[Congressional Record Volume 164, Number 64 (Thursday, April 19, 2018)]
[Senate]
[Page S2300]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



            Foreign Investment Risk Review Modernization Act

  Madam President, I wish to switch gears to another issue. I have 
spoken quite a few times recently about U.S. relations with China, both 
the opportunities and the concerns that we should have. Last week, I 
held a hearing in the Finance Subcommittee on International Trade, 
Customs, and Global Competitiveness to examine the challenges that U.S. 
businesses, manufacturers, and service providers face when they are 
trying to access the Chinese market.
  The President spoke about this issue in his State of the Union when 
he called for reciprocity. In other words, we expect to be treated as 
well as we treat Chinese investment in the United States when we and 
our companies invest in China, but that is not happening.
  I have also been spending a lot of time looking at the long-term 
national security implications that China poses to our country, which 
is why I was proud to join our colleague, the senior Senator from 
California, Mrs. Feinstein, to recently introduce legislation that will 
strengthen the process by which the Committee on Foreign Investment in 
the United States, otherwise known as CFIUS, weighs national security 
risks. The CFIUS process was not originally designed, and is now 
insufficient, to address rapidly evolving technology, as well as the 
threats to our technological edge, particularly when it comes to dual-
use technology that is important for national security reasons. The 
committee's current jurisdiction and the staffing is both too narrow 
and inadequate in order to address these evolving threats.
  China, in particular, has proven adept at circumventing the current 
CFIUS process. It exploits gaps and creatively structures business 
arrangements within the United States to evade scrutiny. That can mean 
that there would be no scrutiny of those transactions on national 
security grounds, which is a troubling situation that our bill, the 
Foreign Investment Risk Review Modernization Act, or FIRRMA, is meant 
to address. The weaponization of trade and the use of coercive 
industrial policies are tools that China has been using for some time, 
and it is imperative that we give CFIUS the full authority it needs to 
ensure that our advantage in the U.S. military know-how and technology 
are not stolen from us and used against us.
  It is important to note, in the wake of some critics' flawed 
objections, that my bill does not try to address all, or even most, 
outbound investments. Rather, it addresses a narrow subset--joint 
ventures where tech-related intellectual property and know-how are 
transferred. This is a threat to our industrialized base, or jobs, here 
in America. If somebody can acquire both the intellectual property and 
the know-how to make that technology in China, obviously, those are 
jobs we will not have in the United States.
  It is true that these technology transfers are already sometimes 
covered under current export controls, but the problem is that the harm 
to our national security is occurring despite those current export 
controls. So we need to do more. We need to step up to the challenge.
  Export controls are not an adequate solution to the situation we are 
now dealing with because of their inherent limitations. For example, 
the intellectual property that is at the heart of many of these joint 
ventures implicates technology that the Commerce Department has, in 
fact, decontrolled; that is, removed from the relevant export control 
list.
  One last point I need to emphasize is that currently joint ventures 
are often carefully structured, as I suggested a moment ago, to 
circumvent this review process. These joint ventures are essentially 
acquisitions by another name, which is why CFIUS should be able to 
review them for national securities risks.
  Let me be clear, though. Foreign investment is a good thing. These 
joint ventures are not inherently bad, but we do know that China has 
used them strategically as a vessel for its activities to try to 
undermine both our national security edge and jobs in America. Foreign 
actors know that CFIUS, under normal circumstances, would block their 
attempt to acquire certain business units outright. So they have been 
very creative in structuring transactions to obtain the very same 
industrial capabilities by other means.
  To address the national security risks, what we need is an upfront 
U.S. governmental review, informed by our intelligence assessments, of 
the foreign partners that are involved. We need to ask whether these 
foreign partners are affiliated with the Chinese military, for example, 
or some other potential adversary.
  In China, there is no separation between public and private sectors 
because the Communist Party sits atop the entire Government of China 
and is basically embedded within all of these Chinese companies. They 
have an ``all of government'' strategy focused at beating the United 
States, economically and militarily.
  I believe the opponents of the reforms that I have just talked about 
are trying to perpetuate the status quo as long as possible--not to 
protect our national security interests but just the opposite--so they 
can bolster their bottom line, regardless of its potential negative 
effects on the rest of our country and on our national security.
  We simply cannot afford to wait while China whittles away at our 
technological advantages. The time to act is now. Our national security 
demands that CFIUS and export controls be made to be interlocking and 
mutually reinforcing, rather than simply relying on export controls to 
address these national security risks, which would be foolhardy.
  If we want our country to retain its technological advantage and 
remain the top military superpower in the world, enacting this bill is 
an essential piece of that. After all, if China supplants the United 
States--it is not only the top economic but military superpower in the 
world--the repercussions there will be enormous. We simply have not 
faced that situation where the U.S. Armed Forces were not the most 
powerful military in the world since before World War II. It is 
dangerous, as that war pointed out, when you have countries building 
their military, acting more belligerently, and inviting retaliation. 
Let's not start now.
  The bipartisan bill that Senator Feinstein and I have filed has been 
endorsed by the White House and is supported by the current Secretaries 
of Defense, Treasury, and Commerce, as well as the Attorney General of 
the United States. Let's not hold it up any longer.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Nevada.


                       Honoring Our Armed Forces