Fri, Oct 12, 2018 - Page 10 News List

Treasury tightens rules for foreign investment in US

ADDRESSING RISKS:The regulations, which go into effect on Nov. 10, cover deals that would give overseas investors access to critical technology in 27 industries

AP, WASHINGTON

The US Department of the Treasury on Wednesday issued new rules on foreign investments into US companies that are to give the government more power to block foreign transactions on national security grounds.

The rules, which represent the latest escalation in an intensifying economic conflict between the US and China, will implement a program for tougher reviews of foreign acquisitions that the US Congress approved this summer.

The regulations are to require foreign investors to alert an interagency committee led by the Treasury to all deals that would give the foreign investors access to critical technology covering 27 industries, including semiconductors, telecommunications and defense.

US Secretary of the Treasury Steven Mnuchin said the new interim rules would “address specific risks to US critical technology,” while also giving officials critical information they can use in developing the final rules.

The law the Congress passed in August did not single out China, but it was clear lawmakers and US President Donald Trump’s administration had Beijing in mind.

The administration has accused China of using predatory tactics to steal US technology.

The administration has imposed penalty tariffs on about US$250 billion of Chinese imports, triggering retaliation by China, as a trade war between the world’s two biggest economies has widened.

As part of the trade battle, Trump had initially ordered the Treasury Department to draft investment restrictions aimed specifically at China. However, in June, Trump decided to back Congress’ effort to tighten existing investment restrictions by increasing the powers of the Committee on Foreign Investment in the United States.

This Treasury-led inter-agency panel was given the power to review investments that grant foreigners access to a US company’s high-tech secrets.

Before the law was strengthened, the committee could only review foreign investments that were big enough to give the foreign group control of the US company.

The new rules, published on Wednesday in the Federal Register, are to go into effect on Nov. 10 and will implement a pilot program covering an initial 27 industries.

Officials are to use the experience gained from these reviews to craft expanded regulations that would fully implement the new law.

The legislation received strong bipartisan support in Congress, with lawmakers from both parties expressing concerns about the need to prevent China from obtaining US technology by buying or investing in US companies.

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