By Andrzej Zwaniecki
USINFO Staff Writer

Washington – The House of Representatives passed a bill to strengthen federal reviews of proposed foreign investment transactions in the United States and give Congress more oversight over the review process.

The chamber on February 28 approved unanimously a measure that would broaden the scope of deals subject to review by the interagency Committee on Foreign Investment in the United States (CFIUS) to include acquisitions in the homeland-security sector and critical infrastructure such as power plants, ports and toll roads. It would require a 45-day investigation to follow the initial 30-day review of any deal by companies controlled by foreign governments. It also would oblige the director of national intelligence to analyze any potential threats to national security posed by a foreign investment.

“This bill contains very tough provisions to protect national security, including the ability for CFIUS to reopen reviews when companies don’t comply with mitigation agreements designed to reduce security risks,” said Democrat Carolyn Maloney, who sponsored the measure.

However, lawmakers from both parties were quick to emphasize that the legislation was crafted carefully to avoid discouraging foreign investment in the United States.

“The welcome mat for foreign investment must be out,” Representative Spencer Bachus, ranking Republican member of the Financial Services Committee, said.

The legislation would ensure that Congress is notified when investigations are completed and receives regular reports on agreements or conditions imposed by CFIUS.

Lawmakers have complained that the current law leaves them out of the review process. They attempted to revamp CFIUS in 2006 when the CFIUS approval of a management deal concerning six U.S. ports by a state-owned Dubai company caused an uproar. The House and Senate, however, failed to agree on a compromise measure after each chamber had passed a different version of the legislation. The adjournment of the 109th Congress ended work on those bills; the 110th Congress, which convened in January, had to introduce new bills to restart work on CFIUS legislation.

For the bill to become law, it must be passed by both chambers of Congress and signed by the president.

The White House expressed support for the House bill passed February 28 with some reservations. The Office of Management and Budget said in a statement that one of the provisions it opposes would allow extension of the 45-day investigation for transactions involving foreign governments.

Major U.S. business groups, including the Organization for International Investment, an association of U.S. subsidiaries of foreign companies, welcomed the bill. They said it “strikes a critical balance between protecting national security and encouraging beneficial foreign investment.”

In 2005, foreign companies invested more than $110 billion in the United States, according to the U.S. Chamber of Commerce, the largest U.S. business federation.