[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]


           PERSPECTIVES ON REFORM OF THE CFIUS REVIEW PROCESS

=======================================================================

                                HEARING

                               BEFORE THE

        SUBCOMMITTEE ON DIGITAL COMMERCE AND CONSUMER PROTECTION

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 26, 2018

                               __________

                           Serial No. 115-122
                           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                           


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov
                        
                        
                               __________
                               

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
31-568 PDF                  WASHINGTON : 2019                     
          
-----------------------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Publishing Office, 
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact
Center, U.S. Government Publishing Office. Phone 202-512-1800, or 
866-512-1800 (toll-free).E-mail, [email protected].                       
                        
                        
                    COMMITTEE ON ENERGY AND COMMERCE

                          GREG WALDEN, Oregon
                                 Chairman
JOE BARTON, Texas                    FRANK PALLONE, Jr., New Jersey
  Vice Chairman                        Ranking Member
FRED UPTON, Michigan                 BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
MICHAEL C. BURGESS, Texas            ELIOT L. ENGEL, New York
MARSHA BLACKBURN, Tennessee          GENE GREEN, Texas
STEVE SCALISE, Louisiana             DIANA DeGETTE, Colorado
ROBERT E. LATTA, Ohio                MICHAEL F. DOYLE, Pennsylvania
CATHY McMORRIS RODGERS, Washington   JANICE D. SCHAKOWSKY, Illinois
GREGG HARPER, Mississippi            G.K. BUTTERFIELD, North Carolina
LEONARD LANCE, New Jersey            DORIS O. MATSUI, California
BRETT GUTHRIE, Kentucky              KATHY CASTOR, Florida
PETE OLSON, Texas                    JOHN P. SARBANES, Maryland
DAVID B. McKINLEY, West Virginia     JERRY McNERNEY, California
ADAM KINZINGER, Illinois             PETER WELCH, Vermont
H. MORGAN GRIFFITH, Virginia         BEN RAY LUJAN, New Mexico
GUS M. BILIRAKIS, Florida            PAUL TONKO, New York
BILL JOHNSON, Ohio                   YVETTE D. CLARKE, New York
BILLY LONG, Missouri                 DAVID LOEBSACK, Iowa
LARRY BUCSHON, Indiana               KURT SCHRADER, Oregon
BILL FLORES, Texas                   JOSEPH P. KENNEDY, III, 
SUSAN W. BROOKS, Indiana                 Massachusetts
MARKWAYNE MULLIN, Oklahoma           TONY CARDENAS, California
RICHARD HUDSON, North Carolina       RAUL RUIZ, California
CHRIS COLLINS, New York              SCOTT H. PETERS, California
KEVIN CRAMER, North Dakota           DEBBIE DINGELL, Michigan
TIM WALBERG, Michigan
MIMI WALTERS, California
RYAN A. COSTELLO, Pennsylvania
EARL L. ``BUDDY'' CARTER, Georgia
JEFF DUNCAN, South Carolina

        Subcommittee on Digital Commerce and Consumer Protection

                         ROBERT E. LATTA, Ohio
                                 Chairman
                                     JANICE D. SCHAKOWSKY, Illinois
                                       Ranking Member
GREGG HARPER, Mississippi            BEN RAY LUJAN, New Mexico
  Vice Chairman                      YVETTE D. CLARKE, New York
FRED UPTON, Michigan                 TONY CARDENAS, California
MICHAEL C. BURGESS, Texas            DEBBIE DINGELL, Michigan
LEONARD LANCE, New Jersey            DORIS O. MATSUI, California
BRETT GUTHRIE, Kentucky              PETER WELCH, Vermont
DAVID B. McKINLEY, West Virgina      JOSEPH P. KENNEDY, III, 
ADAM KINZINGER, Illinois                 Massachusetts
GUS M. BILIRAKIS, Florida            GENE GREEN, Texas
LARRY BUCSHON, Indiana               FRANK PALLONE, Jr., New Jersey (ex 
MARKWAYNE MULLIN, Oklahoma               officio)
MIMI WALTERS, California
RYAN A. COSTELLO, Pennsylvania
JEFF DUNCAN, South Carolina
GREG WALDEN, Oregon (ex officio)
  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Robert E. Latta, a Representative in Congress from the State 
  of Ohio, opening statement.....................................     1
    Prepared statement...........................................     2
Hon. Greg Walden, a Representative in Congress from the State of 
  Oregon, prepared statement.....................................   117
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, prepared statement........................   118

                               Witnesses

Heath Tarbert, Assistant Secretary, International Markets and 
  Investment Policy, U.S. Department of Treasury.................     5
    Prepared statement...........................................     7
    Answers to submitted questions...............................   123
Richard Ashooh, Assistant Secretary, Export Administration, U.S. 
  Department of Commerce.........................................    13
    Prepared statement...........................................    15
    Answers to submitted questions...............................   125
Kevin Wolf, Partner, Akin Gump Straus Hauer and Feld, LLP........    41
    Prepared statement...........................................    43
    Answers to submitted questions...............................   127
Clay Lowery, Managing Director, Rock Creek Global Advisors.......    63
    Prepared statement...........................................    65
    Answers to submitted questions...............................   129
Celeste Drake, Trade and Globalization Policy Specialist, AFL-CIO    76
    Prepared statement...........................................    78
    Answers to submitted questions...............................   131
Derek Scissors, Resident Scholar, American Enterprise Institute..    91
    Prepared statement...........................................    93
    Answers to submitted questions...............................   133

                           Submitted material

Statement of the Federal Communications Commission...............   120
Statement of the Department of Energy............................   121

 
           PERSPECTIVES ON REFORM OF THE CFIUS REVIEW PROCESS

                              ----------                              


                        THURSDAY, APRIL 26, 2018

                  House of Representatives,
     Subcommittee on Digital Commerce and Consumer 
                                        Protection,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:15 a.m., in 
room 2322 Rayburn House Office Building, Hon. Robert Latta 
(chairman of the subcommittee) presiding.
    Members present: Representatives Latta, Kinzinger, Burgess, 
Lance, Guthrie, McKinley, Bilirakis, Bucshon, Mullin, Walters, 
Duncan, Schakowsky, Welch, Kennedy, and Green.
    Staff present: Samantha Bopp, Staff Assistant; Daniel 
Butler, Staff Assistant; Melissa Froelich, Chief Counsel, 
Digital Commerce and Consumer Protection; Adam Fromm, Director 
of Outreach and Coalitions; Ali Fulling, Legislative Clerk, 
Oversight & Investigations, Digital Commerce and Consumer 
Protection; Elena Hernandez, Press Secretary; Zach Hunter, 
Director of Communications; Paul Jackson, Professional Staff, 
Digital Commerce and Consumer Protection; Bijan Koohmaraie, 
Counsel, Digital Commerce and Consumer Protection; Austin 
Stonebraker, Press Assistant; Greg Zerzan, Counsel, Digital 
Commerce and Consumer Protection; Michelle Ash, Minority Chief 
Counsel, Digital Commerce and Consumer Protection; Lisa 
Goldman, Minority Counsel; and Caroline Paris-Behr, Minority 
Policy Analyst.

OPENING STATEMENT OF HON. ROBERT E. LATTA, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF OHIO

    Mr. Latta. Good morning. I would like to welcome you to the 
Digital Commerce and Consumer Protection Subcommittee of Energy 
and Commerce. And before we get started, just to let everyone 
know the Environment Subcommittee is also running downstairs, 
so we will have members coming in and out from downstairs from 
that subcommittee meeting, too.
    So I, again, want to welcome you to the subcommittee and I 
recognize myself for 5 minutes.
    And again, good morning and welcome to our witnesses. And 
we thank you for being with us today to discuss proposed reform 
of the Committee on Foreign Investment in the United States or 
CFIUS. CIFUS was first established by the Executive order by 
President Ford. Over the years, the committee was codified and 
its members expanded based on input from this committee under 
both Republican and Democratic leadership.
    CFIUS is tasked with reviewing mergers, acquisitions, or 
takeovers of U.S. businesses by foreign persons to see if they 
pose a threat to our national security. If CFIUS determines 
that a transaction does threaten national security, it can 
negotiate changes to the terms of the proposed deal. 
Alternatively, the committee can recommend that the President 
block a proposed deal.
    Until recently, presidents have generally not found it 
necessary to block a proposed foreign purchase of or 
controlling interests in U.S. assets. However, in the last 6 
years, presidents from both parties have blocked a total of 
four proposed transactions.
    The increase in presidential action to stop foreign 
takeovers of American companies is one indication of how the 
world has changed. Foreign direct investment in the United 
States in 2016 doubled over the previous 10 years. In addition 
to an increase in monetary investments, foreign investments 
have also taken new forms, including the joint venture.
    While more foreign investment in America is generally a 
good thing, for example, Honda has a large presence in Ohio, 
concerns have arisen that some investments could be the work of 
foreign governments that want to access the U.S. technology or 
infrastructure. If America's international competitors lack the 
ability to develop their own technology, they may find it 
easier to buy it by acquiring an American business or, they 
might seek to purchase critical U.S. infrastructure as a way to 
harm American interests.
    CFIUS is the organization charged with examining who is 
investing in national security-related U.S. companies and why. 
Today, we are going to examine whether CFIUS has the proper 
tools to do that job, what tasks are already assigned to other 
government bodies, including export control agencies, and what 
steps are already being taken through regulation to reform 
CFIUS.
    The most important job of Congress is to ensure the safety 
and security of our nation. Whether through the CFIUS process 
or other government programs, it is our duty to be vigilant for 
the American people. Our security, both economic and national, 
secures the freedoms that helps Americans thrive.
    I look forward to hearing from our witnesses today on their 
thoughts on the reform processes and proposals for CFIUS, in 
particular H.R. 4311, the Foreign Investment Risk Review 
Modernization Act of 2017, and what other considerations 
policymakers should keep in mind during this debate.
    I want to, at this time, yield to the ranking member, the 
gentlelady from Illinois, the ranking member of the 
subcommittee.
    [The prepared statement of Mr. Latta follows:]

               Prepared statement of Hon. Robert E. Latta

    Good morning and thank you to our witnesses for being here 
today to discuss proposed reform of the Committee on Foreign 
Investment in the United States, or CFIUS. CFIUS was first 
established by Executive Order by President Ford. Over the 
years, the Committee was codified and its members expanded 
based on input from this Committee under both Republican and 
Democratic leadership.
    CFIUS is tasked with reviewing mergers, acquisitions or 
takeovers of U.S. businesses by foreign persons to see if they 
pose a threat to our national security. If CFIUS determines 
that a transaction does threaten national security, it can 
negotiate changes to the terms of a proposed deal. 
Alternatively, the Committee can recommend that the President 
block a proposed deal.
    Until recently presidents have generally not found it 
necessary to block proposed foreign purchases of, or 
controlling interests in, U.S. assets. However, in the last 6 
years presidents from both parties have blocked a total of four 
proposed transactions.
    The increase in presidential action to stop foreign 
takeovers of American companies is one indication of how the 
world has changed. Foreign direct investment in the United 
States in 2016 doubled over the previous 10 years. In addition 
to an increase in monetary investments, foreign investments 
have also taken new forms--including the joint venture.
    While more foreign investment in America is generally a 
good thing when more jobs are created for our citizens, 
concerns have arisen that some other investments could be the 
work of foreign governments that want access to advanced U.S. 
technology or infrastructure. If America's international 
competitors lack the ability to develop their own technology 
they may find it easier to buy it by acquiring an American 
business. Or, they might seek to purchase critical U.S 
infrastructure as way to harm American interests.
    CFIUS is the organization charged with examining who is 
investing in national security related U.S. companies, and why. 
Today, we are going to examine whether CFIUS has the proper 
tools to do that job, what tasks are already assigned to other 
government bodies-including export control agencies-and what 
steps are already being taken through regulation to reform 
CFIUS.
    The most important job of Congress is to ensure the safety 
and security of our nation. Whether through the CFIUS process, 
or other government programs, it is our duty to be vigilant for 
the American people. Our security, both economic and national, 
secures the freedom that helps Americans thrive.
    I look forward to hearing from our witnesses today on their 
thoughts on reform proposals for CFIUS, in particular H.R. 
4311, the Foreign Investment Risk Review Modernization Act of 
2017, and what other considerations policymakers should keep in 
mind during this debate.
    Thank you and I yield now to the Ranking Member.

    Ms. Schakowsky. Thank you, Mr. Chairman. My opening 
comments will certainly reflect what you have said, as well.
    American ingenuity attracts investment from around the 
world. That investment can bring much-needed capital to 
American companies but foreign interests can also use 
investment to threaten our national and economic security.
    Congress has instructed the Committee on Foreign Investment 
in the United States to review mergers and acquisitions by 
foreign investors for potential national security threats. It 
has been a decade since the last major CFIUS legislation. We 
are more than due for evaluating how CFIUS is operating.
    In 2016, the stock of foreign direct investment in the 
United States totaled $7.6 trillion and foreign investors spent 
more than $365 billion acquiring U.S. companies. Given the 
enormity of that investment, we must consider whether the 
current safeguards for our national security and our nation's 
workers are sufficient.
    State-owned and state-affiliated enterprises in China have 
sought U.S. intellectual property through mergers and 
acquisitions, as well as joint venture agreements. Current 
CFIUS review is inadequate to capture the various ways a 
foreign interest may try to access sensitive American 
technologies.
    Today, we will be hearing about several bills to reform 
CFIUS. H.R. 4311, the bipartisan Foreign Investment Risk Review 
Modernization Act, would expand the investments covered by 
CFIUS--CFIUS review to protect critical technologies and 
infrastructure. Congressman Ed Royce and Eliot Engel, the chair 
and ranking member of the Foreign Affairs Committee, have 
introduced H.R. 5040, the Export Reform Control Act, to control 
the outflow of military and dual-use items.
    Finally, Congresswoman Rosa DeLauro has introduced H.R. 
2932, the Foreign Investment and Economic Security Act, to 
expand CFIUS' review to greenfield transactions which are new 
investments, as opposed to acquisitions. Her bill would also 
ask CFIUS to evaluate not only national security risks but also 
economic, public health, and safety risks.
    Our hearing today occurs within a broader debate over 
trade. President Trump has placed tariffs on steel and aluminum 
and the United States is currently renegotiating--it could be 
today, I hear, we might get some sort of announcement on NAFTA, 
the North American Free Trade Agreement with Canada and Mexico. 
Any new NAFTA deal must include strong labor protections for 
workers in this country, as well as for workers in Mexico and 
Canada.
    Last week, I was among the 107 House Democrats who sent a 
letter to the U.S. Trade Representative Robert Lighthizer 
emphasizing our opposition to legislation in the Mexican Senate 
to weaken labor standards in Mexico. I am encouraged that the 
legislation has now been tabled.
    I believe that Americans benefit from trade relations that 
are fair. Americans are increasingly aware that corporations 
have manipulated U.S. trade policy to the detriment of workers 
and consumers. As we examine our trade policy, we want to keep 
fairness to American workers and consumers front and center.
    Corporations have used trade agreements to fight against 
countries' labor and environmental laws. We should be fighting 
for fair trade agreements that protect workers and our 
environment, rather than encouraging a race to the bottom.
    National security is an important consideration as we 
review foreign investment in the United States but I hope we 
also spend time today on other risks that unfair trade 
practices pose to this country.
    I look forward to hearing from our two panels of witnesses. 
I appreciate your being here today. And I want to thank 
Chairman Latta.
    And I yield back.
    Mr. Latta. Thank you very much. The gentlelady yields back, 
and the chair of the full committee, the gentleman from Oregon 
is not here. Is there anyone on the Republican side that would 
like to claim his time? Seeing none, and we haven't had--I saw 
that Mr. Green had checked in but we will go ahead and conclude 
with member opening statements at this time.
    And the chair would like to remind members that pursuant to 
the committee rules, all members' opening statements will be 
made part of the record.
    And again, I want to thank all of our witnesses for being 
with us today and taking the time to testify before the 
subcommittee. Today's witnesses will have the opportunity to 
give 5-minute opening statements, followed by a round of 
questions from the members.
    Our first panel of witnesses for today's hearing will 
include the Honorable Heath Tarbert, the Assistant Secretary 
for International Markets and Investment Policy at the U.S. 
Department of Treasury, and the Honorable Richard Ashooh, the 
Assistant Secretary for Export Administration at the U.S. 
Department of Commerce.
    And, again, I thank you both forth being here. And Mr. 
Tarbert, you are recognized for 5 minutes.

STATEMENTS OF HEATH TARBERT, ASSISTANT SECRETARY, INTERNATIONAL 
MARKETS AND INVESTMENT POLICY, U.S. DEPARTMENT OF TREASURY; AND 
  RICHARD ASHOOH, ASSISTANT SECRETARY, EXPORT ADMINISTRATION, 
                  U.S. DEPARTMENT OF COMMERCE

                   STATEMENT OF HEATH TARBERT

    Mr. Tarbert. Chairman Latta, Ranking Member Schakowsky, 
Vice Chairman Kinzinger, and distinguished members of the 
subcommittee, thank you for the opportunity to testify in 
support of FIRRMA and about CFIUS more generally.
    The United States has always been a leading destination for 
investors. Alexander Hamilton argued that foreign capital is 
precious to economic growth. Foreign investment provides 
immense benefits to American workers and families, such as job 
creation, productivity, innovation, and higher median incomes. 
At the same time, we know foreign investment isn't always 
benign. On the eve of America's entry into World War I, 
concerned by German acquisitions in our chemical sector, 
Congress passed legislation empowering the President to block 
investments during national emergencies.
    During the Depression in World War II, cross-border capital 
flows fell dramatically. And in the boom years of the 1950s and 
'60s, investment in the U.S. was modest compared to outflows. 
During that time, foreign investment also posed little risk. 
Our main adversaries, the Soviet Union and its satellites, were 
communist countries that were economically isolated from us.
    But when the post-war trend changed in the 1970s, CFIUS was 
born. The oil shock that made OPEC countries wealthy led to 
fears that petro dollars might be used to buy strategic U.S. 
assets.
    In 1975, President Ford issued an Executive order creating 
CFIUS to monitor foreign investments. Then in 1988, a growing 
number of Japanese deals motivated Congress to pass the Exon-
Florio amendment. For the first time, the President could block 
a foreign acquisition without declaring a national emergency.
    For the next 20 years, CFIUS pursued its mission without 
fanfare but, in the wake of the Dubai Ports controversy, it 
became clear that CFIUS needed greater procedural rigor and 
accountability. In 2007, some of you helped enact FINSA, which 
formally established CFIUS and codified our current structure 
and process.
    Well now we find ourselves at yet another historic 
inflection point. The foreign investment landscape has shifted 
more than at any point during CFIUS' 40-year history. Nowhere 
is that shift more evident than in the caseload CFIUS now 
faces. The number of annual filings has grown within the last 
decade from an average of about 95 or so to nearly 240 last 
year. But it is the complexity, not simply the volume, that has 
placed the greatest demand on our resources. In 2007, about 
four percent of the cases went to the more resource-intensive 
investigation stage. Last year in 2017, nearly 70 percent did.
    This added complexity arises from a number of factors: 
strategic investments by foreign governments, complex 
transaction structures, and globalized supply chains. 
Complexity also results from the ever-evolving relationship 
between national security and commercial activity. Military 
capabilities are rapidly building on top of commercial 
innovations. What is more, the data driven economy has created 
vulnerabilities never before seen.
    And I know the gravity of this last point isn't lost on any 
of you. Protecting against the disclosure of Americans' 
sensitive personal data lies at the core of this subcommittee's 
work. In several cases we have seen, even over the last year, 
the company being acquired had access to significant amounts of 
sensitive information capable of exploitation by state actors. 
Similar sensitivities can arise because a company has 
concentrations of data regarding American servicemen and women, 
private information such as medical records, or simply 
personally identifiable information on such a vast scale that 
the national security concerns are too large to ignore.
    New risk require new tools. The administration has endorsed 
FIRRMA because it embraces four pillars critical to CFIUS 
modernization. First, FIRRMA expands the scope of transactions 
potentially reviewable by CFIUS to include certain non-passive 
investments, joint ventures, and real estate purchases. These 
changes lie at the very heart of CFIUS modernization. Right 
now, we can't review a host of transactions that present 
identical concerns to those we regularly examine.
    Second, FIRRMA allows CFIUS to refine its procedures to 
ensure the process is tailored, efficient, and effective. Only 
where existing authorities, like export controls, can't resolve 
the risk will CFIUS step in.
    Third, FIRRMA recognizes that our closest allies face 
similar threats and incentivizes our allies to work with us to 
address those threats.
    And finally, FIRRMA acknowledges that CFIUS must be 
appropriately resourced.
    Since testifying in the Senate in January and the House in 
March, I have been meeting regularly with Members of Congress, 
the business community, and other stakeholders to hear their 
views on the bill. As a result of these meetings, we have been 
working on proposed technical amendments to ensure that FIRRMA 
is even better tailored to address jurisdictional gaps, while 
also encouraging investment in our country. There is only one 
conclusion here: CFIUS must be modernized. In doing so, we must 
preserve our longstanding open investment policy. We must also 
protect our national security. These twin aims transcend party 
lines and they demand urgent action.
    I look forward to working with this subcommittee on 
improving and advancing FIRRMA.
    Thank you.
    [The prepared statement of Mr. Tarbert follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Latta. Well, thank you very much for your testimony.
    And, Mr. Ashooh, you are recognized for 5 minutes. And, 
again, thank you for being with us this morning.

                  STATEMENT OF RICHARD ASHOOH

    Mr. Ashooh. Thank you, Mr. Chairman, and thank you also 
Ranking Member Schakowsky, and the members of the committee for 
having us here today.
    I appreciate the opportunity to testify before the 
subcommittee today regarding CFIUS. And to share the 
perspective of the Department of Commerce, not only as a member 
agency of CFIUS but also, Mr. Chairman you mentioned in your 
opening statement about export control agencies, and we will 
bring that perspective to our testimony today as well.
    Within Commerce, the International Trade Administration and 
the Bureau of Industry and Security, or BIS, play important 
roles in the Department's review of CFIUS matters. BIS is the 
administrator of the Export Administration Regulations or EAR 
is the regulatory authority for the licensing and enforcement 
of controls on dual-use items, which are items that have a 
civilian end-use but can also be used for a military or 
proliferation-related purpose, and also includes less-sensitive 
military items.
    The export control system administered by BIS is a process 
that, like CFIUS, involves multiple agencies, primarily the 
Departments of Defense, Energy, and State. We work closely with 
these agencies to review not only license applications 
submitted to BIS but also to review and clear any changes to 
the EAR itself, ensuring that the export control system is 
robust.
    The interagency licensing process also takes into account 
intelligence information to assist in the analysis of the 
potential threats posed by those proposed exports. Further, the 
export control system benefits from close cooperation with our 
international partners through four major multi-lateral export 
control regimes focused on national security, as well as 
missile technology, nuclear, and chemical weapons 
nonproliferation. Through these regimes, the United States and 
our partners coordinate on which items and technologies merit 
control and how those controls should be applied.
    The EAR's authority covers an array of in-country transfers 
of technology, as well as exports of goods, software, or 
technology to foreign countries. For example, the EAR regulates 
the transfer of controlled technology within the United States 
or abroad to foreign nationals under what we call deemed 
exports. It differentiates between countries that range from 
our closest allies to embargoed nations; thus, allowing the 
export control system to handle technology transfers under 
different licensing review policies, depending on the level of 
concern with the recipient country.
    The EAR also includes lists of end-users of concern that 
trigger extraordinary licensing requirements, as well as 
prohibitions of certain end uses.
    The export control system is also highly adaptable to 
evolving threats and challenges. BIS is currently reviewing 
control levels and procedures to specifically address such 
threats from adversary nations, as well as their interest in 
emerging critical technologies.
    Our export control system includes aggressive enforcement 
capabilities as well. BIS' special agents are located across 
the United States and overseas with a primary focus on 
identifying violations of the EAR and bringing to justice 
domestic and foreign violators.
    Recently, BIS, in conjunction with other federal law 
enforcement agencies announced a prosecution against two 
individuals conspiring to violate export control laws by 
shipping controlled semiconductor components to a Chinese 
company that was under a Commerce license restriction known as 
the entity list.
    The export control system and CFIUS are complementary tools 
that we utilize to protect U.S. national security, with CFIUS 
addressing risks stemming from foreign ownership of companies 
important to our national security and export controls dealing 
with the transfer of U.S. goods, technology, and software to 
foreign nationals, regardless of the mode of transfer.
    As with the export control system, it is also crucial that 
CFIUS remain adaptive to current and evolving security 
challenges. The FIRRMA legislation introduced in the House and 
the Senate would, if enacted, take several important steps in 
this direction, especially the provision requiring mandatory 
filings for certain transactions involving foreign government-
controlled entities, as well as the provision which would 
facilitate greater cooperation and information-sharing with our 
allies and partners. Such international cooperation is an 
essential part of our export control system and would benefit 
CFIUS as well.
    In sum, the export control system and CFIUS are both vital 
authorities and complementary tools that the United States 
relies upon to protect our national security. Strengthening 
CFIUS through FIRRMA, while ensuring that CFIUS and the export 
control authorities remain distinct, will enable even stronger 
protections of U.S. technology.
    The Department of Commerce looks forward to working with 
the committee and the bill's cosponsors on this important 
effort.
    And I look forward to taking your questions.
    [The prepared statement of Mr. Ashooh follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Latta. Well, again, thank you for your testimony. And 
that will end our presentations from our witnesses. And I will 
begin the questioning and recognize myself for 5 minutes.
    Pardon me, it is allergy time in Washington.
    First this is a question for both of you. What are the 
administration's views on the proper relationship between 
export controls and CFIUS?
    Mr. Tarbert, would you like to start or Mr. Ashooh?
    Mr. Tarbert. Sure, I can start. I think Assistant Secretary 
Ashooh said it right, the administration believes they are 
complementary and mutually reinforcing tools of the United 
States Government. And so the stronger export controls are, the 
better that it makes CFIUS and vice-versa.
    Mr. Ashooh. And I would certainly reiterate that. And the 
fact that the--not only is CFIUS in need of modernization but 
our export control authorizing legislation, as well. And right 
now there are independent efforts to do both. That is very, 
very important because, as we modernize one, it is important to 
modernize both because they really are knitted together and 
rely upon each other to be effective.
    Mr. Latta. Let me follow-up with that, then, Mr. Ashooh, if 
I could, because do current legislative proposals create a 
distinction between CFIUS and export controls? And if they 
don't, should they?
    Mr. Ashooh. The current legislation, the CFIUS legislation?
    Mr. Latta. Right. Right.
    Mr. Ashooh. The latest, and I don't want to pretend to be 
an expert on what is going on in the committees that are 
working on the legislation but, as we understand it, the latest 
draft does do a very good job of not only drawing the line but 
leveraging each other. There is an acknowledgment that the 
goals of FIRRMA need to be accomplished with several 
authorities. And expert control is specifically carved out and 
reinforces the relationship that the two have.
    Mr. Latta. Thank you.
    Secretary Tarbert, how has foreign direct investment in the 
United States changed since the last time this committee 
considered CFIUS legislation in 2006?
    Mr. Tarbert. So we are seeing, and I mentioned a few points 
in my opening testimony but just to give you a little bit more 
flavor on that, the rise of state-owned enterprises, 
particularly from certain countries that are buying strategic 
assets as part of an industrial plan and, in some cases, that 
industrial plan involves civil military fusion. And so there is 
this inflow of state-owned enterprise money that is sort of 
government-backed money that are not purely financial 
investments but are purchasing U.S. businesses with more 
military and strategic goals in mind.
    The other thing that has changed is that, to go back to 
this committee and what you all are really specialists in, is 
the vulnerability side. So there is sort of the sources of the 
funds coming into the United States and why people are 
investing but then there is also the U.S. companies. There is 
much more. We live in a big data economy now. And so when we 
are looking at a particular U.S. company, a healthcare firm, 
for example, or even an internet servicing firm, the data on 
U.S. citizens is much greater than it was 10 years ago and 
certainly 30 years ago, when the actual jurisdictional 
provision of CFIUS was created. So it has been 30 years since 
CFIUS' actual jurisdiction has been revisited.
    Mr. Latta. Thank you.
    Secretary Ashooh, do the current export controls 
administered by your Department adequately prevent the transfer 
of sensitive goods in intellectual property?
    Mr. Ashooh. They do but they need to be utilized 
aggressively. This is not a one and done scenario, as we have 
learned. Not only on the CFIUS side, on the export control 
side, bad actors seek to evade current restrictions. And they 
do this all the time and the volume of this activity is also 
going up.
    So the authorities, while they need to be updated, are 
certainly able to deal with the threats to the technology 
transfer but they need to be utilized aggressively.
    Mr. Latta. When you talk about utilized aggressively, how 
would you define that?
    Mr. Ashooh. Well, as I mentioned, one of the things that is 
important about the export control system is we do have 
enforcement and we need to utilize our enforcement. And so I 
referred to one example in my opening statement but that is 
something that we are relying on Congress to help us make sure 
is resourced properly because, at the end of the day, this 
comes down to having the right people doing the job but it also 
means making sure that we are staying ahead of the technologies 
that are targets. And we are living in a world now where 
emerging technologies, which is clearly the strength of the 
U.S. innovation base.
    We are very excited about the technologies that are coming 
online, most of them for civilian purposes, but which could 
have national security implications. And so we need to be 
aggressive about identifying and potentially controlling that 
category of technology.
    Mr. Latta. In my last 20 seconds, not to be picking on you, 
one last question.
    In your testimony you said that however we are concerned 
that the 25 percent threshold in FIRRMA is too high and that 
you might encourage that Congress consider a lower threshold. 
What would that lower threshold be, in your opinion?
    Mr. Tarbert. So we have identified 10 percent, which is 
similar to what the SEC uses to identify their definition of 
control. Our view is from an export control perspective. The 
wider the aperture that proceeds through CFIUS is an 
opportunity for the export control system to understand and 
examine those specific transactions for export control 
purposes. So, we think the overall system benefits from having 
that wider aperture.
    Mr. Latta. Thank you very much. My time has expired.
    And the gentlelady from Illinois, the ranking member of the 
subcommittee, is recognized for 5 minutes.
    Ms. Schakowsky. I have so many questions. I am going to try 
and get through some of them, anyway.
    So I am interested in hearing from both of you the issues 
of staffing and resources. It is my understanding that the 
number of investments or transactions that CFIUS is reviewing 
is already--you talked about that, how many more there are and 
that FIRRMA could require CFIUS to review even more 
transactions.
    So, if we could start with you, Secretary Tarbert.
    Mr. Tarbert. Sure. So in order to do this, we will need 
resources, particularly FIRRMA. I mean we are committed to 
ensuring that the resources are there so that cases can be 
reviewed adequately for national security purposes.
    One thing that FIRRMA does is it has special funding 
mechanisms, which helps ensure that the resources are there. It 
also has a special, the legislation would not go into effect 
until there is a certification by the Treasury Secretary that 
the new regulations and resources are in place.
    So, absolutely, resources are a very important part of 
this.
    Ms. Schakowsky. So how many transactions per year does 
CFIUS review now and how many do you expect it would be 
required to review if the bill became law?
    Mr. Tarbert. Right now we had a little under 240 cases 
before.
    Ms. Schakowsky. Yes, you said that.
    Mr. Tarbert. We don't know with exact certainty because the 
bill is changing. It will certainly be multiples of that but we 
don't know exactly how many because the bill is changing and we 
also want to make sure that the regulations really pinpoint 
those transactions that are most likely to give rise to 
national security concerns.
    Ms. Schakowsky. And how many staffers work for or are 
assigned to the committee and how many more staff--so you can't 
really tell how many more would be required if the law passed.
    Mr. Tarbert. Not at this time.
    Ms. Schakowsky. OK. Secretary Ashooh, did you want to 
respond?
    Mr. Ashooh. Sure. There is actually a good reason why it is 
difficult to forecast. And that reason is, certainly in the 
case of Commerce, the majority of people who work CFIUS cases 
are also working licensing and other export control-related 
matters. So we are leveraging the expertise of both.
    We have got a cadre of about 30 engineers and scientists 
that help us understand the technology in question and those 
are people who would work on both. The caseload will go up, 
there is no question, but I don't think it will be necessarily 
a one-for-one increase because we will continue to leverage the 
overall organization to support what we are doing.
    Ms. Schakowsky. So, Secretary Tarbert, we have been, this 
subcommittee and the Energy and Commerce Committee, has been 
dealing with the issue in pretty high-profile hearings on 
security, data security, privacy, that kind of thing.
    And the things that you were saying really concern me 
because then what are the guiding principles? The United States 
of America has very few real regulations when it comes to data 
privacy and security. Europe has come up with a new regime on 
how to do that. So what guides you on whether or not the data 
that these investments want to have or do have is protected, or 
how do you balance it?
    Mr. Tarbert. Yes, it is a great question. So there is 
probably a whole other data protection debate that you have 
raised about that.
    What CFIUS looks at are specifically are there national 
security concerns arising from the vulnerabilities of the 
target company. So when we do an assessment of a transaction, 
we look at the threat, which is an intelligence community 
analysis of the foreign acquirer, and then we look at the 
vulnerability, which is essentially an assessment of what the 
target company has in the U.S. And then we put those two 
together and say if a threat meets the vulnerability, what are 
the potential consequences.
    So if we have a foreign acquirer----
    Ms. Schakowsky. Well, these all ifs, but have you actually 
enforced some? Can you tell me about that?
    Mr. Tarbert. Absolutely. So we see cases where the foreign 
acquirer, there may be concerns that they could take American's 
information and share them with their state authorities in a 
way that could have intelligence community effects. And so, in 
some cases, we would require mitigation that effectively 
doesn't allow certain people from the foreign acquirer to have 
access to Americans' information.
    Ms. Schakowsky. And then how often does that happen?
    Mr. Tarbert. It is happening more often than before. But, 
again, it has to arise to the level where we need to say there 
is actually a national security concern. But it is arising more 
often than certainly 5 years ago and certainly 10 years ago.
    Ms. Schakowsky. And what kind of company would that be?
    Mr. Tarbert. It could be any particular company.
    Ms. Schakowsky. What company has there been?
    Mr. Tarbert. They are in various industries, health care, 
for example, where healthcare information is particularly 
sensitive. And it can be in the financial services industry, as 
well, where we have seen cases where, again, there is lots of 
personal data and financial data on Americans, where we are 
concerned that it could have national security ramifications.
    Ms. Schakowsky. Thank you. I would like to hear more about 
that but I have run out of time.
    Mr. Tarbert. Absolutely, my pleasure.
    Mr. Latta. Thank you very much. The gentlelady yields back.
    The chair now recognizes the gentleman from Illinois, the 
vice chair of the subcommittee for 5 minutes.
    Mr. Kinzinger. Thank you, Mr. Chairman, and thank you both 
for being here. I appreciate it. Obviously, there are a lot of 
questions we have.
    This is an extremely important issue, especially when you 
deal with the economy. We obviously want to make sure we are 
protected. At the same time, anytime we make changes in the way 
our economy works, it could have implications that we know 
nothing about. And so part of you being here is extremely 
important for that.
    Mr. Tarbert, in your testimony, you emphasized the gravity 
of potential vulnerabilities arriving from the digital data-
driven economy that we live in. Can you explain how countries 
are exploiting this and how you believe that modernizing CFIUS 
will help address those concerns?
    Mr. Tarbert. Yes. There is only so much I can say because 
some of that is classified as to how countries may be 
exploiting the vulnerabilities. But I think if you think about 
a company that contains lots of personally identifiable data, 
personal healthcare data on individual Americans, one can 
easily see that if that information got into the wrong hands, 
particularly if those individual Americans work in sensitive 
U.S. Government positions, that a foreign actor could exploit 
that.
    Mr. Kinzinger. OK.
    Mr. Ashooh, in your testimony, you state that our export 
control system and CFIUS are complementary tools, as the 
chairman talked about, that we utilize to protect our national 
security. Given that they complement each other, are there any 
gaps in the way that they interplay?
    Mr. Ashooh. I think any gaps that might exist are not gaps 
between the two. I think that FIRRMA is addressing gaps that 
need to be addressed in certain transactions. That will benefit 
the export control system.
    And I think it is also important you know to illustrate why 
these two need to be complementary. If we are concerned about a 
certain technology, oftentimes the concern will be over the 
nature of the transaction under which that technology would be 
transferred. CFIUS is very good at understanding, and blocking, 
or mitigating those transactions.
    Once that occurs, though, the technology still exists and 
may belong to several companies. In fact, it usually does. And 
so if we have a concern over the technology that was resonant 
in that transaction, we want to make sure, as an export control 
agency, we follow it and control it wherever it goes.
    So the----
    Mr. Kinzinger. Kind of cradle-to-grave, in essence.
    Mr. Ashooh. Yes, really, belt and suspenders, whatever you 
want to use. It is very important for us to follow the 
technology of concern wherever it goes.
    And I think the changes that we are talking about, if there 
are gaps, those will be addressed in FIRRMA and that will then 
help the export control system be more robust.
    Mr. Kinzinger. And then let me ask you how does 
coordination with other agencies, such as DOD, occur with 
respect to the evaluation of potential military application of 
a civilian technology?
    Mr. Ashooh. So the export control system is founded on an 
interagency process. And so the agencies that I mentioned, 
Energy has a nation security role, protects a stockpile; 
Defense; State all are the member agencies that review export 
control licenses. That includes an escalation process, meaning 
if one agency has a concern that it does not feel is being 
addressed, it can raise that up to the Assistant Secretary 
level, all the way up to the Cabinet, so we can really drill 
down into the issues that are of concern.
    I would also like to expand on that internationally. We 
have a similar process where we work with international allies 
because, again, we are talking about evasion in cases. Where 
the adversary nation wants to obtain something from the U.S., 
can't get it, it doesn't do us any good to control it if they 
can get it from Europe or somewhere else. So we have a number 
of ways to work with our allies to control technology.
    And FIRRMA, again, acknowledges the need to work 
internationally, as the export control system does, again, 
creating more complementary natures.
    Mr. Kinzinger. And then do you think, for both of you, do 
you think that CFIUS is capable of addressing emerging 
technology concerns, given how rapid innovation is occurring? 
And what changes do you think are necessary to better position 
it to do so?
    In a month we are going to have technology we don't even 
know exists today.
    Mr. Tarbert. I would just say there needs to be a process 
where emerging technologies are identified, and considered, and 
made part of the CFIUS review process or certainly the export 
controls. And so we have been working a lot on that process in 
the bill with Members of Congress, with the committees of 
jurisdiction, to make sure that we have such a process and that 
that process keeps up.
    Mr. Ashooh. Sir, this is a critical issue for us. We are 
spending a great deal of our resources and focus on adapting to 
the trend you just identified.
    We have technical advisory committees that include private 
sector individuals and companies that are those early stage 
innovators. We were relying on them. In fact, we have 
reorganized them around emerging technologies, one of many. 
With more time, I would be happy to fill you in on what we are 
doing to tackle that.
    Mr. Kinzinger. Cool.
    And Mr. Chairman, to be an example for generations to come, 
I yield back with time on the clock.
    Mr. Latta. The gentleman yields back.
    The chair now recognizes the gentleman from Texas for 5 
minutes.
    Mr. Green. Thank you, Mr. Chairman.
    The bill contemplates increasing CFIUS scrutiny of certain 
transactions that involve critical technology or critical 
infrastructure. While I understand the purpose of CFIUS is to 
consider each transaction in light of national security, I am 
interested in how labor issues are considered.
    I understand that the Secretary of Labor is a nonvoting 
member. What is their role in the committee?
    Mr. Tarbert. Sure. So if an issue raises to the level of 
national security, it will be considered. And as you say, the 
Secretary of Labor has an observer role. And so, therefore, if 
there is a case--so normally what happens is that if there is a 
case involving a company where let us say the Labor Department 
is primarily involved, whether it is a set of ERISA funds or 
other things, a labor union of some sort, where there is a 
foreign acquisition there, then we would often ask that Cabinet 
secretary to sit as the co-chair of the case.
    Mr. Green. OK. Can CFIUS consider whether a transaction 
would strip the U.S. of these good high-paying jobs or pose 
threats to the health or environment of Americans?
    Mr. Tarbert. Right now, CFIUS is focused solely on national 
security. So if there is an issue where it rises to the level 
of national security, it would be considered.
    There are a number of other tools the U.S. Government has 
to address some of those issues, as well as some of the issues 
that you raised, Ranking Member Schakowsky, about unfair trade 
practices and things. But for now, CFIUS is just focused on 
national security.
    Mr. Green. Well, and I know I live in a very urban area, an 
industrial area in Houston. If a foreign company comes in and 
there is a labor bargaining unit, by federal law they continue 
that agreement.
    Does CFIUS take that into consideration or is that 
Department of Labor responsibility?
    Mr. Tarbert. I believe that is the Department of Labor. We 
are set up solely to focus on does this pose a national 
security concern to the United States.
    Mr. Green. OK. The issue is focused on foreign investment. 
Obviously, we like to have foreign investment in our country.
    And discuss, either of you, do you agree that the U.S. 
needs to support R and D and infrastructure spending? I mean 
that ought to be a no-brainer. I think all of us do.
    What are you doing to push the administration to make such 
investments?
    Mr. Tarbert. Do you want to?
    Mr. Ashooh. Sure. So I come from the Bureau of Industry and 
Security, which is dedicated to national security issues within 
Commerce but we are a very small bureau in a very large agency 
that is focused on ensuring that we are putting pedal to the 
metal on innovation, research and development. R and D in the 
United States exceeded $500 billion last year, which is an all-
time high. Most of that is private and so we want to make sure 
that we continue to encourage that private investment.
    Mr. Green. Mr. Tarbert, some have recommended that a net 
economic benefit test should be added to CFIUS review 
procedures, like those that some of our allies employ. Would 
you support such a test being mandated or, if not, why not?
     Mr. Tarbert. Sure. So the administration's position is is 
that CFIUS has always been designed and should continue to 
focus solely on national security.
    Mr. Green. OK.
    Mr. Tarbert. That said, there are other tools available to 
address economic issues. And so the 301 investigation is 
something that I think goes to many of the concerns that you 
have raised.
    Mr. Green. OK, thank you, Mr. Chairman. I yield back.
    Mr. Latta. Thank you. The gentleman yields back.
    And the chair now recognizes the gentleman from Florida for 
5 minutes.
    Mr. Bilirakis. Thank you, Mr. Chairman.
    Secretary Ashooh, is that correct?
    Mr. Ashooh. Yes, sir. It rhymes with cashew, if you like 
cashews.
    Mr. Bilirakis. Oh, gosh. OK, very good.
    When CFIUS law was last amended in 2007, does the term 
national security include homeland security when analyzing the 
national security implications of a transaction? And if so, 
does this include issues related to state and local enforcement 
agencies, which are often on the front line of homeland 
security?
    Mr. Ashooh. Yes, sir, it does.
    Mr. Bilirakis. It does?
    Mr. Ashooh. Yes.
    Mr. Bilirakis. OK, very good. Thank you.
    And Secretary Tarbert, how does CFIUS seek out the input of 
other federal agencies not included on the committee, such as 
FTC or other regulators, who review, separately enforce 
competition and consumer protection?
    Mr. Tarbert. Sure. So in many of the cases, you brought up 
the FTC, and also the FCC, there is often a regulatory process 
ongoing. So if a company is buying another company, CFIUS will 
be running, in many cases, in parallel to whatever separate 
regulatory process there is.
    So sometimes we will coordinate with them if they spot a 
national security issue that we haven't spotted. That is rare 
because we use the intelligence community and the Defense 
Department. We will work with them.
    The other thing we do is sometimes we will see a case 
involving an agricultural company, for example. And there, the 
Secretary of Agriculture doesn't technically sit on the 
committee, the Department of Agriculture, but because they have 
unique expertise, we will invite them in to help co-chair the 
case. And so that has happened a number of times.
    Mr. Bilirakis. Well thank you very much.
    Again, for Secretary Ashooh, how does the Department ensure 
that the Commerce Control List is keeping up with emerging 
technologies that we might not want to fall into the wrong 
hands?
    Mr. Ashooh. Again, this is something we are devoting a 
great amount of energy to.
    Emerging technologies, that is not a new thing. We have 
always had the concept of new technologies that have yet to be 
subject to the Commerce Control List but, as we alluded to 
earlier, it is the volume. And again, this is a good trend. We 
are seeing amazing innovations occur.
    I have already referred to one change that we made 
structurally just to our technical advisory committees but we 
have also established a certain control number, a control area 
within the Commerce Control List specifically designed for 
emerging technologies. And what this does is allow us to place 
an immediate control on a technology that may be so new, it has 
yet to be considered and that we are not clear on what the 
national security implications might be. This way, we can 
control it immediately and that then triggers a process, an 
interagency process that was referred to earlier that will 
allow us to work under certain time constraints, so we are not 
going on forever, and adjust the control appropriately, and 
then, take it the multilateral regime so we are doing it 
internationally.
    This is an area that is going to get much more attention 
based on this trend and the large volume of emerging 
technologies.
    Mr. Bilirakis. Very good. It sounds like you have been very 
proactive.
    Mr. Ashooh. Devoting a lot of time to it, sir.
    Mr. Bilirakis. I appreciate that very much.
    I yield back, Mr. Chairman.
    Mr. Latta. Thank you. The gentleman yields back.
    The chair now recognizes the gentleman from Indiana for 5 
minutes.
    Mr. Bucshon. Thank you, Mr. Chairman.
    Assistant Secretary Tarbert, obviously you look at 
governments and investment with direct connections and stuff 
but, as you know, around the world there are individuals who 
also have maybe nebulous connections to various governments. Is 
that the type of thing that would trigger a CFIUS review, 
potentially, as a specific individual? Tell me what you can 
tell me.
    Mr. Tarbert. Yes, absolutely. No, when someone files with 
CFIUS, the intelligence community does something called the 
national security threat assessment. And that national security 
threat assessment looks at the acquirer, as well as the 
individuals behind the acquirer to get an understanding of who 
they are.
    At the same time, within the Treasury Department, we have 
the Office of Terrorist Financing and Intelligence, which runs 
a check through our systems on the individuals as well, whether 
they have been involved in anti-money laundering or there are 
any issues there, and their potential connection.
    So that is a very thorough part of the process because I 
think, as you are intimating, we could have a company from a 
country who is an ally but had bad people at that company.
    Mr. Bucshon. That is my point. You have people that have 
people that have maybe nebulous----
    Mr. Tarbert. Exactly.
    Mr. Bucshon [continuing]. Connections to other people that 
aren't necessarily on our side on certain issues.
    Mr. Tarbert. Exactly.
    Mr. Bucshon. The other thing is can you briefly describe 
maybe the chain of command-type decisionmaking process with 
CFIUS? Because obviously, the ones that we hear about are in 
the newspaper. The President, himself or herself, whatever the 
case may be, has made that decision but, obviously, that is 
kind of unusual probably.
    Mr. Tarbert. Right.
    Mr. Bucshon. And whatever you can say publicly about the 
process because I think, from a representatives perspective, 
the more that the American people know about a process, the 
better they understand it, the more people like me are able to 
help you reform the process.
    Mr. Tarbert. Absolutely. And so in the wake of the Dubai 
Ports controversy, FINSA was passed. And so that statute 
essentially lays out what the process needs to be.
    And so the case comes in. We assign it to case officers and 
members from all of CFIUS' member agency, case officers work on 
that particular case. Ultimately, a case cannot be cleared 
unless a Senate-confirmed official, at least one, signs off on 
the case.
    There are certain cases that require higher level sign-offs 
at the deputy or even secretary level. And those involve ones 
that go to the investigation stage, as well as when the 
acquirer is a foreign-controlled entity, foreign government-
controlled entity.
    Mr. Bucshon. All right because I think that is an important 
concept for people to understand. The only cases you are seeing 
in the newspaper that the President, him or herself, has 
decided are not the only cases that you all are looking at. And 
sometimes I think that that impression is created where people 
are saying well why did the President make that decision. And 
to know that there was a more complicated process that actually 
ramped up to that level I think is important.
    Mr. Tarbert. Right. In less than one-tenth of one percent 
of the cases, the President blocks. So there are a lot of cases 
where we review them. They either get cleared or we impose 
mitigation.
    Mr. Bucshon. Right.
    Mr. Tarbert. So, people only read the newspaper story but 
it is----
    Mr. Bucshon. Yes, and I think also people have the 
impression that sometimes it is a political decision, not a 
national security decision that a President, him or her, has 
made and that is just not the case.
    Last question, Secretary Tarbert, in your testimony you 
touch on the gaps and jurisdictional authority to protect 
national security. Obviously, those are probably commonly known 
gaps by people that are trying to get around your process.
    Can you describe what those might be and how H.R. 4311 
might help to resolve those gaps?
    Mr. Tarbert. Sure. And those gaps, in many cases, have been 
brought to our attention because the parties themselves have 
said well, if you don't approve our transaction, we will 
restructure it this way to get around it.
    Three gaps are essentially these: number one are real 
estate in close proximity to military bases and other sensitive 
U.S. Government. The statute allows us to look at mergers/
acquisitions of a U.S. business but if it is vacant land, that 
is not a business.
    So there have been situations where if it has a windmill on 
it, we can review it; if it doesn't have the windmill on it and 
they put the windmill on after they buy it, we can't review it.
    The second area are non-passive investments. So these are 
investments that come below the level of control but they 
involve a board seat, they involve the ability to come on the 
premises to get all the information they need, and many foreign 
actors have found that that is even better than even getting 
control because it is cheaper but they get what they need.
    And finally, there is the J.V. provision, where 
essentially, they replicate the business in the U.S. overseas 
and, therefore, it is not a U.S. business anymore.
    Mr. Bucshon. I yield back.
    Mr. Latta. Thank you very much. The gentleman yields back.
    The chair now recognizes the gentlelady from California for 
5 minutes.
    Ms. Walters. Thank you, Mr. Chairman.
    Mr. Ashooh, in general, the Trade Sanctions Reform and 
Expert Enhancement Act of 2000 prohibits unilateral sanctions, 
restrictions, or conditions on the export of key humanitarian 
products, such as food, medicine, and medical devices.
    Is it your sense that medical device products should 
generally be excluded from proposed CFIUS reform definitions, 
in particular, the terms critical technologies and emerging 
technologies?
    Mr. Ashooh. I would say that that is definitely an issue 
for the export control system and is one that we have in 
consideration. But as far as definitions within CFIUS, we 
believe that those definitions should synch up, just as the two 
systems should synch up.
    And so I mean this is a reasonable policy. It is primarily 
an issue in the export control system. I don't know that it is 
one that has really emerged on the CFIUS side.
    Ms. Walters. OK, is there any reasonable argument that 
medical device products, including the associated intellectual 
property are sufficiently relevant to national security to 
justify subjecting transactions involving such products to 
CFIUS jurisdiction?
    Mr. Ashooh. It is possible. It is possible. I don't have a 
crisp answer for you because I don't have any direct experience 
in that case but it is certainly possible.
    Ms. Walters. OK. And do you have any suggestions as to how 
to ensure CFIUS legislation accounts for such a humanitarian 
exemption?
    Mr. Ashooh. I am sorry, one more time.
    Ms. Walters. Do you have any suggestions as to how to 
ensure CFIUS legislation accounts for such a humanitarian 
exemption?
    Mr. Ashooh. Yes. And again, it gets back to the theme we 
have been repeating. That is the sort of thing that Department 
of Commerce would bring to the table, as well as potentially 
other CFIUS member agencies, HHS, for example. That is why the 
interagency process in CFIUS is so important. We rely on the 
expertise where it belongs in the various agencies.
    Ms. Walters. OK, thank you.
    And I yield back the balance of my time.
    Mr. Latta. Thank you. The gentlelady yields back.
    And the chair recognizes the gentleman from South Carolina 
for 5 minutes.
    Mr. Duncan. Thank you, Mr. Chairman. Thank you guys for 
being here.
    Before I got on Energy and Commerce back in December, I 
chaired the Western Hemisphere Subcommittee of the Foreign 
Affairs Committee. And during my time there, we had hearings on 
the Venezuela situation and especially with their company, 
PDVSA. And during that time, PDVSA pledged their stake, 49 
percent of Citgo, to Russia for a loan of $1.5 billion, 
something like that I believe.
    Rosneft is the company, the Russian oil company that 
basically took the collateral. And if Venezuela defaulted on 
that loan, that would effectively give Russia and their energy 
company, Rosneft, a 49 percent stake in Citgo, an American-
based refinery company and oil producer.
    We sent a letter, Ranking Member Albio Sires and I sent a 
letter to the secretary on April 6th of last year asking you 
guys at CFIUS to look at this transaction and with the 
possibility of blocking Russia's ownership of not a majority 
stake but a dang-near close majority stake in a huge American 
asset of Citgo Refinery.
    So let me ask you what the status of that investigation is 
and where we may go from here. What is the next step?
    Mr. Tarbert. So the statute prohibits us from talking about 
specific cases in a public setting. So if you are amenable to 
it, I will give you a confidential briefing to your office 
whenever you would like.
    But let me just say this. The point that you are raising is 
an important one because right now the statute allows us to 
look at anything where there will be control. But for a non-
passive investment that doesn't pass that threshold of control, 
particularly for a critical infrastructure asset, CFIUS does 
not have jurisdiction.
    So that was one of the things that we looked at very 
carefully in crafting the provision of FIRRMA to ensure that 
transactions similar to the one that you described would 
absolutely be within our jurisdiction.
    Mr. Duncan. Thank you. I am going to take you up on that 
briefing.
    Mr. Tarbert. Absolutely.
    Mr. Duncan. I am no longer chairman of that subcommittee 
but this is an issue that I have followed for a long time, the 
situation in Venezuela but also Russia's involvement in energy, 
in guaranteeing loans and assets that are American assets.
    Let me just ask you one more question in the time I have 
got.
    Assistant Secretary Tarbert, in your testimony you touch on 
gaps and your jurisdictional authority to protect against 
national security concern. What are these gaps and does H.R. 
4311 help resolve those?
    Mr. Tarbert. Yes, to the three gaps are land that is not a 
business but, nonetheless is near a sensitive military 
installation of some sort or other national security 
installation.
    The second would be the one that we just talked about, 
where potentially you have an ownership stake that doesn't 
technically meet the definition of control but, nonetheless, 
has a lot of influence, has access, has the ability to get 
information and to influence the decisions of the company. So 
that is a non-passive investment.
    And then the third are when someone essentially tries to 
replicate a business or a core business capability overseas. 
That is not a U.S. business and hence, CFIUS doesn't have the 
authority.
    FIRRMA addresses all of these things and is continuing to 
evolve in a manner that addresses them with more effectiveness.
    Mr. Duncan. Well, thank you.
    Mr. Chairman, because of the jurisdictional boundaries, 
this committee may not have been aware of the situation I was 
talking about with Venezuela, and PDVSA, and Rosneft, and 
Citgo. I would like unanimous consent to enter into the record 
copies of the letters we sent to CFIUS.
    Mr. Latta. Without objection.
    [The information appears at the conclusion of the hearing.]
    Mr. Duncan. Thank you. With that, I will yield back.
    Mr. Latta. Thank you. The gentleman yields back.
    And the chair now recognizes the gentleman from 
Massachusetts for 5 minutes.
    Mr. Kennedy. Thank you, Mr. Chairman. Thank you to our 
witnesses for being here. Thank you holding an important 
hearing.
    A couple of topics I wanted to touch on. So first, 
gentlemen, this is about state-owned enterprises. There has 
been a bit of discussion as to whether Congress or CFIUS should 
make a distinction between foreign investments made by private 
persons or firms as compared to those made by firms that are 
state-owned or partially state-owned.
    During one of the hearings at Financial Services Committee, 
members commented that it really did not matter in the case of 
China because even private firms are influenced by the Chinese 
Government and would rather make investments or disclose 
information upon request of the Chinese Government.
    So curious as to your thoughts, either one of you. Can you 
share your thoughts as to whether we should be making such a 
distinction or whether China is a problem no matter what?
    Mr. Tarbert.
    Mr. Tarbert. Thank you. Thank you, Congressman Kennedy.
    For purposes of state-owned enterprises we think there is a 
mandatory declaration requirement for those because we think 
that certainly with state-owned enterprises, there is a clear 
nexus and, therefore, we think that we should be notified of 
those transactions.
    When we go through the threat analysis and the intelligence 
community does the national security threat assessment, they 
look very carefully at the history of a given company and its 
potential connections to the state.
    And so you are exactly right that with respect countries, 
particularly those with doctrines of civil military fusion, the 
line between state-owned and private becomes blurred and we 
take that into account.
    Mr. Ashooh. And certainly, that is an issue we deal with 
constantly in the export control system. And the system is 
designed to allow us to examine whether or not that civil 
military integration, which is a factor certainly in China, and 
in fact is common to the countries that we find ourselves 
spending most of your time with, Russia and Iran as well.
    Mr. Kennedy. And I assume then, gentlemen, it would be kind 
of a similar analysis with regards to investment in a venture 
capital fund or a private equity fund, in terms of foreign 
investment going into a partnership with a V.C. that is either 
buying up potentially strategically important early stage 
companies. Someone?
    Mr. Tarbert. If the venture capital firm itself--so the 
question is is the venture capital firm, itself, a foreign 
firm. If the answer is yes, then that would be within our 
jurisdiction.
    If it is an American firm and the foreign investor just has 
a passive L.P. interest but doesn't control that, then that is 
out of our jurisdiction.
    Mr. Kennedy. OK. Do you believe that CFIUS can place 
appropriate conditions on the investments that could critically 
limit Chinese or any other government their access to critical 
or emerging technology when investors are Chinese firms? So 
similar, I guess, followed between the two.
    Mr. Tarbert. Yes and we do it nearly every day. Thank you.
    Mr. Kennedy. Pushing a little bit more on the passive 
investment side, some concerns have been raised about a 
provision in the bill that would limit investments, even when 
they are passive and the investor would not have control of the 
U.S. company and would not have a say in those decisions.
    Under such a case, does the committee have a way to ensure 
that the relationship does not change after a review takes 
place? So for example, if a foreign investor started to see 
certain I.P., from what or how at least I understand it, the 
relationship would already be established. So could such a case 
get before CFIUS on a secondary review?
    Mr. Tarbert. That is a great question. And so we have 
thought about exactly the point that you made. And so in the 
FIRRMA bill, there is an additional basis of jurisdiction when 
an investor's ownership changes you know materially to fall 
into one of the jurisdictional categories that exist.
    Mr. Kennedy. And forgive me. How would you be notified if 
that investor's relationship changes?
    Mr. Tarbert. Well, if it is a state-owned enterprise, there 
would be a declaration. But otherwise, CFIUS remains a 
voluntary process. So we have methods and capabilities of sort 
of monitoring the landscape but, as a technical matter, it 
could occur.
    Now sort of the ability that we have is if it does occur 
and they don't notify us, then we have the ability to go in and 
reopen that transaction at any time.
    Mr. Kennedy. OK.
    Anything to add, sir?
    Mr. Ashooh. Only that if there is a case where there is a 
technology transfer concern in what you are discussing.
    The Commerce Department will often place an additional 
licensing requirement on the companies in question as an 
important reminder that they are obligated to not transfer that 
technology, not only to a foreign national but the re-export of 
that as well. So, again, we keep track. This is how we leverage 
the CFIUS process to make sure we are keeping track of the 
technology.
    Mr. Kennedy. Thank you both.
    I yield back. Thank you, Chairman.
    Mr. Latta. Thank you. The gentleman yields back.
    The chair recognizes the gentleman from Kentucky for 5 
minutes.
    Mr. Guthrie. OK, thank you very much. Thanks, Mr. Chairman. 
Thanks for having this hearing and thank you guys for being 
here.
    And I have the questions. These two questions are for both 
of you. One, you mentioned earlier today that about the volume 
of reviews. Specifically, if the current form of legislation is 
enacted, how many additional transactions will CFIUS be 
required to review and can CFIUS handle that increase?
    Mr. Tarbert. So I can answer it. We don't know with exact 
certainty because the bill continues to evolve----
    Mr. Guthrie. In current form.
    Mr. Tarbert [continuing]. In current form. We are still--
because then there would be regulations, additionally, that 
redefine it. We think it would be multiples of what we are 
currently reviewing and we would need the resources to be able 
to staff that.
    But more importantly, we don't think that the per case/per 
case officer volume would remain the same, that ratio. Because 
one of the things that the bill does, which I think is 
critically important is for those transactions that don't 
really require an immense amount of government resources, there 
is a streamlined filing process.
    So for example, when our ally buys an American company, 
there is very little national security issues, we can process 
those a lot quicker. Today, if you want to file before CFIUS, 
you have to fill out a 50- to 300-page form listing all this 
stuff. And so for things that are more likely to be cleared, a 
much shorter form, more efficient and effective will actually 
reduce the time spent on each particular case.
    So we think that it is really helpful to modernize it.
    Mr. Guthrie. Because you know the volume goes up and there 
will be tools to moderate it.
    Mr. Tarbert. Absolutely. And this would not go into 
effect--one of the key provisions in the bill says that nothing 
will go into effect and become live until the Secretary of the 
Treasury signs a certification saying the resources and the 
regulations are in place.
    Now at the same time, the argument there is, well, that 
could take a while. That could take a year. What about stuff we 
are seeing today that is a concern? It also allows us, 
potentially, if passed, to have a pilot program. So if we know 
there are transactions out there of a certain type that we want 
to stop, the day the bill is passed, we can issue an immediate 
sort of regulation to address those, while getting the 
resources in place for the larger jurisdiction.
     Mr. Guthrie. Well here is another question, too, is we are 
looking at H.R. 4311 and if the reviewable transactions 
dramatically do increase--I know you have this streamlined 
process but let's say it dramatically increases and it is an 
issue, what do you think that will do to foreign investment in 
the U.S.? Will it deter it or hamper it?
    Mr. Tarbert. We don't think so because America still 
remains the preeminent destination for investment. And the more 
we are able to protect those companies, to protect national 
security, in the long-run, the more attractive that is going to 
be for investors.
    Mr. Guthrie. OK.
    Mr. Tarbert. But obviously, the reason why CFIUS is chaired 
by the Treasury Department is we are particularly aware of 
wanting to attract investment to the United States.
    And so in 1988 and 2007 we have always got that balance 
right and we want to continue to get that balance right by 
protecting our national security but, obviously, continuing to 
attract foreign investment.
    Mr. Guthrie. OK, do you have any comments on this?
    Mr. Ashooh. Yes, I might add it is worth pointing out that, 
even absent FIRRMA, the caseload under CFIUS has gone up year 
on year fairly substantially. So the resource issue is one that 
we have been grappling with and will continue. I don't see, and 
Secretary Tarbert might agree, we don't see that steady 
increase slowing. This is being driven by, obviously, some 
trends regarding nations that see a benefit in pursuing it.
    Mr. Tarbert. And one final point. As a Treasury Department, 
we don't really like to spend a lot of money. We like to 
collect it.
    But I think our view on this is that----
    Mr. Guthrie. It is like business; you want more money to 
come in than go out.
    Mr. Tarbert. Yes. But well, no, given the amount of money 
that we spend on the defense of this country, this, to spend 
whatever we need to spend have people reviewing these critical 
transactions to ensure that our technological edge isn't lost. 
In many ways, it is an insurance policy that is well worth the 
money.
    Mr. Guthrie. OK, thanks. And I have a question just for 
you, Secretary Tarbert, or either one.
    Can you tell us, in general and obviously in unclassified 
terms of what you can share, what is the greatest threat to the 
U.S. that CFIUS is tracking right now? For instance, is it the 
transfer of technology, foreign control of infrastructure, or 
something else? Because I did a town hall recently and somebody 
stood up and said--the hardest question I had to answer was of 
all the questions I had to answer and they were from left and 
right--were what keeps you up at night.
    Mr. Tarbert. You know the truth is, all of the above that 
we are seeing threats and vulnerabilities. Obviously, state-
owned enterprises as well as other companies that are working 
in close contact with their states and trying to acquire 
companies that are critical to our technological edge, that is 
important. But on the vulnerability side, the personally 
identifiable information. There are a number of other things we 
are worried about and we are always worried about 
infrastructure, you know the purchase of infrastructures.
    So I would say, unfortunately, it is all of the above. 
Every day I come in I see sort of a new threat or a new 
vulnerability, I feel.
    Mr. Guthrie. All right, thank you very much.
    My time has expired and I will yield back.
    Mr. Latta. Thank you. The gentleman's time has expired and 
he yields back.
    The chair now recognizes the gentleman from Vermont for 5 
minutes.
    Mr. Welch. Thank you both. You know this question of 
imposing a big responsibility without providing the resources 
to get the job done is of concern to me. So one of the 
questions that is brought up in this bill is whether there are 
some ways to streamline without relinquishing review.
    And one of those ideas is to have the bill apply only to a 
limited number of countries or, in the alternative, have a 
large number of countries listed that are not of concern and 
they would receive a safe harbor.
    I guess I am looking to your reaction to that because we 
could, over time, have a list of countries that would shift. 
You know it might have been Japan 10 or 15 years ago, whereas, 
it probably would be China now.
    So, I would ask your thoughts about this. Is this a 
practical way to try to relieve the burden without sacrificing 
safety?
    Mr. Tarbert. Sure, the bill chooses the second alternative 
in what is called sort of the good guys list. It doesn't choose 
a blacklist and the reason is is because if you start 
blacklisting certain countries, it can easily be evaded, 
particularly in the acquisition context.
    So if you had--and then you run into the problem well then, 
if you are a blacklisted country and then how many investors in 
a particular entity do you need to make that entity 
blacklisted, and then we end up sweeping in our allies. And to 
your point, the threat changes over time.
    And the vulnerabilities remain the same. So it is very well 
possible that we have a U.S. company that is so important that, 
even people from countries that we wouldn't necessarily 
blacklist, still requires review and some kind of mitigation.
    But the good guys list is important because there our 
allies are facing, in many cases, the exact same threats that 
we are. And so the idea is is that if we can get them to work 
with us to create similar investment screening regimes, that 
would actually save us potential concerns because--yes.
    Mr. Welch. Similar protocol----
    Mr. Tarbert. Exactly.
    Mr. Welch [continuing]. For them and us because we have a 
unified interest.
    Mr. Tarbert. Correct.
    Mr. Welch. Yes, thank you.
    Mr. Ashooh. And if I might add, you know one of the 
benefits of CFIUS is that the member agencies bring their 
expertise and authorities to the CFIUS table. And the export 
control system is very list-driven. We have got end-users, 
countries of concern. And I can tell you that lists come with a 
cost. It takes a fair amount of effort to maintain those lists.
    Mr. Welch. Right.
    Mr. Ashooh. So rather than have multiple and perhaps 
overlapping lists, you know it is useful, I think, for these 
agencies to bring them to the table and Commerce certainly does 
that in the CFIUS context.
    Mr. Welch. OK, thank you. That is all I have. Thank you 
very much.
    I yield back.
    Mr. Latta. Thank you. The gentleman yields back.
    The chair recognizes the gentleman from West Virginia for 5 
minutes.
    Mr. McKinley. Thank you, Mr. Chairman. I am sorry I was at 
another hearing downstairs and so I have missed a lot of the 
testimony that perhaps you have given. But one thing that I did 
hear as I came in was early you made point that CFIUS is a 
voluntary program. And that concerns me a little bit--a great 
deal, actually.
    And I am hesitant because we went through our classified 
briefing and then I had another classified briefing on another 
situation that had to do with CFIUS. So I am hoping I am going 
to be able to stick to what we can have from open source.
    But should we be making it mandatory?
    I come from the construction industry, 50 years in 
construction. You can't start a project without getting your 
permits for water, sewer, air, archeological digs, what 
environmental yet we allow a project to begin. Someone, a 
foreign entity, can invest in a project and it may take you a 
while before you become engaged. And by that time, it is too 
late.
    The information on energy transporting data is already out 
there and it is gone. Why is it voluntary and why is it--why 
would we not make it mandatory that they have to first check 
the box that they have approached CFIUS for preliminary ruling 
before they proceed?
    Mr. Tarbert. Great. So the first question, you know why has 
it been voluntary, and it has been voluntary since the start of 
it----
    Mr. McKinley. That doesn't make it right but go ahead.
    Mr. Tarbert. Yes, and I think the thought there is that 
because CFIUS has the ability then to address the transaction, 
to potentially unwind the transaction, those----
    Mr. McKinley. After the fact.
    Mr. Tarbert [continuing]. After the fact, that is enough to 
get people to file.
    Now that said, the point you are raising is an important 
one. And for certain types of transactions, our view, 
particularly those by state-owned enterprises, and also by 
particular types of technology, it is so important, just as you 
said, that we want to get a declaration in advance of that 
transaction so we know about it. And so the bill actually does 
that.
    The bill has a certain provision in there that there are 
mandatory declarations, in some cases, for state-owned 
enterprises.
    Mr. McKinley. So under this legislation, will someone that 
is acquiring an energy company, energy transmission company, 
they will have to announce that they are going to do this?
    Mr. Tarbert. Right now, the bill requires declarations for 
state-owned enterprises that have some kind of substantial 
interest. And it may be 25, it may be----
    Mr. McKinley. I don't need that.
    Mr. Tarbert. But if it is--yes.
    Mr. McKinley. If I just have a seat at the board without 
any investment in that, if I get a seat at that board, I have 
got access to all the information I need. How are you aware of 
that?
    Mr. Tarbert. So right now, we are monitoring some things 
but the bill would provide us with the authority. It doesn't 
mandate us to do that but would provide us with the authority 
to say that in certain types of transactions, like the one you 
announced, you have to get a declaration before CFIUS before 
you can engage in that transaction.
    And so during the notice and comment period, we will be 
soliciting--if the bill passes, be soliciting views of what are 
the kinds of transactions, to your point, that are so critical 
and important we don't want to be learning about them after the 
fact, that we want an advanced declaration before----
    Mr. McKinley. Is there any protection, as legislation, 
that--because the technical information, understanding how our 
utility markets operate is instantaneous. And by that virtue, 
your coming is after the fact trying to address that. So will 
this legislation prevent that transfer of information without 
an investment, that is just merely a seat at the table? Are you 
going to be able to prevent that from happening? Because it 
happens in an instant before you are aware of it.
    Mr. Tarbert. Yes, to be frank, it could prevent it in 
certain instances, it may not prevent it in others. And so 
there may need to be additional legislation. It may not even 
require a board seat. Someone could just walk into the energy 
company, get to know the CEO and----
    Mr. McKinley. Thank you.
    Mr. Tarbert [continuing]. A relationship starts. So it 
sounds like for that specific instance, we just deal with 
foreign investments of various sorts that there may need to be 
added protection under some other area of the law.
    Mr. McKinley. So let me ask you. You just offered to do 
another classified. I would like to follow up on the 
conversation you and I had last week and see where we might be 
able to go with this.
    Mr. Tarbert. We are planning that, actually. I think we 
have got it--we are working to schedule that, the one specific 
to your state.
    Mr. McKinley. You know what I am talking about.
    Mr. Tarbert. Yes, sir.
    Mr. McKinley. Thank you. I yield back.
    Mr. Latta. And you know what he is talking about, OK.
    The gentleman yields back and the chair now recognizes the 
gentleman from Texas, the chairman of the Health Subcommittee 
of Energy and Commerce for 5 minutes.
    Mr. Burgess. Thank you, Mr. Chairman, and thanks to our 
witnesses for being here today. I also thank the subcommittee 
for putting together the classified briefing that we had on 
this subject. It was important.
    And I will just ask if I ask you a question that really 
should not be answered in an open setting, I will accept your 
deflection on that.
    I was here in the United States House of Representatives 
when Dubai Ports World got all the headlines. Most people 
didn't know what CFIUS was before them and then, of course, 
everybody knew and became an expert on CFIUS. But what many 
people didn't know and I didn't know at the time is that this 
participation in this process is largely voluntary. Is that 
correct?
    And just as a matter of procedure, a notice which is given 
to you for to answer a possible question, how does that arise? 
Where do those notices come from? Do the companies make those 
notices or the company that is involved makes the notices?
    Mr. Tarbert. Normally, the acquirer and the target company, 
the people doing the business combination will come to CFIUS, 
oftentimes, as they are getting into the initial stages of 
planning the transaction to tell us about the transaction and 
to get the notice started. They will send us drafts back and 
forth of the notice and we will work with them to complete the 
notice so then we can deem it accepted.
    Mr. Burgess. So that is part of their due diligence in 
doing the merger and acquisition background. Does it ever come 
to your attention from another source, through someone else say 
hey, this is happening and I wonder about it?
    Mr. Tarbert. It does. And we have members of the 
intelligence community that are sort of--and other resources. 
But that is one of the things that I think this bill 
acknowledges that we also need to have resources devoted to 
scanning the investment landscape for things that are not 
notified to us.
    So every now and again, we will get wind of a particular 
transaction that wasn't notified to us. We will look into the 
matter and, in some cases, ask the parties to file. If the 
parties don't want to file or for some reason we don't think 
they will be cooperative, we have the authority to actually 
issue the notice ourself and start the case.
    Mr. Burgess. Just as a general matter, of the number of 
notices that come to your attention, are all of them 
investigated, a portion of them investigated, a large portion, 
a small portion? Could you qualify that?
    Mr. Tarbert. Yes, normally not many at all investigated. 
There is a technical definition of investigation----
    Mr. Burgess. OK.
    Mr. Tarbert [continuing]. Which means the second phase. But 
I would say all of them we look at and we determine whether 
there needs to be a filing.
    One of the things that FIRRMA does, which makes it a lot 
easier is because the filing costs a lot of money.
    Mr. Burgess. Sure.
    Mr. Tarbert. It is 50 to 300 pages. And so for let's say a 
Canadian company buying an American company, where there is not 
likely to raise any national security concerns, the parties 
will often say this is what we are doing here. Do we really 
need to file with you? We have to then say well, we can't tell 
you not to file but, based on what you are saying and what we 
know about the companies, there may not be a national security 
concern.
    But that is difficult. So one of the things that FIRRMA 
does is it creates the declaration where they can actually file 
a short version of that that doesn't cost as much money but we 
can then review that and determine whether we want a full 
notice of whether we have enough information to say that 
transaction is OK.
    Mr. Burgess. Well, under the current regime, are there any 
particular countries that --when you list out the number of 
countries that are investigating--or where you have notices 
that you are investigating, do there tend to be a preponderance 
of countries or is there a single country that is identifiable 
as this is where we spend a lot of our time?
    Mr. Tarbert. What I can tell you is in those cases where we 
have reached out, where there hasn't been a notice and a 
transaction has occurred and we have asked the parties to file, 
required them to file, or filed a notice ourself to get it 
started, those cases have involved recently China and Russia.
    Mr. Burgess. And just of the transactions involving China, 
how many are allowed to proceed? Can you quantify that? Is 
there a percentage? Is it a lot, a little, all of them?
    Mr. Tarbert. It is a substantial number but a number of 
them, there is proceeding without mitigation, there is not 
proceeding, and then there is sort of proceeding with 
mitigation, where the Government requires certain things to 
happen before that transaction can go forward.
    Mr. Burgess. And you may have already answered this or you 
may have been asked this. I am not sure if I understood or 
heard the answer. Is this a two-way street? U.S. involvement in 
other countries, is it blocked from time to time?
    Mr. Tarbert. Well, it is. In some countries, U.S. investors 
are blocked regardless of national security. There are simply 
investment caps that don't allow our companies to invest in 
other countries but that is more of an economic issue than an 
issue.
    I am not aware of any situation where for national security 
reasons another country has blocked an American acquisition of 
one of their companies.
    Mr. Burgess. For economic reasons, when the President talks 
about he wants trade to be fair and reciprocal, is this one of 
those areas?
    Mr. Tarbert. That would be potentially one of those areas. 
And I know that the Treasury Department and other government 
agencies have talked to different governments about you know if 
we allow your countries to invest here, why are you preventing 
our companies from opening their doors in your country or 
requiring that our company needs to form a joint venture with 
one of your nation's companies, that if we are going to allow 
investment in our country, why don't you allow our companies to 
go and do business in your country without imposing constraints 
on them. But that is an economic issue.
    Mr. Burgess. Yes, sir.
    Mr. Ashooh. And sir, if I might just add, the concept of 
CFIUS is still fairly unique in the world. Although we are 
seeing the EU, and Japan, and other allied countries establish 
similar procedures, we generally think that is a good thing 
because this is, again, a national security review. And to the 
extent we share national security goals, it is helpful to 
manage the foreign----
    Mr. Burgess. Good enough. As far as the economic goals, I 
may follow up with you, Mr. Tarbert, just because that is of 
interest to me.
    Thank you, Mr. Chairman, I will yield back.
    Mr. Latta. Thank you. The gentleman yields back.
    The chair recognizes the gentleman from New Jersey for 5 
minutes.
    Mr. Lance. Thank you very much and good morning to our 
distinguished panel.
    Both the Treasury and the Commerce Department maintain 
lists of prohibited persons and nations for purposes of trade 
and sanctions. Gentlemen, do you believe that these lists are 
effective in identifying the entities that pose threats to 
American interests?
    Mr. Ashooh. Yes, indeed.
    Mr. Tarbert. Yes.
    Mr. Lance. And do they provide a model of how CFIUS should 
view certain types of investment? For example, should CFIUS 
have a list of nations that will draw special scrutiny?
    Mr. Tarbert. On this, we don't think so. And the reason is 
is that we want to be able to review all transactions involving 
foreign investors, where relevant. And each transaction is 
looked at specifically for the threat, the vulnerability, and 
the consequence. So there is an intelligence analysis of the 
particular acquirer. And so you could have a situation where 
you have an acquirer from an allied country but the particular 
individuals within that are not necessarily friendly to U.S. 
national security interest.
    And so our view is that we have never maintained a 
blacklist, so to speak, for particular countries. But since 
every transaction undergoes a very thorough intelligence 
analysis, the kinds of issues that you are talking about are 
always unearthed.
    Mr. Ashooh. And sir, if I might, Commerce, through the 
export control system, does maintain a multiplicity of lists. 
It can be individuals, companies, technologies, end uses, end-
users. And Commerce, as one would hope, we bring those to the 
CFIUS table. So you know the experiences and knowledge that we 
have get brought to the CFIUS table and that way we are not 
having to overdo it on the list side.
    Mr. Lance. Thank you. Obviously, foreign direct investment 
has historically been a tremendous boom to our economy. Does 
the administration seek to ensure that any reforms to the CFIUS 
process do not create unnecessary hurdles for legitimate and 
beneficial direct involvement?
    Mr. Tarbert. Absolutely, and that is why the Treasury 
Department of the chair of CFIUS because it recognizes that we 
are looking at protecting our national security while, at the 
same time, maintaining an open investment environment.
    So while the FIRRMA bill would increase the jurisdiction to 
certain types of transactions that have been avoiding review, 
at the same time, it has a number of measures to modernize the 
process and to streamline it a bit for those transactions that 
are least likely to raise national security issues.
    Mr. Lance. Thank you.
    Mr. Ashooh. And sir, where there is a technology transfer 
concern, we spent a lot of time really drilling down to what 
actually matters from a national security perspective so that 
we are not over-controlling and being overly restrictive.
    Mr. Lance. Thank you and thank you for your distinguished 
testimony.
    And Mr. Chairman, I yield back 2 minutes.
    Mr. Latta. Well, before the gentleman yields back, would he 
yield?
    Mr. Lance. Oh, I will be happy to yield to the chair.
    Mr. Latta. Well, thank you very much because I would like 
to follow up on a question that the gentleman from Texas asked 
and came back.
    How often is a company or companies not cooperative with 
you when you want to get with them and all of a sudden they say 
we are not going to cooperate?
    Mr. Tarbert. It is very rare. Because CFIUS has the 
ultimate power to unwind the transaction, impose other things, 
and in some cases impose fines if there is a violation of a 
mitigation agreement, most companies seek to comply and work 
with us.
    Mr. Latta. And you say most. OK. All right. Well, thank 
you.
    The gentleman yields back and I will yield back his time.
    And we want to thank you very much for testifying before us 
today. It has been very, very informative. We appreciate all 
that you do out there to help keep things straight for 
Americans and especially when it comes to our security reasons. 
We really appreciate your testimony today and all you do. So, 
thanks for being with us today.
    And so that will conclude the first panel. And we will get 
ready to have the second panel come before us.
    [Recess.]
    Mr. Latta. Well, good morning and I would like to take this 
opportunity to thank you all for coming before the 
subcommittee. And again, we do have the other subcommittee 
running downstairs, so we do have members coming in and out 
during the hearing.
    And if I could, I would like to introduce our second panel. 
The Honorable Kevin Wolf, partner at Akin Gump Strauss Hauer 
and Feld, and former Assistant Secretary for Export 
Administration at the United States Department of Commerce. 
Welcome. The Honorable Clay Lowery, Managing Director at Rock 
Creek Global Advisors, and former Assistant Secretary for 
International Affairs at U.S. Department of Treasury. Ms. 
Celeste Drake, Trade and Globalization Policy Specialist at the 
AFL-CIO. Thank you. And Dr. Derek Scissors, the Resident 
Scholar at the American Enterprise Institute.
    And again, we want to thank you for being with us today 
because this is a really important subject.
    And Mr. Wolf, you are recognized for 5 minutes. So, thank 
you very much for being with us.

  STATEMENTS KEVIN WOLF, PARTNER, AKIN GUMP STRAUS HAUER AND 
 FELD, LLP; CLAY LOWERY, MANAGING DIRECTOR, ROCK CREEK GLOBAL 
    ADVISORS; CELESTE DRAKE, TRADE AND GLOBALIZATION POLICY 
  SPECIALIST, AFL-CIO; AND DEREK SCISSORS, RESIDENT SCHOLAR, 
                 AMERICAN ENTERPRISE INSTITUTE

                    STATEMENT OF KEVIN WOLF

    Mr. Wolf. Thank you, Mr. Chairman, Ranking Member 
Schakowsky, for inviting me to speak today.
    As an opening note, the comments I make today are my own 
views and are not on behalf of anyone else.
    First before I begin, a compliment. As I have been 
following this FIRRMA and CFIUS reform discussion, it has been 
a genuine, nonpartisan, good faith, regular order, civil, 
spirited public debate over a--this hearing has been too 
straightforward. Let's see if we can raise it up a little bit.
    But no, seriously, these are legitimately difficult issues 
and on difficult national security and economic security 
issues, where bright lines are hard.
    So in fact, just a summary of where the debate really is. 
It is sort of between, and apologies for over-generalizing, two 
camps, two very nonpartisan, good faith camps. There is one 
view that believes that CFIUS should have substantially 
expanded jurisdictional authority over far more transactions 
going in and out of the country to address evolving and 
emerging threats, particularly with respect to strategic 
acquisition from China of emerging technologies. Technologies 
evolve quicker than law or regulations can. Commercial 
transactions are very creative and more creative than the 
Government can quickly understand.
    And so, therefore, we need substantially more authority to 
be able to metaphorically look in every box going in and out of 
the country and decide whether if in that box there is a 
transaction of concern, technology, or PII, or other types of 
activity of concern.
    And then the other camp does not deny the underlying threat 
but says that before the Government uses this extraordinary 
authority to impose additional controls on otherwise commercial 
transactions, that it should do the hard work first to identify 
the particular technologies, and threats of concern, and tailor 
the scope of the new authorities accordingly, so as not to 
discourage because fear and uncertainty about what would be 
controlled discourages investment in the United States. The 
U.S. is an open investment culture for which there are great 
benefits to foreign direct investment.
    And so that is really what the debate in FIRRMA is going 
back and forth. In my prepared testimony, I lay out some detail 
about the benefits of foreign investment and the issues with 
respect to the strategic plans from China but I also lay out 
the questions to be asking when considering any changes to 
CFIUS.
    And the first question is: Does the statutory authority 
exist in some other area of law to address the issue through a 
regulatory or process change?
    And then the second question is: Would what the threat is 
you are trying to address be better addressed more directly, 
with fewer collateral consequences, by another area of law, 
such as the export control system, trade remedies, government 
contract issues, and intellectual property protection?
    And then the third question is: The threat that you are 
trying to address or the issue that you are trying to resolve, 
can it be addressed through more investment simply internally 
in the Government, for example, in identifying more non-
notified transactions, to have more and deeper robust review of 
already filed transactions or to be able to have more staff to 
monitor mitigation agreements, which are alterations of 
agreements thereafter? And if the answer to any one of those 
questions is no, then that is the sweet spot for reform.
    The area for which I am the particular expert in, given my 
background, is with respect to the issues pertaining to 
technology transfer. And one of the threats identified in the 
previous panels and in general is the identification of and the 
control over technology that is being sought, that is emerging, 
that has dual-use implications, both commercial, and other 
activities of concern. And my main theme is that with respect 
to efforts to control outbound investment to please remember 
that there is an entire area of law, the export control system, 
which Secretary Ashooh spoke about so well, that exists 
explicitly to do that, to identify and to regulate through an 
interagency process for national security purposes technologies 
of concern without imposing unintended collateral burdens on 
foreign direct investment, which we want to encourage.
    So, I am here to answer your questions about anything 
involving CFIUS, or export controls, or how they could or would 
work better together.
    And with that, I will stop and turn it over to my 
colleagues.
    [The prepared statement of Mr. Wolf follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Latta. Thank you very much.
    Mr. Lowery, you are recognized for 5 minutes.

                    STATEMENT OF CLAY LOWERY

    Mr. Lowery. Chairman, Ranking Member, and members of the 
committee, thank you for the opportunity to testify today on 
CFIUS and the modernization efforts underway.
    In general, I support FIRRMA but I would like to point out 
what I consider to be several key shortcomings in the current 
bill, particularly from the perspective of someone who had to 
implement the major reform of CFIUS that happened about a 
decade ago.
    Before I discuss these issues, however, I did want to say 
just a few words about CFIUS that goes beyond what Assistant 
Secretary Tarbert had to say. The easiest way to understand it 
is to know what its mandate is. And that mandate is to ensure 
national security while promoting foreign investment. It is not 
solely about protecting national security. And the reason for 
this is because welcoming foreign investment, in fact promoting 
foreign investment, is part of our national security. It is 
core to our economic growth. It is core to our increasing 
productivity. And it is core to creating jobs in this country.
    There was an earlier discussion about whether it should be 
a voluntary process. The reason it is a voluntary process, in 
many respects, is because of that issue. There is usually over 
1,200 or 1,500 mergers and acquisitions that happen in the 
United States every year. Most of them have exactly nothing to 
do with national security. If we had mandatory process, we 
would have to be investigating all of those.
    The CFIUS is exactly what I said. It is a committee. It is 
an interagency committee that investigates cross-border mergers 
and acquisitions that could put our national security at risk.
    Mergers and acquisition parties file with CFIUS, and CFIUS 
determines whether the acquirer will gain control in the U.S. 
business, and then it does a three-part analysis, as Assistant 
Secretary Tarbert laid out.
    The history of CFIUS is that it addresses complex 
transactions under very tight timelines, in an orderly process, 
that protects classified information and proprietary 
information very well. While most transactions don't raise 
national security risks, as I just mentioned, those that do are 
addressed because CFIUS has extraordinary powers to 
investigate, to mitigate, and, in very rare circumstances, to 
recommend to the President to block a transaction.
    The FIRRMA bill, I think, does a good job of modernizing 
CFIUS and does a good job of filling in some of the gaps that 
were mentioned earlier. My worry, though, is that the 
legislation that we saw back of November is that portions of 
the bill use vague language, duplicate existing export control 
authority, and will be overly burdensome for both the private 
sector and the Government.
    There is a substantial part of this bill that transforms 
the committee on foreign investment in the United States into a 
technology control regime in which there isn't a merger, there 
isn't an acquisition, in fact there isn't even a foreign 
investment into the United States. In this scenario, CFIUS 
would go from reviewing approximately 200 transactions a year 
to several thousand. If this expansion is truly necessary for 
our national security, and cost is the only issue, then, by all 
means, let's find a way to pay for it. But this expansion is 
not driven by national security. Instead, it would be the 
needless result of a bill that is too vague and too 
duplicative, rendering it practically impossible for CFIUS to 
accomplish the work it has been tasked to do and that is so 
vital for our U.S. economic and national security.
    We have just heard from Assistant Secretary Tarbert and 
Ashooh that the administration has recognized some of these 
concerns and is making a serious effort working with Congress 
to fix bill. And this trajectory, in my mind, is very positive 
and it suggests that we may actually find a way to modernize 
CFIUS, make it implementable, and improve our national 
security. If we don't fix it, though, I fear we will not 
enhance our security, we will harm it.
    Thank you very much.
    [The prepared statement of Mr. Lowery follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Latta. Well, thank you very much.
    And Ms. Drake, you are recognized for 5 minutes. Thank you.

                   STATEMENT OF CELESTE DRAKE

    Ms. Drake. Thank you.
    Chairman Latta, Ranking Member Schakowsky, and members of 
the committee, good morning. Is it still morning? Good.
    I appreciate the opportunity to testify on behalf of the 
AFL-CIO on the critical issues of foreign investment and job 
creation. I have submitted written testimony for the record and 
will highlight just a few key points here.
    The AFL-CIO and its affiliate unions support investment 
that creates good jobs. In determining the impact of foreign 
investment on U.S. security, we must recognize that our 
economic and national security are intricately linked. 
America's economy is really the source and foundation of our 
national security and that is also the source of the AFL-CIO's 
interest in efforts to update and improve the Committee on 
Foreign Investment in the United States or CFIUS. At the end of 
the day, for us, it is a jobs issue.
    As you know, the U.S. is a premiere destination for foreign 
investment. In comparison to other countries in which investors 
are required to create joint ventures for nearly every 
investment, or pressured to transfer important technology or 
intellectual property, the U.S. has a very open system and we 
must make sure that openness does not become a weakness, 
allowing jobs, and critical technology, and knowhow to bleed 
away.
    While foreign direct investment can contribute to the 
creation and maintenance of high-quality jobs, we cannot assume 
this is a given. Some foreign investors may seek to drive U.S. 
competitors out of the market, or to transfer valuable 
technology, equipment, and intellectual property overseas, 
taking jobs with them. State-owned and controlled enterprises, 
in particular, may not invest with a goal to operate in the 
U.S. for the long-term but, instead, merely to acquire 
strategic technology for their home country that could, in the 
end, jeopardize U.S. security.
    Because of these risks, we have long-supported updating 
CFIUS. CFIUS' current charge is too limited. It reviews mergers 
and acquisitions but needs broader authority to address new and 
evolving acquisition strategies and vehicles. It cannot review 
new or greenfield investments and its definition of national 
security is too narrow.
    Some of these shortcomings are directly addressed by the 
Foreign Investment Risk Review Modernization Act or FIRRMA, 
which we believe will benefit American's working people. FIRRMA 
balances open investment with important national security 
considerations.
    FIRRMA will allow CFIUS to respond more effectively to 
efforts by China and other nations to buy technological and 
military components of the United States. Importantly, it will 
update the definition of a covered transaction, require filings 
for certain investments by state-owned enterprises, and ensure 
that mitigation agreements are monitored.
    Accordingly, we support FIRRMA as a needed update that 
recognizes the complex business structures and fast-moving 
technology development of the 21st century. However, in our 
view, FIRRMA does not address all of CFIUS' shortcomings. 
America's working people have additional concerns. We would 
expand CFIUS' ability to review greenfield transactions and to 
consider the net economic benefits of any transaction.
    By limiting greenfield reviews to those in proximity to 
strategic installations, as FIRRMA does, we may miss certain 
predatory investments or the attacks on our companies piece by 
piece, rather than wholesale.
    The Tianjin Pipe Facility provides a case in point. It is a 
greenfield investment that we wish we knew more about. If 
Tianjin uses its own inputs made in China, with illegal 
subsidies, or sold at less than the cost of production, Tianjin 
could harm U.S. businesses that make those same inputs, costing 
jobs, wages, and perhaps whole communities. We could get at 
those things with trade remedy law but not once Tianjin is 
producing here in the United States.
    And by failing to review economic impacts, we may miss the 
forest for the trees, allowing investments that drive down 
wages or leave the U.S. with fewer high-value jobs in the long-
run.
    Trading partners such as Australia and Canada already 
require foreign investments to undergo such a review. And cases 
like the 1990s Magnequench acquisition demonstrate that not all 
foreign investment creates good jobs.
    In sum, we look forward to working with you to advance 
FIRRMA, to improve CFIUS, and to promote the growth of the 
American economy through investment that creates high wage, 
high benefit jobs.
    I thank the committee for its time and would be pleased to 
answer any questions you may have.
    [The prepared statement of Ms. Drake follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Latta. Thank you for your testimony.
    And Dr. Scissors, you are recognized for 5 minutes.

                  STATEMENT OF DEREK SCISSORS

    Mr. Scissors. Thank you.
    So my written testimony presented China facts to show the 
context for the CFIUS reform discussion. I am going to go 
straight to the punchline here.
    If the amount of money tells us anything, Chinese 
technology acquisition is not done primarily in the United 
States. So if you just restrict Chinese investment in the 
United States, you are not going to block Chinese technology 
acquisition. You are going to do very little, in fact, to block 
it.
    To protect national security the United States must be able 
to regulate certain businesses overseas, and particularly 
businesses involved with China. That is what the facts say. It 
is not an easy thing to do. I am not arguing that it is easy 
but that is what the facts say.
    On the flip side, the business community's objections are 
right that you can restrict investment in such a way that you 
deter beneficial investment. So legislation has to be as narrow 
and clear as possible.
    So I am going to talk about the security requirement and 
then suggest some ways to make sure that H.R. 4311 or any 
modification of it does not or does minimal harm to foreign 
investment.
    It is not a good idea to single out China in U.S. law but 
the policy debate is actually about China. And the reason I 
feel confident of that is not just the numbers. It is because 
China is our first security rival which has enough money to use 
it as a weapon.
    All over the world, China uses loans as a political tool. 
For those following the Belt and Road Program that China has 
announced that it received some recognition from U.S. foreign 
policy, is basically using loans as a political tool. In that 
light, it would be a mistake, in my opinion, to spend too much 
time thinking about the size of the equity stake or what the 
definition of passive investment is. If China is providing 
financing to a firm, they have influence over a firm. And you 
know that doesn't mean that automatically something nefarious 
is going on. It means we need to realize that Chinese financing 
brings Chinese influence. Just like with any firm, if I am 
providing the money, I get a say in what you are doing.
    And the money trail here is actually evaporating. Total 
Chinese investment in the U.S. was in the $50 billion range in 
2016. This year it is tracking to reach less than, it is not 
going to even hit $20 billion annually. So total investment is 
falling.
    There have been no $100 million technology investments. We 
track $100 million investments and up. There have been no $100 
million technology investments since January 2017. So it has 
been well over a year.
    Now Beijing hasn't given up on acquiring technology. So the 
fact that we are not seeing investments in the U.S. is not a 
sign like OK, well, problem solved. The problem is obviously 
not solved and the administration has told us what their 
primary concern is.
    The Section 301 investigation was launched primarily to 
deal with coercion by China of U.S. firms using access to the 
Chinese market in order to gain technology. In other words, the 
primary technology threat is coercing American firms who want 
access to China; it is not Chinese firms investing here. We 
know that from the administration's position and we know that 
from the facts.
    And if China is blocked from an investment here, just as an 
example, it is a trivially easy thing to do to say hey, would 
you like to set up a joint venture in China? Really favorable 
terms. You are going to make a lot of money. All we need is to 
get a look at the technology you are using, for our own 
regulatory purposes. So, we cannot locate the action here of 
Chinese technology acquisition as investment in the United 
States.
    Now the hard part is, What do we do? It is easy for me to 
identify the problem. What do we do about it? I do work in a 
free market think tank. The U.S. is by far the largest national 
player in global investment, both coming in the United States 
and going out. And what investors love is certainty.
    So a phrase like country of special concern, that doesn't 
promote certainty. We need to define high-risk countries, not 
that they are the only risk countries, but we need to define 
high-risk countries in a very clear and concrete way that could 
be updated over time.
    And just as an illustration, if we have an arms embargo on 
a country, that is a higher risk country. That is a good proxy 
for high risk. It is not perfect. It needs to be changed but it 
is a lot better than saying countries of special concern.
    Similarly, words like critical apply to technology, 
materials, infrastructure, call out for definitions so business 
knows what to expect from the U.S. review process. Because we 
want investment, those definitions should be as narrow and 
specific as possible. I am happy to talk more about that in 
Q&A. The goal should be that most countries and most firms have 
nothing to fear from CFIUS reform because it is not aimed at 
most countries and most firms.
    My last remark applies to all views of what should be done 
here. Whatever the final bill looks like, whether it is more 
intervention as to defense of national security or less, if 
CFIUS isn't budgeted and staffed properly, it doesn't matter.
    So I feel like even though we have talked about this, we 
are not paying enough attention to that issue. In a sense, the 
budgeting and staffing is the most important thing and then the 
goals all follow from what you are willing to provide, in terms 
of resources and people.
    Thank you.
    [The prepared statement of Mr. Scissors follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Latta. Well, thank you all for your testimony. And we 
will now move into the Q and A portion of the hearing.
    And I will begin the questioning and recognize myself for 5 
minutes.
    Mr. Lowery, how difficult is it for CFIUS to identify 
transactions which involve a foreign purchase of a U.S. 
company?
    Mr. Lowery. I don't think it is that difficult. If it is a 
foreign purchase, where there is going to be control, the first 
thing is just kind of, as we heard in the last panel, there is 
a process. There is a lot of incentive for the companies to 
come forward and basically present that to the U.S. Government 
for a review under CFIUS. If it is obviously in a non-national 
security area, they wouldn't do that.
    But beyond that, the Government does spend some of its 
resources on kind of scouring the M and A Press, which is 
actually a very robust press for a variety of reasons. And so 
from that, at least, you can basically have the--CFIUS actually 
has subpoena authority, if it needs to, to go out and actually 
bring transactions in.
    So my own view is that you actually capture most of the 
critical controlling M and A transactions under CFIUS 
currently. That doesn't mean that it doesn't take some effort 
but I think actually most of them are actually brought in 
through CFIUS.
    Mr. Latta. So would you say that the notice requirements 
right now are adequate that are out there already?
    Mr. Lowery. I think they are adequate. I actually do think 
in the FIRRMA bill the addition of having a mandatory 
requirement for state-owned enterprises is a very good add.
    Mr. Latta. Thank you.
    Mr. Wolf, do export controls create a blacklist of 
prohibited persons and transactions, or whitelist the permitted 
goods and transactions, and is this the right approach?
    Mr. Wolf. So with respect to individuals--and that is an 
excellent question because export controls are about controls 
on information and things, controls on people, end uses, and 
end users. And as was described in the previous panel, there 
are lists of proscribed individuals and companies to which the 
export or re-export of anything is prohibited for national 
security reasons, in order to get that threat. So that is the 
blacklist approach. It goes to the certainty point that was 
very well made a moment ago in that you have to know who you 
can't deal with to know who you can't deal with.
    With respect with the identification of technology, that is 
done both unilaterally and multi-laterally with our regime 
allies. And for companies to know what requires a license when, 
what information is required to get government permission to 
release, they have to know what it is. And so it is a very 
explicit list, a very long list, a Commerce Control List, of 
the types of technologies and related items that are 
controlled.
    To the extent it is sometimes too difficult to describe 
exactly the term, occasionally, there are notes that say 
particular technologies in these areas are not caught, such as 
the whitelist. But the primary approach is a positive lit 
approach of identifying the names of the companies, and the 
individuals, and the types by technical description, or other 
objective terms the technologies that require permission to 
transfer.
    Mr. Latta. Thank you.
    Dr. Scissors, what role does foreign direct investment play 
in creating economic growth here in the United States?
    Mr. Scissors. Well, the world changes over time. I think I 
will----
    Mr. Latta. Yes, thank you.
    Mr. Scissors. The role changes over time. I will answer 
that question I think you know in a quick fashion but a very 
important fashion.
    The President and a lot of other national and local 
politicians have said the U.S. needs to, at least partly, to 
the extent we can, reindustrialize. There are manufacturing 
jobs that can and should be created in the U.S. that, to some 
extent, have been lost to automation or trade and we can bring 
some of them back here. And I think that is true to some 
extent. It requires foreign investment. We can't do it without 
that.
    So if you care, as I do, and I think probably almost 
everyone in this room does, care about reindustrialization, if 
you deter foreign investment, you are really striking--it is a 
very difficult task to bring millions of manufacturing jobs to 
the United States. You can't do it without foreign investment.
    So that is the way I would say I would describe it. It is a 
big question but foreign investment is crucial to the idea of 
bringing manufacturing jobs, a large number of manufacturing 
jobs to the economy.
    Mr. Latta. Thank you.
    Mr. Lowery, what is the best way to address the question of 
how to ensure sensitive U.S. technology information that does 
not fall into foreign hands?
    Mr. Lowery. So I think that it is a combination of factors. 
One is I think the most important one, which actually really 
isn't the U.S. Government. It is actually the companies 
themselves. The companies themselves, they don't want to allow 
their technology to fall into foreign hands or, by the way, 
domestic hands, because that is the technology that allows them 
to make money. And so that is the ``secret sauce.''
    Going beyond that, though, I think the export control 
regime is probably the best regime we have and it needs to be 
updated. And that is why I think Congressman Royce's bill is a 
very positive bill and Congressman Engel's bill. And I think 
that that helps put more force into what they should be doing, 
the export control regime.
    I think CFIUS also is very helpful but it is my own view 
that it should be about what is a foreign investment into this 
country. And so I think the combination of what the private 
sector does, and then the export control regime, and the CFIUS 
I think is the best way to address these issues.
    Mr. Latta. My time has expired and I recognize the 
gentlelady from Illinois, the ranking member of the 
subcommittee for 5 minutes.
    Ms. Schakowsky. Thank you, Mr. Chairman.
    I wanted to explore some things with you, Ms. Drake. Gene 
Green, I don't know if you were here for the earlier, he raised 
some questions about labor and about the workforce. And the 
answers that we heard from Mr. Tarbert at Treasury essentially 
was we narrowly focus on national security issues. And I would 
argue that it really is narrowly defining national security 
issues. And in some ways I think you have tried to broaden 
that, what is a national security issue, and I would certainly 
like to see to the extent that jobs are at stake, et cetera, is 
also a part of a national security issue.
    But you mention in your testimony additional shortcomings 
of CFIUS that are not addressed in FIRRMA, including the issue 
of greenfield investments. And so what are greenfield 
investments and why might they present a concern for the United 
States?
    Ms. Drake. Thanks. So greenfield investments are when you 
are not buying a going concern. So you might be buying the land 
and building a factory from scratch. And in theory, you would 
think, well this one of the good kinds of foreign investments 
that we want because if you are building a brand new workplace 
or factory, you are creating jobs that didn't exists before. 
And that is potentially the case.
    But in the case, I gave the example, in my written 
testimony and mentioned it briefly, Tianjin, which is a steel 
pipe producer that is about to open a new facility actually in 
Texas, near Mr. Green's district, and the problem is is that if 
they behave in such a way, if the whole point of the investment 
is to evade U.S. trade remedy law, whether it is dumping 
countervailing duties, Section 232, and then they bring in from 
their own company their own suppliers in China, which they own, 
dump subsidized inputs, we are not going to be able to reach 
those inputs through trade remedy law. And then they are 
behaving here in a predatory manner that might drive other U.S. 
competitors out of business.
    So we could, in the long-run, be losing jobs, be harming 
communities, and potentially driving down wages in that sector, 
if we end up with a monopsony type situation, where there are 
fewer buyers of labor.
    So these are the kinds of things that we want to look at 
when we are looking at does foreign investment benefit our 
economic security, which really is linked. I mean whether you 
talk about a net economic benefits test or you just talk about 
expanding our view of what national security is, if our economy 
isn't strong, then certainly our national security is at 
greater risk.
    Ms. Schakowsky. So right now CFIUS concentrates on this 
narrow view of national security. And in your testimony, you 
cited the U.S. China Commission's recommendation for addition 
of a quote, net economic benefits test, unquote. And do you see 
that being under CFIUS or some sort of a new regime?
    Ms. Drake. We would put it under CFIUS, rather than 
building a new whole regime. And you know Canada does a similar 
thing. Australia does a similar thing. Those are both popular 
destinations for foreign investment. So it is not driving away 
investment but it is a way to say let's make sure, if you are 
investing, it is not to strip the knowhow and technology and 
take the jobs elsewhere but you are committing to having the 
production here for the long-term. You are committing to hiring 
U.S. workers, to pay them good wages. These all really matter 
because if it is really predatory and it ends up killing an 
entire sector of the U.S. economy, those are jobs but those 
are, in the long-run, things that we can no longer make. And we 
have got to rely, then, on imports from some other source.
    So these things really should be looked at part and parcel 
by CFIUS.
    Ms. Schakowsky. And so you think that we have a structure 
that could add on this whole additional piece. I mean I think 
it is a really important piece and you know where it gets 
housed and where it happens. Does the Department of Labor do 
any of these things now, looking at these investments and how 
they impact the overall economy and jobs?
    Ms. Drake. Not in that manner. As you heard from Secretary 
Tarbert on the first panel, the Secretary of Labor sits on 
CFIUS but is a nonvoting member and doesn't really look at 
these sort of workforce, wage, jobs issues. But it could easily 
be done and I think it would be value added to what CFIUS is 
already doing.
    Ms. Schakowsky. You know I would really like to talk to you 
about that. I think these are matters of national security. I 
would like to work with you and the AFL-CIO on that.
    Thank you.
    Ms. Drake. Thank you.
    Mr. Latta. Thank you. The gentlelady yields back.
    The chair recognizes the gentleman from Indiana for 5 
minutes.
    Mr. Bucshon. Thank you, Mr. Chairman.
    Mr. Lowery, when you were at Treasury, the CFIUS process 
was substantially revised. How did the process change and does 
it provide any insight into how policymakers should proceed 
under the current proposals?
    Mr. Lowery. Thank you, sir. So the way it mainly changed, 
it didn't change what CFIUS was looking at, which I think Mr. 
Tarbert talked about. What it did was it made a much more 
formal review process by the intelligence community.
    So the intelligence community was always part of CFIUS but 
it just, it enhanced it. And then it also enhanced the level of 
our accountability from the U.S. Government. So it wasn't just 
signed off on by the career civil servants, not that they don't 
do a great job but, basically, the people that have to testify 
before Congress have to now sign off on all transactions.
    It also provided a lot more transparency between the 
executive branch and congressional branch which, frankly, did 
not exist before that.
    So all of those were a lot of process issues. The results 
of some updates on the types of issues we were looking at, 
especially on critical infrastructure and some homeland 
security issues, which was an update from a previous era.
    I would say probably the last thing is but it took a lot of 
time. So in 2007, we passed FINSA, through Congress. It took 
about a year and a half to do the regulatory process to get it 
back up into place. And then you had to make sure you had the 
right personnel because everybody has to have the right 
clearances and so forth to look at this. So it just takes a 
long time.
    Some of my criticism of the FIRRMA bill, and not all of the 
FIRRMA bill but parts of it, are that you would take this and 
metastasize it. And that is the part that I worry about, that 
we literally wouldn't be able to implement it.
    Mr. Bucshon. Yes, understood.
    Mr. Wolf, in your testimony, you said, and this is 
interesting to me, that one side of the CFIUS debate are folks 
that believe transactions are more creative than the Government 
can understand. I am just curious if you thought that when you 
were at Commerce.
    Mr. Wolf. Yes, in fact, which is why I----
    Mr. Bucshon. That is a serious question but it is also kind 
of in jest because I----
    Mr. Wolf. No, technologies are evolving, transactions are 
evolving. The world is evolving quickly. And in any area of law 
and regulation, it is difficult for the Government regulations 
and statutes to keep up.
    And I acknowledge that as a serious debate.
    Mr. Bucshon. Let me just say I agree with you. I do think 
that you know bureaucracies can get behind pretty quickly.
    Mr. Wolf. Right.
    Mr. Bucshon. And I would just phrase it in a different way. 
It is not that the Government can't understand it, it is just 
that things are evolving so quickly because of the inherent 
nature of the way agencies and the Government do their business 
that it is pretty easy for them to quickly get behind.
    I am not saying I disagree. I just thought I would ask you 
whether you thought that when you were at Commerce.
    Mr. Wolf. But it is the key philosophical question in this 
FIRRMA debate----
    Mr. Bucshon. Yes.
    Mr. Wolf [continuing]. Which is if, in light of that fact, 
should you have rather expansive authority with very broad 
general definitions on inbound and outbound investments, in 
order to be able to know it when you see it later, whether 
there is a transaction of concern.
    Mr. Bucshon. Yes.
    Mr. Wolf. And then the second question is if that expansive 
authority does more harm than good with respect to the open 
investment culture that every President before us has 
acknowledged. So I have got a longer version of that but that 
is the essential debate in this question.
    Mr. Bucshon. Yes, understood and I don't disagree. I think 
we need to balance our ability to accept foreign investment and 
to make sure that our economy is strong and not inappropriately 
burdensome on investment by overreaching. That is why we need 
to strike a balance here.
    But that said, based on what people like me are currently 
hearing in the classified setting on a lot of issues, we have 
some really pretty serious national security issues to address 
and that is why getting this right is really important.
    So, I yield back, Mr. Chairman.
    Mr. Latta. Thank you very much. The gentleman yields back.
    The chair recognizes the gentleman from Kentucky for 5 
minutes.
    Mr. Guthrie. Thank you very much. And just finishing on 
that, and not my line of questioning, but that is one of the 
debates we have as the legislative branch. How much authority 
do we grant? Because it is quicker to react regulatory than 
legislatively and you get broad definitions, and broad 
authorities, and you hope that the things go down the way that 
Congress intended when you do that. But with the Chevron case, 
it gets to the point where both sides, both have--and if you 
are in the executive branch, you probably want to do that 
anyway, taking a lot of liberty, I think, with what Congress 
intended.
    So, unfortunately, we are to the point that we have to be 
more prescriptive than that because you can't legislate for who 
is in power now. You have got to legislate for who may be in 
power in the future.
    So, Mr. Wolf, this is the first question to you. One of the 
reasons cited for the current legislation is the need to deal 
with emergency situations, such as when a foreign purchaser is 
actively seeking to acquire U.S. technology.
    How long does it take for the export control process to 
work and is it suited for emergency situations?
    Mr. Wolf. And that is the follow-on to my previous point. 
And the key effort in this effort, in this debate, which I 
think is very well laid out in a process point in Section 109 
of Congressman Royce's bill, is the need to identify the 
technologies of concern, the emerging technologies that are 
being sought by countries of concern, identify and regulate 
them, regardless of the nature of the transaction, whether it 
is a joint venture, or whether it is a voluntary sale, whether 
it is a telephone call. If technology is of concern, if it is 
being sought to be acquired by a foreign government to our 
detriment, it should be regulated and that is exactly what the 
export control system does.
    Now to the timing question. So I was so concerned about 
this when, during my time, we created a process that was 
referred to earlier, the OA521 process that allows the Commerce 
Department to identify immediately and impose unilateral 
controls, that is without needing the permission or 
coordination of other countries over any technologies for any 
foreign policy or national security reason.
    So the legal answer to your question is it can be done as 
quickly as a reg can be written and published, in a day. The 
harder question, which is where the process point comes in from 
Secretary Royce--or Congressman Royce's bill is to identify 
those technologies that, historically, we are not familiar 
with. And in this entire debate, artificial intelligence, 
robotics, driverless vehicle technology, a long list of other 
technologies are the target of acquisition.
    And so my primary advocacy is that the Government devote 
significantly more creative resources to identifying those 
technologies, listing them, and tagging their ability to be 
released to countries and end uses, and end-users of concern, 
regardless of whether it is an investment, passive or 
otherwise.
    So, it can be done quickly. So the law is there to do it 
quickly. The hard part is the brain power to think through what 
really is of concern and without doing it in such a broad way 
that you discourage investment in the U.S. or U.S. companies 
from developing this technology in the U.S.
    Mr. Guthrie. So the law doesn't prevent you from acting 
quickly, the process, I mean doing the right thing correctly.
    Mr. Wolf. It is a function of will, and creativity, and 
intelligence, and collective efforts.
    Mr. Guthrie. Up to the point where everybody agrees this is 
right but we have got to wait so many days because of the law. 
The law actually allows you to----
    Mr. Wolf. The existing regulations with the broad authority 
that Congress has given the Commerce Department exist to tag 
and identify something immediately.
    One quick follow-on. However, that shouldn't be where it 
ends because the worst export controls are the ones that stay 
forever unilaterally, that is, only the U.S. imposes, because 
what that does is it drives that work, that technology, that 
development to our allies and then we lose that work because 
the U.S. is a more restrictive environment than our allies.
    And so what I have just described as a short-term 
unilateral fix but the regulation and also Congressman Royce's 
bill lays out a process to make it multi-lateral so that our 
allies are in the same boat with us, and achieving the common 
objectives, and leveling the playing field with respect to 
control of the technology of concern.
    Mr. Guthrie. OK, thanks.
    Mr. Lowery, is CFIUS equipped to review not only inbound 
foreign investment into the U.S. but also outbound 
transactions, such as the contribution of intellectual property 
to a joint venture with a foreign entity?
    Mr. Lowery. No, it is not. In the original FIRRMA bill 
provided that authority and that is the biggest problem of the 
bill. It should not be doing that.
    That is, CFIUS should be about foreign investment into this 
country. And if it is a concern about what is happening that is 
being exported, whether it is in a joint venture or whether it 
is just a regular sale, that is when you turn to the 
authorities that Kevin Wolf just was talking about. That is 
what the export control system is all set up to do.
    That doesn't mean it doesn't need to be modernized, 
updated, and maybe sometimes having a fire under the you know 
whats from Congress. And I think that that is kind of what I 
saw from Congressman Royce and Congressman Engel's bill.
    Mr. Guthrie. OK, thank you.
    And Dr. Scissors, can you please touch on the policy 
motivations for H.R. 4311 that stem from the Made in China 2025 
Plan?
    Mr. Scissors. Sure. You know one difference in talking 
about how quickly to move is that you know China has a declared 
intent to acquire technology, to attain global technological 
leadership. It is not just to acquire technology to make its 
people better off. It is to be the leader, ahead of all of you, 
everyone else in various sectors. And in some of those sectors, 
we might think of OK, electrical cars. You know we don't want a 
lot of combustion engines on Chinese streets for 1.4 billion 
people. But other areas, like semiconductors, there is an 
obvious national security component to that, as well as 
strategic economic component.
    So Made in China 2025 is not the first time the Chinese 
have announced an industrial policy. It is the first time they 
have announced an industrial policy at the high end, where we 
are going to get technology at the high end. We are going to 
subsidize our companies at the high end.
    So the challenge to the United States has changed 
fundamentally because China is now competing with us in areas 
where we thought we were the undisputed global leader. And 
their intent is explicitly for that no longer to be true, that 
we will not be the undisputed global leader.
    Mr. Guthrie. Ms. Drake, you were shaking your head a couple 
of seconds ago. Do you have a comment on that, then?
    Ms. Drake. Oh, I just, I agree with----
    Mr. Guthrie. You were agreeing, obviously.
    Ms. Drake [continuing]. Absolutely with those comments and 
think that we have to adjust what we are doing to respond to 
what China is doing, absolutely.
    Mr. Guthrie. OK, thank you.
    And I yield back.
    Mr. Latta. Well, thank you very much.
    And seeing no other members here to ask questions, first I 
want to thank you all for being here. Your testimony has been 
very, very informative. It is an area that I think this 
committee is delving into and we have got to do something. So I 
want to thank you for being here.
    And before I conclude today, I would also like to make sure 
that we submit for the record, by unanimous consent, a 
statement from FCC Commissioner Michael O'Rielly.
    [The information appears at the conclusion of the hearing.]
    Mr. Latta. And pursuant to committee rules, we remind 
members that they have 10 business days to submit additional 
questions for the record and I ask that witnesses submit their 
response within 10 business days upon receipt of those 
questions.
    And, without objection, the subcommittee will stand 
adjourned.
    [Whereupon, at 12:26 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

                 Prepared statement of Hon. Greg Walden

    Good morning and thank you to our witnesses for being here 
today. Our hearing will examine the Committee on Foreign 
Investments in the United States and the vital role it plays in 
ensuring that corporate transactions involving U.S. and foreign 
persons do not pose threats to our national security.
    We are also here to discuss the role foreign direct 
investment plays in growing the American economy and creating 
jobs. Perhaps most importantly, we are here to discuss the 
balance between encouraging global investment in the United 
States, while preventing those who would do us harm from 
exploiting our fundamental faith in the free market and the 
free flow of capital.
    Since 2007, the last time Congress reviewed the CFIUS 
(Siff-ious) review process, much has changed. The types of 
investments made by foreign persons in U.S. companies have 
diversified; the role of foreign governments in attempting to 
acquire U.S. assets through companies they partially or wholly 
own has altered; and technological improvements have increased 
incentives for other nations to attempt to acquire innovative 
products and technologies created by American entrepreneurs.
    These changes mean new opportunities and new risks. Under 
the auspices of investing in an American business, a foreign 
government could acquire a whole or partial stake in a U.S. 
company that allows it to access critical information or 
products that could undermine our national security. Some of 
our colleagues believe the CFIUS review process, designed to 
address such risks, has not kept pace with these developments.
    At the same time, it must be recognized that much of 
foreign investment in the United States is beneficial to our 
country and economy. When a foreign-owned business invests in 
the U.S., it is acknowledging the tremendous advantages that 
come from employing American workers and operating in U.S. 
markets.
    Many U.S. companies with foreign ownership not only 
manufacture their products in the United States, employing 
American supply chains, but also export these U.S. built 
products overseas.
    According to the most recent U.S. Commerce Department data, 
majority-owned U.S. affiliates of foreign entities exported 
$352.8 billion in goods, accounting for over 23 percent of 
total U.S. goods exported in 2015 \1\. These types of ventures 
reduce our trade deficit while creating jobs for Americans.
---------------------------------------------------------------------------
    \1\ https://www.commerce.gov/news/fact-sheets/2017/10/foreign-
direct-investment-united-states.
---------------------------------------------------------------------------
    In that same report on Foreign Direct Investment in the 
United States, the Commerce Department noted that the United 
States had an inward FDI stock of $3.3 trillion in 2015 and 
$3.7 trillion in 2016. The largest investors in the U.S. came 
from the United Kingdom, Japan, Canada and Germany, countries 
with whom we have a close and cooperative relationship.
    Welcoming foreign investment in the United States has 
yielded tremendous benefits for our citizens. It is important 
that we do not make the opportunity to invest in the U.S. so 
burdensome or uncertain that we discourage a vital source of 
economic growth.
    It is also critical that we remain aware of the reality 
that not everyone in the world shares our values or is content 
to see America succeed. The CFIUS review process has 
historically struck a balance between encouraging investment in 
America with protecting our citizens from harm. It is our duty 
to review that process to ensure CFIUS has the tools it needs 
to continue to strike that balance in a changing world.
    I look forward to hearing from our witnesses today on 
whether H.R. 4311 correctly strikes that balance, what changes 
or improvements can be made in the legislation, and what 
equities policymakers should consider as we undertake this 
process.
    Thank you and I yield back the balance of my time.
                              ----------                              


             Prepared statement of Hon. Frank Pallone, Jr.

    Today we are here to review the CFIUS process. CFIUS, the 
Committee on Foreign Investment in the United States, serves as 
an important check on our generally open investment climate. 
Simply put, CFIUS reviews certain transactions to ensure that 
they would not result in adverse national security consequences 
for the United States.
    Investment in American companies, whether foreign or 
domestic, is a major component of the U.S. economy. It can spur 
innovation and create good jobs for American workers.
    However, some foreign investment is more beneficial to the 
U. S. economy than others. For example, research has shown that 
the benefits of investment by acquisitions are ambiguous. In 
addition, investments that are made based on incentives given 
at the state or local level can foster a ``race to the bottom'' 
among jurisdictions.
    And regardless of the potential benefits, foreign 
investment must never cause harm. Therefore, we need to ensure 
that such investment is not creating risks to our national 
security.
    Over the last several years, there have been calls to 
update the CFIUS process, particularly as the global market and 
our national defense posture evolves. Most recently, a 
bipartisan bill the Foreign Investment Risk Review and 
Modernization Act, was introduced by Representatives Pittenger 
and Heck, which we will discuss at today's hearing. I look 
forward to exploring this legislation with our witnesses and 
hope this bill works its way through the process on a 
bipartisan basis.
    It is imperative that CFIUS is always ready to respond to 
security threats from any power seeking to have a strategic 
edge over our nation. CFIUS must be reviewing the right 
transactions and making sure that our critical infrastructure 
and intellectual property are being protected. The number of 
investments that need to go through the CFIUS process is on the 
rise so a review of the process now makes sense.
    While we do not want to drive investment dollars to other 
countries, we need to protect our technological edge and 
military readiness. And unfortunately, there are other 
governments seeking to take away that edge. Recently, Chinese 
President Xi Jinping reiterated his vision of China's future as 
a technology power. In a speech this past weekend, he 
acknowledged his goal of having Chinese companies collaborate 
with the Chinese military in that pursuit, what some have 
called civil-military fusion.
    I understand those who are concerned about access to 
capital. U.S. firms and universities do need capital to grow 
ideas. I agree, and strongly support efforts to increase 
funding for research and development. For our nation to 
maintain its technological and strategic edge, we in Congress 
must work to ensure federal dollars are committed to emerging 
research and improving our infrastructure
    Mr. Chairman, it is no wonder why the United States is the 
number one destination for foreign investment. Companies come 
here because of our workforce, infrastructure, and consumer 
base. They recognize that it is a great place to do business. I 
look forward to hearing from our witnesses about how to best 
strike the balance of strengthening our national security 
review and maintaining our title as the investment capital of 
the world.
                              ----------                              


[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


                                 [all]