Scott Secures Provision Fighting Chinese Theft of Critical National Security Technologies and Intellectual Property

Washington, D.C. – In addition to securing big wins for South Carolina’s military instillations and the well-being of our nation’s troops in the 2019 National Defense Authorization Act (NDAA), U.S. Senator Tim Scott (R-SC) also introduced a provision that will help stop certain foreign investors from stealing sensitive national security materials from American companies. Scott secured the inclusion of the Foreign Investment Risk Review Modernization Act (FIRRMA) in the NDAA to modernize the procedures used by the Committee on Foreign Investment in the US (CFIUS), a government entity that reviews foreign investment in American companies for national security concerns.

“We must make sure sensitive national security technology and intellectual property are not being stolen by Chinese or any other nation’s investors in American companies,” Scott said. “Modernizing CFIUS will take a huge step forward in helping prevent these abuses. I want to thank my colleague Senator Cornyn for all his efforts on this issue, as well as my colleagues on the Armed Services Committee for their support.”

CFIUS procedures have not been updated in over a decade, and during that time, experts suggest that Chinese investors have learned to exploit gaps in the current system in an effort to bring sensitive national security-related technology and know-how back to China.

Specifically, the amendment would:

• Expand the jurisdiction of CFIUS to include certain minority-position investments, joint ventures, and real estate transactions near military bases and other sensitive locations.
• Add emerging technologies that could be essential for America to maintain our technological advantage to CFIUS’ definition of “critical technologies”.
• Allow CFIUS to exempt covered transactions if the investors are from countries that meet certain criteria, such as having a mutual investment security arrangement or being a U.S. treaty ally.
• Create “light filings” for certain types of transactions.
• Add new national security factors for CFIUS to consider in its analyses.

The amendment does not:

• Impose a ban on Chinese investment in the U.S.
• Cover all joint ventures with Chinese entities.
• Automatically block any transactions (it only makes certain transactions subject to review).
• Require CFIUS to consider investment reciprocity or economic security impacts in its analysis.