Mr. Chairman, I thank the gentleman for yielding and for his leadership. I want to thank in particular Chairman Frank for making this bill, the National Security FIRST Act, a priority of this Congress. Democrats and Republicans have…
Mr. Chairman, I thank the gentleman for yielding and for his leadership.
I want to thank in particular Chairman Frank for making this bill, the National Security FIRST Act, a priority of this Congress. Democrats and Republicans have supported this bill, demonstrating a desire to enhance national security while avoiding a freeze of beneficial and safe economic investment in our country.
I would like to thank in addition my other Democratic colleagues, Luis Gutierrez and Joe Crowley, and my colleagues on the other side of the aisle, Deborah Pryce, Roy Blunt and Ranking Member Bachus, for their continued support and leadership on this important legislation.
A year ago, Mr. Speaker, Americans woke up to find out that six of the largest ports in our Nation would be controlled by a foreign government, the United Arab Emirates, under the Dubai Ports World. Even worse, this deal had been approved by our government through a secretive process no one had ever heard of. In fact, Congress and senior administration officials learned about this deal by reading about it in the newspapers.
Even before the Dubai Ports World fiasco, the General Accountability Office had criticized the Committee on Foreign Investments in the United States, or CFIUS, for being overly focused on bureaucratic goals, basically getting deals done with little oversight, without causing a fuss.
Well, the Dubai Ports World deal showed the world the weaknesses in the CFIUS process. The decision was
made, and when they did make that decision, they did not involve any high-level government officials. They did not report to Congress. They used a very out-of-date definition of national security.
Surely anyone in a post-9/11 world would consider our largest ports a national security concern. The 9/11 Commission called it one of the areas that we have the most problems and one that needs the most attention.
As a Representative from New York, which is both target number one for terrorism and the financial capital in our Nation, I felt very strongly that we needed to get something done.
At the time, along with Deborah Pryce, I was the ranking member on the subcommittee which we both served on with jurisdiction over CFIUS, and so we had a front-line responsibility for the issue, and we worked together to put forward this legislation.
Our legislation passed the last Congress 421-0. We hope we get the same result today, and we resubmitted the bill again earlier this year. It is past time to get this done. If you had told the American people that a year after Dubai Ports World and the scandal involved with it we would still be debating CFIUS reform and had not strengthened the system already, I think they would be very surprised.
The need for reform remains even after DPW. The CFIUS process is not catching all the deals that it should.
Last year I personally called to the attention of CFIUS the fact that a company with ties to the Venezuelan Government had purchased a major voting machine manufacturer in our country. CFIUS did initiate a review, and after some time in the process, the company announced that it would withdraw from the U.S. market. Surely we would consider a foreign government owning our voting machines a national security concern.
In the end the process did work, but it worked only after prodding, and it should work better. That is what this bill would accomplish. It puts national security first, addressing the weaknesses in the Dubai Ports World.
The bill requires high-level attention and sign-off on every transaction, and particular attention to transactions involving foreign-government-owned entities.
The bill also creates a formal role for the intelligence community and sets up an independent intelligence assessment. It requires a broad and flexible definition of national security that includes the concerns of 12 different agencies, and it sets up a system for monitoring deals that are withdrawn from the process.
The bill contains very tough provisions to protect national security, including the ability of CFIUS to reopen reviews when companies do not comply with mitigation agreements designed to reduce security risks. This is such a severe remedy that we have hedged it with many procedural protections, and we expect CFIUS to use it only in exceptional cases.
This bill also puts Congress in the picture, making sure that we learn about these deals from CFIUS, not from the newspapers but after the decisions have been made. And by providing greater certainty and predictability in the process, we can encourage foreign investors. I am glad he yielded me this time, because a very important part of CFIUS is we build in predictability and clarity for foreign investment, so that it is not gray, but black and white of where they can go to get a swift approval for safe foreign investment.
This is critical to our economy. Over 5.1 million jobs came into our economy from foreign investment in 2004, and there were 50,000 jobs recently created in New York City after 9/11 from foreign investment. It is very important to economic growth in our country. We want to encourage it, but at the same time, we want to protect our citizens, our number one responsibility.
Mr. Chairman, may I say to Ms. Pelosi, I appreciate your making this a priority and moving it to the floor so quickly. We will be able to work with our colleagues in the Senate to get a strong bill and pass it and sign it into law. I appreciate the support from the business community, the intelligence community, and from the executive office.
I request unanimous consent to place in the Record the statement from the Executive.
What can I say, it is a win-win situation. It is a bipartisan bill. Let's move forward and pass it and enact it into law.
Statement of Administration Policy
h.R. 556--national security foreign investment reform and strengthened
transparency (rep. maloney (d) ny and 58 cosponsors)
The Administration supports House passage of H.R. 556 and
appreciates the efforts of the House Financial Services
Committee to strengthen the Committee on Foreign Investment
in the United States (CFIUS). The Administration regards the
Nation's security as its top priority. In addition, the
Administration views investment, including investment from
overseas, as vital to continued economic growth, job
creation, and building an ever-stronger America. Therefore,
the Administration seeks to improve the CFIUS process in a
manner that protects national security and ensures a strong
U.S. economy and an open investment environment that will
serve as an example and thereby support U.S. investment
abroad.
In light of the President's responsibility to ensure the
Nation's security, and in the context of comity between the
executive and legislative branches, we believe the President
should retain substantial flexibility to determine CFIUS's
membership and administrative procedures and to make
adjustments when national security so requires. Accordingly,
the Administration has concerns with some of the provisions
of H.R. 556 and looks forward to working with Congress to
address these concerns, to strengthen CFIUS, and to ensure
the protection of America's homeland and the strength of our
economy.
Establishment and membership of CFIUS
The President should retain the flexibility to determine
and adjust the appropriate Executive Branch membership of
CFIUS and their roles. H.R. 556 should not mandate that CFIUS
have Vice Chairs, nor that CFIUS include members of the
Executive Office of the President. Further, the President
should retain the flexibility to determine roles and
responsibilities of CFIUS and its members. For example, the
Administration opposes any language in Section 6 that would
call for the designation of a lead agency or agencies to
represent other agencies or the Committee in negotiating,
entering into, imposing, modifying, monitoring, or enforcing
mitigation agreements.
Deliberations and decision-making of the committee
The Administration is concerned that the legislation
imposes procedural requirements, such as roll call voting and
motions, which are ill-suited for executive bodies such as
CFIUS and are inconsistent with the vesting of the executive
power in the President. Given the bill's reporting
requirements, such procedures will deter the full and open
interagency discussion that is required to consider CFIUS
cases properly.
The Administration fully shares Congress' goal of ensuring
senior-level accountability for CFIUS decisions. The
Administration supports requiring the Secretary, Deputy
Secretary, or an Under Secretary of the Treasury to sign
CFIUS decisions at the conclusion of a second-stage (45-day)
investigation, as H.R. 556 provides. With respect to cases
for which CFIUS concludes its action at the end of the first-
stage (30-day) investigation, the Administration supports
the House Financial Services Committee's decision to
authorize delegation of this authority. However, in view
of the volume and variety of cases and to ensure that our
most senior officials are able to focus on those cases
that do raise national security concerns, this authority
should be further delegable to other officials appointed
by the President and confirmed by the U.S. Senate.
The Administration believes that the current 30-day and 45-
day time frames for first-stage and second-stage
investigations provide CFIUS with sufficient time to examine
transactions. The possibility of extensions may discourage
foreign investment by generating uncertainty and delay for
the parties to proposed transactions. The Administration
therefore opposes allowing CFIUS to extend the second stage
(45-day) investigation period. The Administration notes that
the current CFIUS practice of encouraging parties to
transactions to consult with CFIUS prior to filing provides
CFIUS with additional time and flexibility to examine complex
transactions.
The Administration supports the role of the intelligence
community as an independent advisor to CFIUS and appreciates
the bill's inclusion of a provision that ensures that the
Director of National Intelligence (DNI) is provided adequate
time to complete the DNI's analysis of any threat to the
national security of a covered transaction. However, language
in H.R. 556 also appears to provide the DNI with the ability
to force a second-stage (45-day) investigation if the DNI has
identified particularly complex intelligence concerns and
CFIUS was not able to satisfactorily mitigate the threat.
Such a policy role would be inconsistent with the independent
advisory role of the DNI envisioned in the legislation and
supported by the Administration.
Notification and reports to Congress
The Administration supports enhanced communication with
Congress on CFIUS
matters to better facilitate Congress' performance of its
functions. CFIUS should be required to notify Congress of
transactions only after all deliberative action is concluded,
as H.R. 556 provides. As discussed above, roll call voting,
particularly if reported outside the Executive Branch, would
deter the full and open interagency discussion that is
required to consider CFIUS cases, and reporting on internal
Executive Branch deliberations, including the positions of
individual CFIUS members, should not be required.
Authorities of CFIUS
The Administration believes current law and regulations
give the President and CFIUS adequate authority to gather all
information needed to conduct CFIUS investigations. The
Administration is concerned that provisions of the bill that
provide CFIUS with additional statutory authority to collect
evidence and require the attendance and testimony of
witnesses and the production of documents would make the
CFIUS process more adversarial and less effective.
The Administration believes its ability to protect national
security would be enhanced by a statutory grant of authority
to impose civil penalties for a breach of a mitigation
agreement. This authority to seek civil penalties, which
could be calibrated to the seriousness of the non-compliance,
would be a useful and effective tool for enforcing those
agreements.
Presidential review and decision
The Administration supports requiring the President to make
the final decision on a case only when CFIUS recommends that
a transaction be blocked or when CFIUS fails to reach a
consensus after a second-stage investigation. Requiring
Presidential action in a broader set of cases would undermine
the President's ability to determine how best to exercise
Executive Branch decision-making authority.
The Administration looks forward to working with Congress
on these important issues.
Mr. Chairman, I move to strike the last word.
I yield to the chairman.
Reclaiming my time, I will yield to the gentleman on his own time.
Mr. Chairman, I rise in opposition to the gentleman's amendment. The CFIUS process already requires comprehensive reporting to Congress on just about every factor conceivable that is relevant to the subject of national security and foreign direct investment. That is the purpose of this bill.
This is not the place to evaluate whether our tax or our regulatory system, our jobs should be changed to encourage foreign investment. That is not the purpose of this bill, and we cannot dress it up like a Christmas tree with all these other items.
I would suggest the gentleman put forward a stand-alone bill or address it in an economic development package, but that is not the purpose of this legislation.
The CFIUS process is put in place and should focus on national security. And while we value foreign investment, we certainly do not want CFIUS to be weighing the value of foreign investment, as per regulation or tax burden or jobs, against any national security risk. The primary purpose is national security. And if there are national security risks that cannot be fixed with an agreement, these transactions should not go forward, period.
I would like to add that the process that we have, the CFIUS process, requires annual reporting to a board setup of a committee on, among other things, all filings with CFIUS, details on the trends in filings, investigations, withdrawals, and Presidential decisions. It requires reporting on mitigation agreements and enforcement, the impact of foreign investment on critical infrastructure, critical technologies, and whether there is a coordinated strategy by one or more countries to acquire critical technologies in the United States.
But to force CFIUS to opine on policy matters outside of its mandate and expertise, CFIUS is not the right body to report on regulation matters or tax matters that the gentleman has put forward in his amendment, and this requirement will also distract CFIUS from focusing on its prime focus, which is protecting our American citizens, our national security first.
These are legitimate issues to raise, and I compliment the gentleman on his thoughtful research and concern, but this is not the area where it should be legislated.
So I join the chairman in strongly urging a ``no'' vote on the gentleman's amendment.
Mr. Chairman, I move to strike the last word.
I join Chairman Frank and my colleague from New York in stressing that the CFIUS process is first and foremost for national security, and to give clear guidelines and predictability to foreign businesses to invest in America.
The CFIUS process is supported, if the gentleman is concerned about jobs and the private sector, this is supported almost unanimously by the business sector of our country. They have come out, a whole list of groups, supporting this well-balanced legislation and have called upon it not to be dressed up like a Christmas tree. My other colleague said this did not dress it up like a Christmas tree, yet it is adding unrelated items to the bill. We have bills on commerce, we have bills on education, we have bills in other areas, and that is where this should be discussed.
Foreign investment is very important to our country. It provides 5.1 million American jobs, $1.9 trillion in equity investment; and some 50,000 jobs in New York City are created at this point by foreign investment. But not one of these jobs or dollars is worth risking our national security. That is why we have CFIUS. We do not want to risk our national security for any job, and we have a template, we have a procedure placed in the CFIUS process for direct, safe foreign investment.
I join my colleague in opposing this amendment.