China, the US, and the EU, using Germany as an exampling Member State. It answers a central research question of how domestic law should be formulated to adequately protect national security of the host state whilst posing minimum negative impacts to the free flow of cross-border investment. In addition to analyzing the latest development of the national security review regimes in aforementioned jurisdictions and identifying their commonalities and disparities, this book establishes a normative framework regarding the design of a national security review regime in general and proposes specific legislative recommendations to further clarify the law. This book will be of interest to scholars in the field of international and comparative investment law, investors who seek better compliance programs in the host state, and policymakers who aim for high-quality regulation on foreign investment.
Examines foreign direct investment (FDI) in the United States, the national security concerns associated with this investment, and treatment of these concerns under US policy. This book asks whether the Committee on Foreign Investments in the United States (CFIUS) process can be improved and answers in the affirmative.Does foreign ownership of American businesses pose a threat to the United States (like the abortive attempt by CNOOC, a Chinese company, to purchase Unocal during the summer of 2005)? This important new book examines foreign direct investment (FDI) in the United States, the national security concerns associated with this investment, and treatment of these concerns under US policy. It asks whether the Committee on Foreign Investments in the United States (CFIUS) process can be improved and answers in the affirmative. The book starts by looking at the review process for foreign takeovers of US firms (including a historical review), looks at the economic and political impact on the United States of foreign direct investment, takes a detailed look at issues relating to FDI posed by the rise of China as an economic and geopolitical power and finally suggests some changes to the Exon-Florio process.
The Bush Administration has committed itself to taking every possible step to protect America's national security since the beginning of the War on Terrorism, in response to the attacks on our country on September 11, 2001, as well as to the worldwide threat posed by Islamo-fascism. Similarly, the Administration has been an active proponent of free trade and an open investment policy in the United States. While both laudable, these two goals may come into conflict when foreign direct investment transactions within the United States may in some way threaten national security. This conflict between the demands of national security and an open foreign investment policy was illustrated in very public and controversial ways by two recent controversies surrounding attempts by foreign corporations to acquire American corporations: the attempt by the China National Offshore Oil Corporation, Ltd. (ᑼNOOCň) to acquire Unocal, a U.S. oil company, and the attempt by Dubai Ports World (ᑽPWň), a state-owned company based in the United Arab Emirates, to acquire a British company which would have given DPW operating rights at terminals in a number of American ports. Both of these controversies featured criticism of the Committee on Foreign Investment in the United States (IUSň or Ňthe Committeeň), the interagency committee chaired by the Department of the Treasury which is tasked by the President under the Exon-Florio Amendment to the Defense Production Act of 1950 with reviewing mergers and acquisitions for national security concerns. CNOOC's attempt to acquire Unocal occurred in the summer of 2005. After a much-publicized bidding and public relations war for control of Unocal between CNOOC and another major U.S. oil company, Chevron, Inc., CNOOC's bid was ultimately defeated by political pressure applied by the United States Congress. Many members of Congress had publicly and forcefully expressed grave reservations about the possible national security repercussions if China's state-owned company gained control of Unocal's oil reserves. This debate led to discussion not only of national security, but also of economic security. Even though CFIUS never initiated a review of the CNOOC transaction, let alone gave the transaction its approval, numerous members of Congress who feared that the Committee would not block the transaction began to suggest that changes to the Exon-Florio statute were in order as a means to address these concerns. This debate over changes to Exon-Florio resumed in early 2006, when DPW attempted to purchase Peninsular and Oriental Steam Navigation Co. (ŇP&Oň), a British firm, in a $6.8 billion deal. With the acquisition of P&O, the Dubai-based company would have acquired operational control of certain terminals at six U.S. ports. The revelation that CFIUS had approved the deal set of a firestorm of criticism on Capitol Hill; members and leaders of both political parties in Congress denounced the merger. Though DPW and the Administration agreed to conduct an additional 45-day investigation under the CFIUS statute, the House Appropriations Committee voted 62-2 to block the transaction, and under intense political pressure DPW agreed to transfer its U.S. ports interests to an American company. In the midst of the ports controversy, legislation was proposed in Congress not only to block the deal, but also to make substantial changes to the Exon-Florio statute in an attempt to strengthen the CFIUS review process. These controversies and the loud calls to amend Exon-Florio that accompanied both of them illustrate that changes to the Exon-Florio statute are likely. These changes could potentially have a tremendous impact on the country's national security and economic health. This Note will argue that currently the Exon-Florio statute and CFIUS process maintain an appropriate balance between national security and economic security. It will then examine recent Congressional proposals to amend the Exon-Florio statute, and argue that such changes would have dire consequences for this balance. Part II of this Note will provide a detailed description of the Exon-Florio process as well as of the legislative history behind Exon-Florio and the executive orders which delegated the President's authority under the statute to CFIUS. It is important to understand this legislative history in order to comprehend the context in which changes to the Exon-Florio statute occur. Part III will explain four major transactions that were examined by CFIUS (or in the case of CNOOC, merely mentioned in the context of a potential review that never actually occurred) and which received far greater public attention than average CFIUS transactions. Part IV will explain the various changes to the Exon-Florio statute that have been proposed in Congress as a result of the fear by some members of Congress that the current system is insufficient to protect the country's national security. Finally, Part V will explain why the current statutory system maintains a careful balance between national security and the promotion of an open investment policy, and how the proposed changes to the Exon-Florio statute could potentially impact that balance. The conclusion will then summarize those changes which would be beneficial and which would be detrimental to the Exon-Florio balance.
On August 24-25, 2010, the National Defense University held a conference titled “Economic Security: Neglected Dimension of National Security?” to explore the economic element of national power. This special collection of selected papers from the conference represents the view of several keynote speakers and participants in six panel discussions. It explores the complexity surrounding this subject and examines the major elements that, interacting as a system, define the economic component of national security.
This report assesses recent international developments as the leaders from a number of nations work to reach a consensus on an informal set of best practices regarding national restrictions on foreign investment for national security purposes. This report also provides one possible approach for assessing the costs and benefits involved in using national policies to direct or to restrict foreign direct investment for national security reasons.
For the past three-quarters of a century, the United States has led the world in technological innovation and development. The nation now risks falling behind its competitors, principally China. The United States needs to advance a national innovation strategy to ensure it remains the predominant power in a range of emerging technologies. Innovation and National Security: Keeping Our Edge outlines a strategy based on four pillars: restoring federal funding for research and development, attracting and educating a science and technology workforce, supporting technology adoption in the defense sector, and bolstering and scaling technology alliances and ecosystems. Failure could lead to a future in which rivals strengthen their militaries and threaten U.S. security interests, and new innovation centers replace the United States as the source of original ideas and inspiration for the world.
