Hearing Entitled: U.S. Policy on Investment Security

House Subcommittee on National Security, Illicit Finance, and International Financial Institutions

2025-07-16

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Summary

This meeting of the Subcommittee on National Security, Illicit Finance, and International Institutions convened to discuss U.S. policy on investment security, specifically focusing on the Committee on Foreign Investment in the United States (CFIUS) and the development of outbound investment regulations[ 00:24:26 ] . Witnesses and subcommittee members examined CFIUS's critical role in safeguarding national security and the need for a robust framework for outbound investments[ 00:25:48 ] .

The Role and Evolution of CFIUS

CFIUS, established in 1975 under the Department of Treasury, is responsible for evaluating foreign investments that pose national security threats[ 00:26:00 ] . The 2018 Foreign Investment Risk Review Modernization Act (FIRRMA) significantly expanded its jurisdiction to include non-controlling investments in critical technologies, infrastructure, and sensitive personal data[ 00:26:05 ] . CFIUS rigorously scrutinizes foreign investments to protect sectors such as technology, agriculture, and energy, while simultaneously enabling beneficial investment inflows that strengthen the U.S. economy[ 00:26:24 ] . The committee operates on principles of statutory timelines, evidence-based decisions, proportionality, confidentiality, and accountability, focusing on cognizable national security risks. Witnesses emphasized that CFIUS is a critical component of the U.S. Open Investment Framework, ensuring continued open investment while addressing potential risks. Calls were made for updated public guidance, improved interagency coordination, and fast-track pathways for trusted investors to streamline reviews and prioritize high-risk cases. Furthermore, the importance of including the Department of Agriculture in CFIUS reviews for ag-related transactions was highlighted[ 00:58:14 ]

, and it was noted that CFIUS has adapted to risks in the energy sector, with the Department of Energy leading reviews and the Department of Defense assessing proximity to defense facilities.

Outbound Investment Policy and its Challenges

The subcommittee discussed the need for a robust outbound investment bill with severe sanctions to prevent U.S. capital from supporting industries in adversarial nations that threaten sovereignty[ 00:27:13 ] . This legislation requires a clear, streamlined framework to avoid burdensome bureaucracy for American companies[ 00:27:58 ] . The Biden administration initiated an outbound investment security program at Treasury to screen certain U.S. investments in China involving sensitive technologies. However, concerns were raised about ambiguities in the regulations that complicate compliance and the lack of clear definitions for covered transactions. It was suggested that the outbound investment security program could inadvertently make U.S. businesses less competitive and hinder their ability to project U.S. values abroad. There is currently a lack of reporting from Treasury on the program's activities, and the committee sought data on notified transactions, enforcement actions, and the program's impact on innovation capacity. Discussion also touched upon China's integrated circuit manufacturing capabilities, which are seen as more limited by technology than by capital, emphasizing that outbound investment often includes the transfer of know-how and technology[ 01:14:55 ]

Balancing National Security with Open Investment

Foreign investment is recognized as overwhelmingly beneficial to the United States, fostering job creation, innovation, and economic growth, while also bolstering national security by funding emerging technologies. CFIUS aims to protect national security while maintaining an open investment environment for trusted capital. The majority of investment into the U.S. comes from allies, often in sectors unrelated to national security. Concerns were raised that overregulation could reduce investment, negatively impacting jobs and innovation. It was emphasized that mitigation agreements should be proportional to identified national security risks, rather than addressing broader economic competitiveness issues. Policies need to be clear and stable for U.S. companies and foreign investors, as frequent updates can create an unstable regulatory environment[ 00:47:47-00:48:22 ]

Politicization of Investment Reviews

Several members expressed concern about the politicization of CFIUS reviews, particularly citing instances under the previous administration where President Trump's actions in cases like TikTok and U.S. Steel disregarded CFIUS recommendations, leveraging transactions for trade negotiations and creating uncertainty. It was asserted that national security should not be treated as a bargaining chip in trade negotiations, and the CFIUS process should remain a rigorous, fact-based assessment rather than a politicized review[ 00:54:56 ]

. The politicization of the Nippon Steel deal was specifically mentioned, highlighting the importance of CFIUS making recommendations based on career advice rather than political influence. Such political interference can make the U.S. less competitive for foreign investments, especially when high-profile deals are handled outside of the established CFIUS process[ 01:22:44 ] . To counteract this, investment security policies should be consistently applied, without differential treatment based on personal relationships or connections to administration officials.

Enhancing Efficiency and Clarity in Investment Security

For CFIUS to be effective, it must operate efficiently to neutralize threats without unduly burdening American businesses[ 00:27:03 ] . The current CFIUS process can introduce significant timing and economic friction, leading to real costs and consequences for cross-border transactions. To improve efficiency, suggestions included reducing compliance burdens, particularly regarding the definition of critical technologies and export control analysis. Streamlining the process for benign capital, especially for venture capital investments that require quick decisions, is crucial to avoid unnecessary impedance. The concept of a "known investor portal" or fast-track pathway for trusted investors was proposed to streamline low-risk reviews, allowing CFIUS to concentrate on high-risk transactions. Such programs would require guardrails to ensure proper threat assessment and contextual understanding of each deal[ 01:00:29 ]

. Continuous outreach to the venture community is also important to educate them on their obligations[ 01:04:53 ] . The importance of attracting and retaining subject matter experts in emerging technologies for government roles was underscored, noting that FIRRMA provided direct hire authority and resources to aid in this effort. Finally, legislative proposals related to CFIUS should prioritize increasing efficiency without harming national security and ensure that any new economic friction is genuinely necessary for the mission.

Tone of the Meeting

The meeting maintained a formal and informative tone[ 00:24:26 ] . There was a general bipartisan consensus on the importance of investment security and the critical role of CFIUS[ 00:28:56 ]

. However, strong concerns were voiced regarding the politicization of investment reviews, particularly in relation to past presidential actions, leading to calls for depoliticization and greater consistency in the process. Specific challenges and ambiguities within the current outbound investment regulations were also a key point of discussion, highlighting the need for clearer guidance and potentially more rigorous legislative processes.