New Treasury program limits foreign investment in U.S. technology
The Treasury Department on Wednesday said it would soon begin imposing new limits on foreign investment in U.S. technology, giving President Trump new powers in his trade battle with China.
The restrictions, which go into effect on Nov. 10, are part of a pilot program authorized by the Foreign Investment Risk Review Modernization Act, a law passed with bipartisan support earlier this year.
It aims to give the government more power to block foreign, non-controlling investments in “critical technologies” that are considered nonpublic, technical information. This would include investments in companies involved in aircraft development and computer manufacturing, as well as chemical and weapons systems.
The new limitations could be interpreted broadly, as they also apply to battery manufacturing and wireless equipment.
The U.S. government has long had the power to block foreign investments in certain American companies if it deemed the investments could pose a national security threat, but the new powers would expand the government’s reach to minority, non-controlling stakes.
The new rules don’t prohibit foreign investments in U.S. companies, but they require investors to notify the government that they are seeking to take a non-controlling stake, giving the Treasury Department the opportunity to review any deal. Failing to notify the government could lead to a fine, Treasury said.
Democrats and Republicans in Congress, as well as Trump, have alleged the Chinese government uses Chinese entities to seek footholds in U.S. technology through investments and other partnerships, and the pilot program could put stricter boundaries around future deals.
The program is not “country specific,” the Treasury Department said, and would not only apply to China.
The Treasury Department is expected to launch other pilot programs as it moves to fully implement the law, though all the programs are slated to become permanent by 2020.
Trump has launched a series of economic attacks at Beijing this year, arguing that major changes need to be made to the trade relationship between the two countries. He has imposed tariffs on $250 billion in Chinese imports and threatened to go even further.
The new investment restrictions were seen as a compromise by some lawmakers, who believed Trump wanted to try to cut off all access to the United States from Chinese investors. The White House and Chinese leaders have had off-and-on talks about resolving differences, but those efforts have not led to an agreement.