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Focus on Regulation

CFIUS Reform Turns to Food Security

Congressional efforts to reform the Committee on Foreign Investment in the United States (CFIUS), a U.S. Government interagency committee that conducts national security reviews, continue apace. This week saw the introduction of bipartisan legislation in the U.S. Senate that would (i) give federal agriculture and food officials permanent representation on CFIUS and (ii) amend the statute to allow the Committee to consider agriculture and food-related criteria when reviewing transactions that could result in control of a U.S. business by a foreign person. Under the current statute, the Committee has the discretion to consider the national security impact of foreign investments on U.S. food and agricultural systems, but the proposed legislation would amend the statute to make food and agricultural criteria explicit.

According to a press release issued by Senators Chuck Grassley (R-IA), the Chairman of the Judiciary Committee, and Debbie Stabenow (D-MI), the Ranking Member of the Agriculture, Nutrition, and Forestry Committee, the Food Security is National Security Act of 2017 would enlarge the Committee’s permanent members to include the Secretary of Agriculture and the Secretary of Health and Human Services (who oversees the U.S. Food and Drug Administration). The legislation also adds new criteria to the CFIUS review process to ensure that proposed transactions are reviewed specifically for their potential impact on American food and agricultural systems, including availability of, access to, or safety and quality of food. Senator Stabenow said that the bill would “safeguard America’s food security, food safety, biosecurity, and the highly competitive U.S. farm sector as a whole.”

Backed by two of the largest farm organizations, the Food Security is National Security Act should nonetheless be viewed in a broader context. There is bipartisan interest in Congress in restricting foreign investment, particularly from China, into the United States. Simultaneously, the Trump Administration, backed by Members of Congress with constituent concerns, is seeking to promote its “America first” policy of strengthening the American manufacturing sector. As we previously commented, the prospects for statutory changes to CFIUS reviews appear greater now than at any time since the underlying statute was overhauled nearly a decade ago.

Meanwhile, at the urging of Members of Congress, the Government Accountability Office (GAO) is currently examining whether CFIUS statutory and administrative authorities have kept pace with the rapidly evolving national security landscape. Congressman Robert Pittenger (R-NC) has been among the most vocal proponents of expanding the scope of the criteria that the Committee uses in considering whether to approve transactions resulting in foreign control of a U.S. entity on national security grounds. If the GAO finds that the Committee has insufficient authorities with which to examine transactions, it could well bolster the case of reformists.