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US Treasury official vows ''sensible'' reform of foreign investment review

WASHINGTON, DC - 03/27/06 - When considering any changes to the foreign investment review process, Congress should do everything possible to avoid any step that could be perceived as isolationist or protectionist, says US Treasury Secretary John Snow. 

Speaking recently to a group of community bankers in the nation's capital, Snow criticized congressional interest in an automatic 45-day security investigation of any foreign investment that could affect "economic security." 

That idea, he asserted, is a "vague concept and would create uncertainty, which could chill [foreign] investment [in the US]." 

The investigation would be in addition to the usual, 30-day review by the public-sector Committee on Foreign Investment in the United States (CFIUS).

Snow chairs CFIUS, a multi-agency panel that recently signed off on a deal that would have allowed Dubai Ports World (DPW), a company owned by interests in the United Arab Emirates (UAE), to operate cargo terminals at several US seaports. 

The company, after intense US congressional criticism, announced March 9 it would divest the U.S. operations.

But many members of Congress are not satisfied as sponsors of legislation to block the DPW deal have said they would not drop their bills, despite the announced divestiture.
 
There have been other congressional proposals to move the responsibility for reviewing foreign investments from CFIUS to a new panel led by the Department of Homeland Security or to force CFIUS to notify congressional committees about ongoing reviews.

Under current law, notifying Congress is necessary only in very rare cases when an additional 45-day investigation is done and the final decision is sent to the president for action.

Snow said he would work with Capital Hill to discuss changes and updates to the review process but called for a "sensible outcome" that would be guided by both further integration of national security interests and a "welcoming stance towards investments in the United States."

He emphasized that foreign investment creates good jobs for Americans and helps open overseas markets to US businesses, adding that the US should avoid "steps in the name of national security that instead are isolationist." 
 
Snow said "automatic investigation of any investment that could affect economic security" - an idea some in Congress favor - is similar to what France calls its "economic patriotism" policy. 

Snow said that policy has kept Lake Success, New York-headquartered Pepsico Inc. from purchasing Danone, a French yogurt company.

"Clearly, economic isolationism is not the way to go, as it would threaten opportunity and prosperity for Americans, and billions of people all over the world," he said.

Snow said he would strive to uphold the independence of CFIUS reviews and protect sensitive information provided by companies and that he wanted to strengthen the president's authority to enforce CFIUS actions.
 
But, perhaps in a nod to his congressional critics, Snow said he would work to "strengthen scrutiny of CFIUS cases involving state-owned companies" and "expand notifications of decisions to Congress so that it can fulfill its important oversight responsibilities."

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