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U.S. Treasury wants to enhance the power of a little-known, secretive government committee to review deals made between U.S. firms and foreign investors.<\/p>\n
This comes as high-profile deals involving foreign investment in the U.S. \u2014 like Chinese firm ByteDance\u2019s ownership of popular social media app TikTok and Japanese firm Nippon Steel\u2019s bid to purchase Pittsburgh-based U.S. Steel Corp. receive increased scrutiny by lawmakers and even President Joe Biden.<\/p>\n
A new proposed rulemaking would strengthen powers for the interagency\u00a0Committee on Foreign Investment in the United States<\/a>\u00a0\u2014 known as CFIUS \u2014 which is tasked with investigating corporate deals for national security concerns and holds power to force the company to divest ownership or change major parts of the firm.<\/p>\n The rulemaking \u2014 if finalized \u2014 would expand the committee\u2019s subpoena authority, allow the committee to request more information from parties to a proposed sale and expand circumstances when fines can be imposed and their size \u2014 from $250,000 to $5 million, where there are misstatements, omissions and failure to file mandatory declarations.<\/p>\n The proposed change comes as the convergence of national security concerns related to foreign investment have increased \u2014 as competition intensifies between the world\u2019s biggest powers and the U.S. focuses on growing its domestic supply chains.<\/p>\n President Joe Biden\u00a0came out in opposition<\/a>\u00a0to the planned sale of U.S. Steel to Nippon Steel of Japan, saying in March that the U.S. needs to \u201cmaintain strong American steel companies powered by American steelworkers.\u201d Japanese Prime Minister Fumio Kishida said on Wednesday during a White House press conference that he hopes discussions on Nippon \u201cwill unfold in directions that would be positive for both sides.\u201d<\/p>\n Nippon Steel<\/a>\u00a0announced in December that it planned to buy the Pittsburgh-based steel producer for $14.1 billion in cash, raising concerns about what the transaction could mean for unionized workers, supply chains and U.S. national security.<\/p>\n Treasury\u2019s Assistant Secretary for Investment Security Paul Rosen said the rulemaking is meant to \u201cmore effectively deter violations, promote compliance and swiftly address national security risks in connection with CFIUS reviews.\u201d<\/p>\n John Carlin, the former Justice Department national security chief and a partner at the Paul Weiss law firm, said the proposed rule shows how \u201ccorporations are on the front lines of national security policy and how seriously the government is taking foreign investments.\u201d<\/p>\n \u201cThe announcement today is all about adding tools for them to investigate and more actively and aggressively enforce their authorities,\u201d he said. He added that it was going \u201cto act as an incentive for people to really scrub deals to see whether or not they need to file.\u201d<\/p>\n \u201cIt really makes CFIUS more of an enforcement agency\u201d by broadening their subpoena power, he said.<\/p>\n Another deal under CFIUS review is the ownership of popular social media app, TikTok. CFIUS\u2019 review of the social media app goes back at least to 2019, though no movement has been made on that review. The U.S. House of Representatives\u00a0has since passed a bill<\/a>\u00a0that would force ByteDance to either sell the app or have it banned in the U.S.<\/p>\n Asked at a press conference in Beijing on Monday about TikTok, Treasury Secretary Janet Yellen said that she supported the administration\u2019s efforts to address national security issues that relate to sensitive personal data. \u201cThis is a legitimate concern,\u201d she said.<\/p>\n \u201cMany US social apps are not allowed to operate in China,\u201d Yellen said. \u201cWe would like to find a way forward.\u201d<\/p>\n J. Philip Ludvigson, a partner at the law firm King & Spalding, said the proposed regulations \u201care yet another indicator of an increasingly aggressive posture in protecting national security.\u201d Ludvigson is a former director for CFIUS Monitoring & Enforcement.<\/p>\n \u201cCFIUS clearly intends to issue more and bigger penalties than ever before, using an enhanced subpoena authority wherever necessary,\u201d he said.<\/p>\n The U.S. has also begun reviewing certain transactions made between U.S. firms and those in China.<\/p>\n President Joe Biden\u00a0signed an executive order<\/a>\u00a0last August to block and regulate high-tech U.S.-based investments going toward China.<\/p>\n<\/div>\nSubscribe to the new Fortune CEO Weekly Europe newsletter to get corner office insights on the biggest business stories in Europe. Sign up<\/a> for free.<\/div>\n