Defense Trade: Implementation of Exon-Florio (06-OCT-05,	 
GAO-06-135T).							 
                                                                 
The 1988 Exon-Florio amendment to the Defense Production Act	 
authorizes the President to suspend or prohibit foreign 	 
acquisitions of U.S. companies that may harm national security,  
an action the President has taken only once. Implementing	 
Exon-Florio can pose a significant challenge because of the need 
to weigh security concerns against U.S. open investment 	 
policy--which requires equal treatment of foreign and domestic	 
investors. Exon-Florio's investigative authority was delegated to
the Committee on Foreign Investment in the United States	 
(Committee)--an interagency committee established in 1975 to	 
monitor and coordinate U.S. policy on foreign investments. In	 
September 2002, GAO reported on weaknesses in the Committee's	 
implementation of Exon-Florio. This review further examined the  
Committee's implementation of Exon-Florio.			 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-135T					        
    ACCNO:   A39157						        
  TITLE:     Defense Trade: Implementation of Exon-Florio	      
     DATE:   10/06/2005 
  SUBJECT:   Congressional oversight				 
	     Corporate mergers					 
	     Federal law					 
	     Foreign corporations				 
	     Foreign investments in US				 
	     Foreign policies					 
	     Homeland security					 
	     International economic relations			 
	     National policies					 

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GAO-06-135T

United States Government Accountability Office

GAO Testimony

Before the Senate Banking, Housing, and

                            Urban Affairs Committee

For Release on Delivery

Expected at 10:00 a.m. EDT DEFENSE TRADE

Thursday, October 6, 2005

Implementation of Exon-Florio

Statement of Katherine Schinasi, Managing Director Acquisition and
Sourcing Management

GAO-06-135T

October 6, 2005

DEFENSE TRADE

Implementation of Exon-Florio

[IMG]

What GAO Found

Several aspects of the process for implementing Exon-Florio could be
enhanced thereby strengthening the law's effectiveness. First, in light of
differing views among Committee members about the scope of
Exon-Florio-specifically, what defines a threat to national security, we
have suggested that Congress should consider amending Exon-Florio to more
clearly emphasize the factors that should be considered in determining
potential harm to national security.

Second, to provide additional time for analyzing transactions when
necessary, while avoiding the perceived negative connotation of
investigation on foreign investment in the United States we have suggested
that the Congress eliminate the distinction between the 30-day review and
the 45-day investigation and make the entire 75-day period available for
review.

Third, the Committee's current approach to provide additional time for
analysis or to resolve concerns while avoiding the potential negative
impacts of an investigation on foreign investment in the United Stated is
to encourage companies to withdraw their notifications of proposed or
completed acquisitions and refile them at a later date. Since 1997,
companies involved in 18 acquisitions have been allowed to withdraw their
notification to refile at a later time. The new filing is considered a new
case and restarts the 30-day clock. While withdrawing and refiling
provides additional time while minimizing the risk of chilling foreign
investment, withdrawal may also heighten the risk to national security in
transactions where there are concerns and the acquisition has been
completed or is likely to be completed during the withdrawal period. We
are therefore suggesting that the Congress consider requiring the
Committee Chair to (1) establish interim protections where specific
concerns have been raised, (2) specify time frames for refiling, and (3)
establish a process for tracking any actions being taken during the
withdrawal period.

Finally, to provide more transparency and facilitate congressional
oversight, we are suggesting that the Congress may want to revisit the
criterion for reporting circumstances surrounding cases to the Congress.
Currently, the criterion is a presidential decision. However, there have
only been two such decisions since 1997 and thus only two reports to
Congress.

                 United States Government Accountability Office

Mr. Chairman and Members of the Committee:

I am pleased to be here today to discuss the implementation of
Exon-Florio-an amendment to the Defense Production Act of 19501 that
authorizes the President to suspend or prohibit foreign acquisitions,
mergers, or takeovers2 of U.S. companies that pose a threat to national
security. As such, Exon-Florio is meant to serve as a safety net when laws
other than the International Emergency Economic Powers Act3 may be
ineffective in protecting national security. As you know, implementing
Exon-Florio can pose a significant challenge for the federal government
because of the potential for conflict with the long-standing U.S. open
investment policy. This policy recognizes the economic benefits associated
with foreign investments. Accordingly, foreign investors are to be treated
no differently than domestic investors.

The Committee on Foreign Investment in the United States, originally
established in 1975 to monitor foreign investments, has been delegated
responsibility for investigating foreign acquisitions when necessary.
According to the regulations, after a company voluntarily files a notice
of a pending or completed acquisition by a foreign concern, the Committee
conducts a 30-day review to determine whether there are any national
security concerns. If the Committee is unable to complete its review
within 30 days, the Committee may either allow the companies to withdraw
the notification or initiate a 45-day investigation. At the completion of
the investigation, the Committee submits a report to the President,
including a recommendation for action. The Committee currently has 12
members: the Department of the Treasury, which serves as Chair; the
Departments of Commerce, Defense, Homeland Security, Justice, and State;
and six offices in the Executive Office of the President.4 Other agencies
may be called on when their particular expertise is needed.

1 50 U.S.C. app. S: 2170.

2 In the remainder of this statement, acquisitions, mergers, and takeovers
are referred to as acquisitions.

3 The International Emergency Economic Powers Act gives the President
broad powers to deal with any "unusual and extraordinary threat" to the
national security, foreign policy, or economy of the United States (50
U.S.C. S:S: 1701-1706). To exercise this authority, however, the President
must declare a national emergency to deal with any such threat. Under this
legislation, the President has the authority to investigate, regulate,
and, if necessary, block any foreign interest's acquisition of U.S.
companies (50 U.S.C. S: 1702(a) (1) (B)).

4 See appendix I for information on Committee members.

The Department of Homeland Security was the most recently added member,
created as a result of the terrorist attacks of September 11th and the
recognition of the new security environment in which we exist.

Over the past decade, GAO has conducted several reviews of the Committee's
actions and has found areas where improvements should be made. For
example, in September 2002, we reported that member agencies could improve
the agreements they negotiated with companies under Exon-Florio to
mitigate national security concerns.5 While our recent work indicates that
member agencies have begun to take action to respond to some of our
recommendations, concerns remain about the extent to which the Committee's
implementation of Exon-Florio has provided the safety net envisioned by
the law. My comments today will focus on the process the Committee follows
in conducting its reviews, concerns about the process, and suggestions we
have made in our report on these issues.6 It should be noted that because
the law provides for confidentiality of information filed under
Exon-Florio, our ability to discuss certain details of cases we examined
is limited.

In summary, several aspects of the Committee's process for implementing
Exon-Florio could be enhanced thereby strengthening the law's
effectiveness. First, in light of differing views among Committee members
about the scope of Exon-Florio-specifically, what defines a threat to
national security, we have suggested that Congress should consider
amending Exon-Florio to more clearly emphasize the factors that should be
considered in determining potential harm to national security.

Second, to provide additional time for analyzing transactions when
necessary, while avoiding the perceived negative connotation of
investigation on foreign investment in the United States we have suggested
that the Congress eliminate the distinction between the 30-day review and
the 45-day investigation and make the entire 75-day period available for
review.

Third, the Committee's current approach to provide additional time for
analysis or to resolve concerns while avoiding the potential negative

5 GAO, Defense Trade: Mitigating National Security Concerns under
Exon-Florio Could be Improved, GAO-02-736 (Washington, D.C.: Sept. 12,
2002).

6 GAO, Defense Trade: Enhancements to the Implementation of Exon-Florio
Could Strengthen the Law's Effectiveness, GAO-05-686 (Washington, D.C.:
Sept. 28, 2005).

impacts of an investigation on foreign investment in the United Stated is
to encourage companies to withdraw their notifications of proposed or
completed acquisitions and refile them at a later date. Since 1997,
companies involved in 18 acquisitions have been allowed to withdraw their
notification to refile at a later time. The new filing is considered a new
case and restarts the 30-day clock. While withdrawing and refiling
provides additional time while minimizing the risk of chilling foreign
investment, withdrawal may also heighten the risk to national security in
transactions where there are concerns and the acquisition has been
completed or is likely to be completed during the withdrawal period. We
are therefore suggesting that the Congress consider requiring the
Committee Chair to (1) establish interim protections where specific
concerns have been raised, (2) specify time frames for refiling, and (3)
establish a process for tracking any actions being taken during the
withdrawal period.

Finally, to provide more transparency and facilitate congressional
oversight, we are suggesting that the Congress may want to revisit the
criterion for reporting circumstances surrounding cases to the Congress.
Currently, the criterion is a presidential decision. However, there have
only been two such decisions since 1997 and thus only two reports to
Congress.7

The Exon-Florio amendment to the Defense Production Act, enacted in 1988,
authorized the President to investigate the impact of foreign acquisitions
of U.S. companies on national security and to suspend or prohibit
acquisitions that might threaten national security. The President
delegated the investigative authority to the Committee on Foreign
Investment in the United States, an interagency group established in 1975
to monitor and coordinate U.S. policy on foreign investment in the United

8

States.

In 1991, the Treasury Department, as chair of the Committee, issued
regulations to implement Exon-Florio. The law and regulations establish a

7 See Appendix II for a number of cases reviewed by the Committee between
fiscal years 1997 and 2004 and the disposition of these cases.

8 Executive Order 11858 (May 7, 1975), as amended by Executive Order 12188
(Jan. 2, 1980), Executive Order 12661 (Dec. 27, 1988), Executive Order
12860 (Sept. 3, 1993), and Executive Order 13286 (Feb. 28, 2003).

Background

four-step process for reviewing foreign acquisitions of U.S. companies:
(1) voluntary notice by the companies;9 (2) a 30-day review to determine
whether the acquisition could pose a threat to national security; (3) a
45day investigation to determine whether those concerns require a
recommendation to the President for possible action; and (4) a
presidential decision to permit, suspend, or prohibit the acquisition. In
most cases, the Committee completes its review within the initial 30 days
because there are no national security concerns or concerns have been
addressed, or the companies and the government agree on measures to
mitigate identified security concerns. In cases where the Committee is
unable to complete its review within 30 days, the Committee may initiate a
45-day investigation or allow companies to withdraw their notifications.
The Committee generally grants requests to withdraw. When the Committee
concludes a 45-day investigation, it is required to submit a report to the
President containing recommendations. If Committee members cannot agree on
a recommendation, the regulations require that the report to the President
include the differing views of all Committee members.10 The President has
15 days to decide whether to prohibit or suspend the proposed acquisition,
order divestiture of a completed acquisition, or take no action.11

While neither the statute nor the implementing regulation defines
"national security," the statute provides the following factors to be
considered in determining a threat to national security:

o  	Domestic production needed for projected national defense
requirements.

o  	The capability and capacity of domestic industries to meet national
defense requirements, including the availability of human resources,
products, technology, materials, and other supplies and services.

9 Notification is not mandatory. However, any member agency is authorized
to submit a notification of an acquisition if the companies have not done
so. To date, no agency has submitted a notification of an acquisition.
Instead, member agencies have informed Treasury of acquisitions that may
be subject to Exon-Florio, and Treasury has contacted the companies to
encourage them to officially notify the Committee of the acquisition to
begin a review.

10 31 C.F.R. S: 800.504(b).

11 In 1990, the President ordered a Chinese aerospace company to divest
its ownership of a U.S. aircraft parts manufacturer. To date, this is the
only divestiture the President has ordered.

Differing Views of What Defines A National Security Threat and When to
Initiate an Investigation May Weaken Exon-Florio's Effectiveness

o  	The control of domestic industries and commercial activity by foreign
citizens as it affects the capability and capacity of the United States to
meet national security requirements.

o  	The potential effects of the proposed or pending transaction on sales
of military goods, equipment, or technology to any country identified
under applicable law as (a) supporting terrorism or (b) a country of
concern for missile proliferation or the proliferation of chemical and
biological weapons.

o  	The potential effects of the proposed or pending transaction on U.S.
international technological leadership in areas affecting national
security.

Lack of agreement among Committee members on what defines a threat to
national security and what criteria should be used to initiate an
investigation may be limiting the Committee's analyses of proposed and
completed foreign acquisitions. From 1997 through 2004, the Committee
received a total of 470 notices of proposed or completed acquisitions,12
yet it initiated only 8 investigations.

Some Committee member agencies, including Treasury, apply a more
traditional and narrow definition of what constitutes a threat to national
security-that is, (1) the U.S. company possesses export-controlled
technologies or items; (2) the company has classified contracts and
critical technologies; or (3) there is specific derogatory intelligence on
the foreign company. Other members, including the departments of Defense
and Justice, argue that acquisitions should be analyzed in broader terms.
According to officials from these departments, vulnerabilities can result
from foreign control of critical infrastructure, such as control of or
access to information traveling on networks. Vulnerabilities can also
result from foreign control of critical inputs to defense systems or a
decrease in the number of innovative small businesses researching and
developing new defense-related technologies.

While these vulnerabilities may not pose an immediate threat to national
security, they may create the potential for longer term harm to U.S.
national security interests by reducing U.S. technological leadership in

12 Nineteen of these notices were refilings.

defense systems. For example, in reviewing a 2001 acquisition of a U.S.
company, the departments of Defense and Commerce raised several concerns
about foreign ownership of sensitive but unclassified technology,
including the possibility of this sensitive technology being transferred
to countries of concern or losing U.S. government access to the
technology. However, Treasury argued that these concerns were not national
security concerns because they did not involve classified contracts, the
foreign company's country of origin was a U.S. ally, or there was no
specific negative intelligence about the company's actions in the United
States.

In one proposed acquisition that we reviewed, disagreement over the
definition of national security resulted in an enforcement provision being
removed from an agreement between the foreign company and the Departments
of Defense and Homeland Security. Defense had raised concerns about the
security of its supply of specialized integrated circuits, which are used
in a variety of defense technologies that the Defense Science Board had
identified as essential to our national defense- technologies found in
unmanned aerial vehicles, the Joint Tactical Radio System, and
cryptography and other communications protection devices. However,
Treasury and other Committee members argued that the security of supply
issue was an industrial policy concern and, therefore, was outside the
scope of Exon-Florio's authority. As a result of removing the provision,
the President's authority to require divestiture under Exon-Florio has
been eliminated as a remedy in the event of noncompliance.13

Committee members also disagree on the criteria that should be applied to
determine whether a proposed or completed acquisition should be
investigated. While Exon-Florio provides that the "President or the
President's designee may make an investigation to determine the effects on
national security" of acquisitions that could result in foreign control of
a U.S. company, it does not provide specific guidance for the appropriate
criteria for initiating an investigation of an acquisition.14 Currently,
Treasury, as Committee Chair, applies essentially the same criteria
established in the law for the President to suspend or prohibit a

13 The regulations provide that the Committee may reopen its review or
investigation and revise its recommendation to the President only if it
determines that the companies omitted or provided false or misleading
information (31 C.F.R. S: 800.601(e)).

14 50 U.S.C. App. S: 2170(a). Under the statute, investigations are
mandatory in those cases in which the acquiring company is "controlled by
or acting on behalf of a foreign government" and the acquisition could
result in control of the U.S. company and could affect the national
security of the United States (50 U.S.C. App. S: 2170(b)).

Allowing Withdrawal of Notifications to Avoid Investigations While
Providing Additional Time May Leave National Security Concerns Unresolved

transaction, or order divestiture: (1) there is credible evidence that the
foreign controlling interest may take action to threaten national security
and (2) no laws other than the International Emergency Economic Powers Act
are appropriate or adequate to protect national security.15 However, the
Defense, Justice, and Homeland Security departments have argued that
applying these criteria at this point in the process is inappropriate
because the purpose of an investigation is to determine whether or not a
credible threat exists. Notes from a policy-level discussion of one
particular case further corroborated these differing views.

Committee guidelines require member agencies to inform the Committee of
national security concerns by the 23rd day of a 30-day review-further
compressing the limited time allowed by legislation to determine whether a
proposed or completed foreign acquisition poses a threat to national
security. According to one Treasury official, the information is needed a
week early to meet the legislated 30-day requirement. While most reviews
are completed in the legislatively required 30 days, some Committee
members have found that completing a review within such short time frames
can be difficult-particularly in complex cases. One Defense official said
that without advance notice of the acquisition, time frames are too short
to complete analyses and provide input for the Defense Department's
position. Another official said that to meet the 23-day deadline, analysts
have only 3 to 10 days to analyze the acquisition. In one instance,
Homeland Security was unable to provide input within the 23-day time
frame.

If a review cannot be completed within 30 days and more time is needed to
determine whether a problem exists or identify actions that would mitigate
concerns, the Committee can initiate a 45-day investigation of the
acquisition or allow companies to withdraw their notifications and refile
at a later date.16 According to Treasury officials, the Committee's
interest is to ensure that the implementation of Exon-Florio does not
undermine U.S. open investment policy. Concerned that public knowledge of
investigations could devalue companies' stock, erode confidence of foreign
investors, and ultimately chill foreign investment in the United

15 50 U.S.C. app. S: 2170(e).

16 Exon-Florio's implementing regulations permit companies to request to
withdraw notifications at any time up to a presidential decision. After
the Committee approves a withdrawal, any subsequent refiling is considered
a new, voluntary notice.

States, the Committee has generally allowed and often encouraged companies
to withdraw their notifications rather than initiate an investigation.

While an acquisition is pending, companies that have withdrawn their
notification have an incentive to resolve any outstanding issues and
refile as soon as possible. However, if an acquisition has been concluded,
there is less incentive to resolve issues and refile, extending the time
during which any concerns remain unresolved. Between 1997 and 2004,
companies involved in 18 acquisitions have withdrawn their notification
and refiled 19 times. In two cases, the companies had already concluded
the acquisition and did not refile until 9 months to 1 year. Consequently,
the concerns raised by Defense and Commerce about potential export control
issues in these cases remained unresolved for as much as a year- further
increasing the risk that a foreign acquisition of a U.S. company would
pose a threat to national security.

We identified two cases in which companies that had concluded an
acquisition before filing with the Committee withdrew their
notification.17 In each case, the company has yet to refile. In one case,
the company filed with the Committee more than a year after completing the
acquisition. The Committee allowed it to withdraw the notification to
provide more time to answer the Committee's questions and provide
assurances concerning export control matters. The company refiled, and was
permitted to withdraw a second time because there were still unresolved
issues. Four years have passed since the second withdrawal. In the second
case, the company-which filed with the Committee more than 6 months after
completing its acquisition-was also allowed to withdraw its notification.
That was more than 2 years ago.

In enacting Exon-Florio, the Congress, while recognizing the need for
confidentiality, indicated a desire for insight into the process by
requiring the President to report to the Congress on any transaction that
the President prohibited. In response to concerns about the lack of
transparency in the Committee's process, the Congress passed the Byrd
Amendment to Exon-Florio in 1992, requiring a report to the Congress if
the President makes any decision regarding a proposed foreign

17 In one of these cases, as discussed above, the company had previously
withdrawn and refiled more than a year later.

Lack of Reporting Contributes to the Opaqueness of the Committee's Process

acquisition. In 1992, another amendment also directed the President to
report every 4 years on whether there is credible evidence of a
coordinated strategy by one or more countries to acquire U.S. companies
involved in research, development, or production of critical technologies
for which the United States is a leading producer, and whether there are
industrial espionage activities directed or assisted by foreign
governments against private U.S. companies aimed at obtaining commercial
secrets related to critical technologies.

While the Byrd Amendment expanded required reporting on Committee actions,
few reports have been submitted to the Congress because withdrawing and
refiling notices to restart the clock limits the number of cases that
result in a presidential decision. Since 1997, only two cases- both
involving telecommunications systems-resulted in a presidential decision
and a subsequent report to the Congress. Infrequent reporting of Committee
deliberations on specific cases provides little insight into the
Committee's process to identify concerns raised during investigations and
determine the extent to which the Committee has reached consensus on a
case. Further, despite the 1992 requirement for a report on foreign
acquisition strategies every 4 years, there has been only one report-in
1994.

In conclusion, in recognition of the benefits of open investment,
Exon-Florio comes into play only as a last resort. However, since that is
its role, effective application in support of recognizing and mitigating
national security risks remains critical. While Exon-Florio provides the
Committee on Foreign Investment in the United States the latitude to
address new emerging threats, the more traditional interpretation of what
constitutes a threat to national security fails to fully consider the
factors currently embodied in the law. Further, the practical requirement
to complete reviews within 23 days to meet the 30-day legislative
requirement, along with the reluctance to proceed to an investigation,
limits agencies' abilities to complete in-depth analyses. However, the
alternative-allowing companies to withdraw and refile their
notifications-increases the risk that the Committee, and the Congress,
will lose visibility over foreign acquisitions of U.S. companies.

Our report lays out several matters for congressional consideration to (1)
help resolve the differing views as to the extent of coverage of
Exon-Florio, (2) address the need for additional time, and (3) increase
insight and oversight of the process. Further, we are suggesting that,
when withdrawal is allowed for a transaction that has been completed, the
Committee establish interim protections where specific concerns have

Scope and Methodology

been raised, specific time frames for refiling, and a process for tracking
any actions being taken during a withdrawal period.

Mr. Chairman, this concludes my prepared statement. I will be happy to
answer any questions you or other Members of the Committee may have.

-----

For information about this testimony, please contact Katherine V.
Schinasi, Managing Director, Acquisition and Sourcing Management, at (202)
512-4841 or [email protected]. Other individuals making key contributions
to this product include Thomas J. Denomme, Allison Bawden, Gregory K.
Harmon, Paula J. Haurilesko, John Van Schaik, Karen Sloan, and Michael
Zola.

Our understanding of the Committee on Foreign Investment in the United
States' process is based on our current work and builds on our review of
the process and our discussions with agency officials for our 2002 report.
For our current review, and to expand our understanding of the Committee's
process for reviewing foreign acquisitions of U.S. companies, we met with
officials from the Department of Commerce, the Department of Defense, the
Department of Homeland Security, the Department of Justice, and the
Department of the Treasury. For prior reviews we also collected data from
and discussed the issues with representatives of the Department of State,
the Council of Economic Advisors, the Office of Science and Technology,
and the U.S. Trade Representative. Further, we conducted case studies of
nine acquisitions that were filed with the Committee between June 28,
1995, and December 31, 2004. These case studies included reviewing files
containing company submissions, correspondence between the Committee and
the companies' representatives, email traffic between member agencies, and
minutes of policy-level meetings attended by at various times all 12
Committee members.

We selected acquisitions based on recommendations by Committee member
agencies and the following criteria: (1) the Committee permitted the
companies to withdraw the notification; (2) the Committee or member
agencies concluded agreements to mitigate national security concerns; (3)
the foreign company had been involved in a prior acquisition notified to
the Committee; or (4) GAO had reviewed the acquisition for its 2002
report. We did not attempt to validate the conclusions reached by the
Committee on any of the cases we reviewed. We also discussed our draft

report from our current review with officials from the Department of State
and the U.S. Trade Representative's office to obtain their views on our
findings.

To determine whether the weaknesses in provisions to assist agencies in
monitoring agreements that GAO had identified in its 2002 report had been
addressed, we analyzed agreements concluded under the Committee's
authority between 2003 and 2005. We conducted our review from April 2004
through July 2005 in accordance with generally accepted government
auditing standards.

Appendix I: Agencies Represented on the Committee on Foreign Investment in the
United States

Agencies Represented Year Added Lead Office Mission

                             Executive Departments

Department of the Treasury 1975 Office of International Investment:        
            (Chair)                Coordinates policies toward foreign        
                                   investments in the United States and U.S.  
                                              investments abroad.             
                              1975 International Trade Administration:        
     Department of Commerce        Coordinates issues concerning trade        
                                          promotion, international commercial 
                                         policy, market access, and trade law 
                                                  enforcement.                

Department of Defense 1975	Defense Technology Security Administration:
Administers the development and implementation of Defense technology
security policies on international transfers of defense-related goods,
services, and technologies.

    Department of State  1975 Bureau of Economic and Business Affairs:        
                              Formulates and implements                       
                                policy regarding foreign economic matters,    
                                            including trade and               
                                  international finance and development.      
                         1988      Criminal Division: Develops, enforces, and 
Department of Justice                        supervises the application of 
                                all federal criminal laws, except for those   
                                         assigned to other Justice            
                                           Department divisions.              

Department of Homeland Security 2003	Information Analysis and
Infrastructure Protection: Identifies and assesses current and future
threats to the homeland, maps those threats against vulnerabilities,
issues warnings, and takes preventative and protective action.

                       Executive Office of the President

Council of Economic Advisers 1980	Performs analyses and appraisals of the
national economy for the purpose of providing policy recommendations to
the President.

Office of the United States Trade 1980 Directs all trade negotiations of
and formulates trade policy for the United Representative

                                    States.

    Office of Management and  1988   Evaluates, formulates, and coordinates   
             Budget                        management procedures and          
                                          program objectives within and among 
                                            federal departments and agencies, 
                                   and controls administration of the federal 
                                                    budget.                   
National Economic Council  1993     Coordinates the economic policy-making 
                                                process and provides economic 
                                        policy advice to the President.       
                              1993 Advises and assists the President in       
National Security Council       integrating all aspects of national        
                                    security policy as it affects the United  
                                                    States.                   
     Office of Science and    1993    Provides scientific, engineering and    
           Technology                    technological analyses for the       
                                   President for federal policies, plans, and 
             Policy                                programs.                  

                             Source: GAO analysis.

Appendix II: Notifications to the Committee on Foreign Investment in the United
States and Actions Taken, 1997 through 2004

                                                         Notices 
                                                     withdrawn   Presidential 
                                                       after     
Year  Notifications Acquisitions Investigations investigation    decisions 
                            a                    b     begun     
1997             62           60              0             0 
1998             65           62              2             2 
1999             79           76              0             0 
2000             72           71              1             0 
2001             55           51              1             1 
2002             43           42              0             0 
2003             41           39              2             1 
2004             53           50              2             2 
Total           470          451              8             6           2c 

Source: Department of the Treasury.

aAcquisitions that were withdrawn and refiled are shown in the year of
initial notification.

bInvestigations are shown in the year of their notification.

cIn both cases the President took no action, thereby allowing the
transaction, and sent a report to Congress.

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