Sending Office: Honorable Rosa L. DeLauro
Sent By:
Terrell.Hunt@mail.house.gov

Strengthen CFIUS Review to Include Economic and Public Health Impact

Endorsed by: AFL-CIO, Food & Water Watch, National Farmers Union, Teamsters

Original Cosponsors: Conyers, DeFazio, Grijalva, Pocan, Slaughter

Dear Colleague,

We write to invite you to join legislation to ensure that foreign direct investment, including greenfield transactions, does not undermine public interests including economic security and public health and safety: H.R. 2932, the
Foreign Investment and Economic Security Act (FIESA).

Today, our government lacks a mechanism to screen for more than just national security threats at the interagency Committee on Foreign Investment in the United States (CFIUS). In response to the potential impact of foreign direct investment on national security,
CFIUS was created to review any merger, acquisition, or takeover by foreign investors. While submitting details of an acquisition for review is voluntary, CFIUS can initiate an investigation to review a merger or acquisition involving a U.S. company by a foreign
entity. The CFIUS review process only applies to potential mergers and acquisitions and does not involve greenfield investments (new startups in America) by foreign entities. This loophole in the oversight capacity leaves America potentially vulnerable.

FIESA would strengthen the CFIUS process by including a net-benefit assessment for all deals, to include a review of how potential transactions can impact food safety, public health, productivity, and economic activity. FIESA would also expand the mandate
of CFIUS to include reviews of greenfield investments, and it includes specific considerations for transactions involving state-owned enterprises.

Several of America’s peers in the Organization for Economic Co-operation and Development (OECD) apply net benefit assessments when considering foreign direct investment, including Canada, Australia, and China. The review for economic security in China includes
special scrutiny for agriculture, manufacturing and transportation and other sectors the government chooses to review.

The need for a net benefit review of foreign direct investment is increasingly clear. Both the volume, diversity, and the strategic value of FDI in the United States has increased markedly. According to a February 2016 report by Rhodium Group, Chinese FDI
deals have diversified since 2013 from a focus in the energy sector to include deals in the technology, hospitality, and other industries. Firms directly or indirectly controlled by the Communist Party of China are of particular strategic concern, but the
U.S.-China Economic and Security Review Commission
reports
that state control of Chinese firms is frequently opaque.

Just last year, CFIUS approved the acquisition of the Chicago Stock Exchange, one of the oldest in the nation, by the Chongqing Casin Enterprise Group despite concerns by Members of Congress over opportunities for corporate espionage.  The transaction has
not yet closed because of scrutiny by the Securities and Exchange Commission.  In agriculture, the 2013 acquisition of Smithfield food means that a Chinese corporation now controls over 26 percent of the American hog market and 97 percent of all pork exports
to China now occur under the Smithfield label. After decades of massive bilateral trade deficits due to currency manipulation, economic espionage, and state subsidies by the Chinese government, billions of the American dollars that were sent abroad are now
used to buy American industry.

This is why we urge you to cosponsor H.R. 2932, the Foreign Investment and Economic Security Act. The strategic threats, beyond simple national security risks, require a holistic approach to foreign investment reviews at CFIUS. We cannot allow foreign
entities and investors to potentially undermine the public health, safety, and economic security of the American people. If you would like to cosponsor or have any additional questions, please contact Brandon Honore, in Congresswoman DeLauro’s office at 5-3661
or Brandon.Honore@mail.house.gov.

             Sincerely,

Rosa DeLauro                          Louise M. Slaughter                  Mark Pocan

Member of Congress                Member of Congress                Member of Congress

Related Legislative Issues
Selected legislative information: Agriculture, Economy, Foreign Affairs, HealthCare, Trade
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