The U.S. Department of the Treasury issued new temporary regulations on foreign investments in U.S. companies that will give the government more power to block foreign transactions on national security grounds.
Under the new rules, foreign investors will have to alert a Treasury-led interagency committee to all deals that would give the foreign investors access to critical technology in one of 27 industries, including semiconductors, telecommunications, and defense. The industries were picked because a strategically motivated foreign investment could pose a threat to America’s “technological superiority and national security,” the Treasury said
The law, passed in August, did not single out China, but the rules are seen as a slap at the regime in Beijing, which has been accused of using such tactics to steal American intellectual property.
“We are pleased to implement this first step of the important and bipartisan FIRRMA [Foreign Investment Risk Review Modernization Act] legislation,” Treasury Secretary Steven Mnuchin said. “These temporary regulations address specific risks to U.S. critical technology while informing the development of final regulations that will fully implement FIRRMA.”
The Treasury Department said the new rules make limited updates to existing regulations of the Committee on Foreign Investment in the United States (CFIUS), primarily to implement FIRRMA provisions and ensure consistency.
The pilot program begins November 10, 2018, 30 days following publication of the regulations in the Federal Register. The requirements will not apply to any transaction that is completed prior to November 10, 2018, or any transaction for which the material terms were established prior to October 11.
Full implementation of FIRRMA will occur no later than February 2020.
The Trump administration has imposed tariffs on about $250 billion of Chinese imports, triggering retaliation by China.
The CFIUS was established by President Gerald Ford in 1975 to vet foreign investments coming into the United States.
On Wednesday, Republican Senator Rand Paul of Kentucky called on the committee to investigate the proposed merger of Broadcom with CA Technologies, worth an estimated $19 billion.
Earlier this year, President Donald Trump blocked a proposed $117 billion takeover by Broadcom of Qualcomm, citing national security interests.