Tatman Savio Speaks with Hong Kong Trade Development Council on Impact of CFIUS Reform
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Akin Gump international trade partner Tatman Savio spoke with the Hong Kong Trade Development Council for a Q&A column titled “CFIUS Reform and its Likely Impact on Inward-Bound U.S. Investment.”
Savio began by discussing some of the main changes brought about by Committee on Foreign Investment in the United States (CFIUS) reform. She noted that the Foreign Investment Risk Review Modernization Act (FIRRMA), signed into law in August, “expands the scope of transactions potentially subject to CFIUS review to cover real estate transactions located near sensitive U.S. government locations and ports, even when they don’t result in foreign control of a U.S. business.” The new act also includes “non-controlling foreign investments in U.S. companies” and, in certain cases, “makes what has until now been a voluntary filing process a mandatory one.”
As a result of the new law, Savio said some of the immediate impacts will include “potentially more CFIUS filings, longer review timelines, and for the first time, penalties for failure to meet mandatory filing obligations.” In the long run, she noted that there is still the possibility of some protection of passive investments.
Other topics covered included:
- The types of investments that will be impacted the most: “CFIUS has expanded its jurisdiction to focus on certain non-controlling investments in U.S. businesses that produce, design, test, manufacture, fabricate or develop a ‘critical technology,’” said Savio. She then outlined what some of those businesses are.
- The economy or country that will most be impacted: The pilot program, Savio said, “applies to all foreigners and is not country-specific,” though the discussion about CFIUS has centered on China and China’s Made in China 2025 industrial policy, “which is focused on expanding its high-technology sectors and developing its advanced manufacturing base.”
- Tips for prospective Hong Kong or mainland Chinese investors to reduce possible adverse impacts: Among other things, Savio advised “not to view FIRRMA in isolation.” It is important, she said, “to understand it in relation to wider issues, including the broader Sino-U.S. trade dispute, and also a new export control reform law that passed at the same time as FIRRMA to control so-called ‘emerging’ and ‘foundational’ technologies.”
To read the full article, as published by the Hong Kong Trade Development Council, please click here.
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