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Sen. John Cornyn (R-Texas) is circulating updated legislation to expand the U.S. process for vetting foreign investments, industry sources with knowledge of the matter told Bloomberg Law.
The Information Technology Industry Council (ITIC), which represents tech giants such as Apple Inc., Google Inc., and IBM Corp., welcomed the changes and is reviewing them.
The Committee on Foreign Investment in the United States (CFIUS), a multiagency panel headed by the Treasury Department, is responsible for assessing the national security risks of foreign transactions. Cornyn said the bill ( S. 2098) would address gaps in CFIUS’s vetting that China is exploiting.
Some industry representatives, including ITIC, worry that routine transactions, such as computer hardware sales or software licensing, might be harmed. New clarifications in the bill are intended to address that concern.
A revised draft of the bill obtained by Bloomberg Law states that “ordinary” business transactions — such as the sale or licensing of intellectual property to foreign customers — wouldn’t be covered.
The new version would also exempt the transfer of intellectual property from U.S. companies to their overseas affiliates.
The bill sponsors, whose focus is on national security, are particularly concerned that China may be using foreign investments to acquire U.S. technologies that can bolster its military capabilities.
The legislation, dubbed the Foreign Investment Risk Review Modernization Act (FIRRMA), is bipartisan and has support from the administration.
ITIC said the proposed changes are a welcome step forward.
“The recent FIRRMA updates contain several helpful clarifications that could help provide additional certainty to the CFIUS process while strengthening U.S. national security,” Josh Kallmer, the group’s senior vice president of global policy, said in an e-mailed statement. “We will closely review these modifications and continue to work in a constructive manner with all stakeholders.”
A Cornyn spokesman didn’t immediately respond to a request for comment.
Rep. Robert Pittenger (R-N.C.), the lead House sponsor of the legislation ( H.R. 4311), has said he’s open to changes that would clarify the bill’s intent and tighten some of the language but will “never” soften the legislation to appease companies.
— With assistance from Len Bracken.
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