National security concerns will have an impact on foreign investment and M&A.
U.S. President Donald Trump recently signed into law a major expansion of the jurisdiction of the Committee on Foreign Investment in the US (CFIUS), an interagency group led by the Treasury Department that conducts national security reviews of cross-border mergers and acquisitions.
The new law is part of the National Defense Authorization Act for fiscal year 2019, and also strengthens US export control laws. It requires another interagency committee, led by the Commerce Department, to conduct a review of the controls on exports to China and other countries subject to US or UN arms embargoes.
This committee will also determine the levels of control and export licensing requirements for “emerging and foundational technologies,” such as artificial intelligence and robotics.
It will likely be several months before the relevant agencies finalize regulations, but the administration has the authority to adopt a pilot program to implement some or all of the provisions of the law before regulations are issued, according to an analysis by law firm Sidley Austin.
The law includes special hiring authority for CFIUS, and establishes a fund for collecting new filing fees of 1% of transactions valued up to $300,000. It also expands the powers of the committee and adds to the factors it may consider when conducting its national-security analysis. Real-estate transactions near ports and military installations or sensitive US government facilities are included.