U.S. GOVERNMENT PUBLISHING OFFICE

31–385 PDF WASHINGTON : 2018

EVALUATING CFIUS: 

ADMINISTRATION PERSPECTIVES 

HEARING 

BEFORE THE

SUBCOMMITTEE ON MONETARY 

POLICY AND TRADE 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

SECOND SESSION 

MARCH 15, 2018 

Printed for the use of the Committee on Financial Services 

Serial No. 115–80 

( 

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HOUSE COMMITTEE ON FINANCIAL SERVICES 

JEB HENSARLING, Texas, Chairman 

PATRICK T. MCHENRY, North Carolina, 

Vice Chairman 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

STEVE STIVERS, Ohio 

RANDY HULTGREN, Illinois 

DENNIS A. ROSS, Florida 

ROBERT PITTENGER, North Carolina 

ANN WAGNER, Missouri 

ANDY BARR, Kentucky 

KEITH J. ROTHFUS, Pennsylvania 

LUKE MESSER, Indiana 

SCOTT TIPTON, Colorado 

ROGER WILLIAMS, Texas 

BRUCE POLIQUIN, Maine 

MIA LOVE, Utah 

FRENCH HILL, Arkansas 

TOM EMMER, Minnesota 

LEE M. ZELDIN, New York 

DAVID A. TROTT, Michigan 

BARRY LOUDERMILK, Georgia 

ALEXANDER X. MOONEY, West Virginia 

THOMAS MACARTHUR, New Jersey 

WARREN DAVIDSON, Ohio 

TED BUDD, North Carolina 

DAVID KUSTOFF, Tennessee 

CLAUDIA TENNEY, New York 

TREY HOLLINGSWORTH, Indiana 

MAXINE WATERS, California, Ranking 

Member 

CAROLYN B. MALONEY, New York 

NYDIA M. VELA ́ ZQUEZ, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

MICHAEL E. CAPUANO, Massachusetts 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

GWEN MOORE, Wisconsin 

KEITH ELLISON, Minnesota 

ED PERLMUTTER, Colorado 

JAMES A. HIMES, Connecticut 

BILL FOSTER, Illinois 

DANIEL T. KILDEE, Michigan 

JOHN K. DELANEY, Maryland 

KYRSTEN SINEMA, Arizona 

JOYCE BEATTY, Ohio 

DENNY HECK, Washington 

JUAN VARGAS, California 

JOSH GOTTHEIMER, New Jersey 

VICENTE GONZALEZ, Texas 

CHARLIE CRIST, Florida 

RUBEN KIHUEN, Nevada 

SHANNON MCGAHN, Staff Director 

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SUBCOMMITTEE ON MONETARY POLICY AND TRADE

ANDY BARR, Kentucky, Chairman 

ROGER WILLIAMS, Texas, Vice Chairman 

FRANK D. LUCAS, Oklahoma 

BILL HUIZENGA, Michigan 

ROBERT PITTENGER, North Carolina 

MIA LOVE, Utah 

FRENCH HILL, Arkansas 

TOM EMMER, Minnesota 

ALEXANDER X. MOONEY, West Virginia 

WARREN DAVIDSON, Ohio 

CLAUDIA TENNEY, New York 

TREY HOLLINGSWORTH, Indiana 

GWEN MOORE, Wisconsin, Ranking Member 

GREGORY W. MEEKS, New York 

BILL FOSTER, Illinois 

BRAD SHERMAN, California 

AL GREEN, Texas 

DENNY HECK, Washington 

DANIEL T. KILDEE, Michigan 

JUAN VARGAS, California 

CHARLIE CRIST, Florida 

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C O N T E N T S 

Page 

Hearing held on: 

March 15, 2018 ................................................................................................. 1 

Appendix: 

March 15, 2018 ................................................................................................. 39 

WITNESSES 

THURSDAY, MARCH 15, 2018 

Ashooh, Hon. Richard E., Assistant Secretary for Export Administration, 

U.S. Department of Commerce ........................................................................... 7 

Chewning, Eric D., Deputy Assistant Secretary for Manufacturing and Industrial Base Policy, U.S. Department of Defense .................................................. 9 

Tarbert, Hon. Heath P., Assistant Secretary for International Markets and 

Investment Policy, U.S. Department of the Treasury ....................................... 5 

APPENDIX 

Prepared statements: 

Ashooh, Hon. Richard E. .................................................................................. 40 

Chewning, Eric D. ............................................................................................ 44 

Tarbert, Hon. Heath P. .................................................................................... 49 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Pittenger, Hon. Robert: 

Written statement of the Department of Justice (DOJ) ................................ 55 

Ashooh, Hon. Richard E.: 

Responses to questions for the record from Representative Emmer ............ 58 

Chewning, Eric D.: 

Responses to questions for the record from Representatives Emmer and 

Pittenger ........................................................................................................ 59 

Tarbert, Hon. Heath P.: 

Responses to questions for the record from Representatives Barr, Emmer, 

Pittenger, and Waters .................................................................................. 63 

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EVALUATING CFIUS: 

ADMINISTRATION PERSPECTIVES 

Thursday, March 15, 2018 

U.S. HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON MONETARY POLICY AND TRADE, COMMITTEE ON FINANCIAL SERVICES, Washington, D.C. 

The subcommittee met, pursuant to notice, at 10 a.m., in room 

2128 Rayburn House Office Building, Hon. Andy Barr [chairman of 

the subcommittee] presiding. 

Members present: Representatives Barr, Williams, Lucas, 

Huizenga, Pittenger, Hill, Emmer, Mooney, Davidson, Tenney, Hollingsworth, Hensarling (ex officio), Moore, Meeks, Foster, Sherman, 

Green, Heck, Vargas, and Crist. 

Also present: Representative Royce. 

Chairman BARR. The committee will come to order. Without objection, the Chair is authorized to declare a recess of the committee 

at any time and all members will have five legislative days within 

which to submit extraneous materials to the Chair for inclusion in 

the record. 

This hearing is entitled, ‘‘Evaluating CFIUS: Administration Perspectives.’’ I now recognize myself for 4 minutes to give an opening 

statement. 

Today’s hearing is the third time in this Congress that the subcommittee has publicly examined the Committee on Foreign Investment in the United States, or CFIUS. While our first two hearings 

brought together former CFIUS practitioners, industry representatives, and think tank experts, this morning we will be hearing from 

Trump Administration officials at three of CFIUS’s key member 

agencies. These witnesses will discuss the current state of CFIUS, 

its challenges, and those it is likely to face in the future. 

Our colleague, Representative Pittenger from North Carolina, 

along with the gentleman from Washington, Mr. Heck, have introduced legislation that seeks to update the CFIUS process. Everyone 

I have met with agrees with the goals of CFIUS reform. First, we 

must improve our security review process to ensure that bad actors 

do not get American technology or information that can be used 

against us; and second, make certain that the CFIUS process does 

not create disincentives for benign foreign direct investment (FDI) 

in the United States, killing jobs and much needed capital sources 

for national security advancements. 

There are different views on how to achieve these goals and our 

hearings are intended to show a path forward that will have broad 

bipartisan support in the same way this issue has always had in 

this committee. As we move forward in the legislative process, I 

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tional security is and what the real threats or vulnerabilities are 

and are not. 

The security of this country rests on a strong defense and an 

equally strong and vibrant economy, but our economy will not remain strong or innovative if we unnecessarily block access to it or 

try to shield it from a free and fair competition. Down that road 

eventually lies weakness. American workers and American businesses are the best in the world and can compete with anyone, anywhere, anytime if we remove both barriers to their creativity and 

regulations that stand in the way of progress. 

We are very well aware of the threat that the Chinese pose to 

the American people. In no way do we want important technologies 

or know-how, that could be used for military purposes, traded to 

foes under the justification that it is good for business. At the same 

time, we must also be keenly aware of the benefits that foreign direct investment can provide to the American people. For example, 

Toyota, a Japanese company, has its largest automotive manufacturing plant in the world located in my district in Georgetown, 

Kentucky. Thousands of direct and indirect jobs have been created 

by this investment. 

Our default position should always be that foreign direct investment is good for both our economy, our competitiveness, and our 

security as it contributes nearly $900 billion in value to our annual 

GDP and is responsible for 6.8 million high-paying American jobs. 

Overshadowing today’s debate is the recent use of Section 232 

authorities to invoke national security as a justification to impose 

steel and aluminum tariffs. As the response to these tariffs on Capitol Hill has made clear, there is significant disagreement over 

their wisdom and their connection to keeping America safe. The 

tariffs have reminded members that once authorities are delegated 

by Congress they are no longer under our control and may be used 

in unforeseen ways and with unintended consequences. 

I have personally heard from constituents who fear that closing 

ourselves to trade will invite retaliation from abroad, even from our 

allies, which can undermine rather than strengthen our security. 

We must keep this in mind as our discussion of CFIUS proceeds. 

Again I want to thank our witnesses in advance for their contributions to this important discussion on how we can properly balance 

the needs of our economy and our competitiveness with the imperatives of national security. 

With that, the Chair now recognizes the Ranking Member of the 

subcommittee, the gentlelady from Wisconsin, Gwen Moore, for 5 

minutes for an opening statement. 

Ms. MOORE. Thank you so much, Mr. Chairman, and as always 

I really look forward to benefiting from the wisdom of our expert 

witnesses here today. 

I really do want to start out by acknowledging the tremendous 

work effort that you, Mr. Chairman, have put into this, and others 

on this committee like Mr. Pittenger and Mr. Heck put into this 

legislation. We live in a world that is increasingly changing and requires us to continue to refine and enhance our regulations, especially this regulatory tool that has national security implications. 

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ity does see someplace for regulation and restraint in this everchanging environment. 

Situations have been presented where the current CFIUS regime 

seems deficient and I think we can easily reach a bipartisan consensus on many of these circumstances and expand CFIUS in ways 

that address holes while continuing to encourage foreign direct investment in the United States. I think where I may have some 

pause with some proposals, I think they have moved beyond the intent of CFIUS and require a larger conversation which will include 

a review of our export regimes and of course it will require a lot 

more staffing resources. 

Now all this can happen, but I don’t want to overlay competing 

regulatory regimes that are not rational and harmonious. I understand that the majority plans to hold a few more hearings on this 

important issue, so I think we have time to continue this discussion 

and drum out a product that we can all agree upon and address 

the concerns of members and stakeholders. I want to thank you 

again, our witnesses, and I want to yield the last 2 minutes to Mr. 

Heck. 

Mr. HECK. Ranking Member Moore, thank you very much. Chairman Barr, I appreciate your convening this hearing. I want to 

begin by thanking our witnesses. I appreciate not only your appearance today, but the important work you do in keeping us safe. 

I am proud to represent Joint Base Lewis-McChord which is the 

U.S. military’s premier West Coast power projection platform. For 

me and the community I represent national security is personal. If 

my friends, family, and neighbors must head into battle I want 

them to have every advantage possible. I want our capabilities to 

be strong enough, unique enough to be a deterrent to potential adversaries picking a fight in the first place. CFIUS is how we protect 

that technological edge. It is obscure but incredibly important. Let’s 

be clear, there are strategic competitors who want what we know. 

We have seen the DIUx report on Chinese technology transfer 

strategy and this committee unanimously recognized aggressive 

Chinese industrial policy as a significant challenge facing CFIUS 

during our budget view markups last week. 

I ask unanimous consent, Mr. Chair, to enter into the record two 

letters from CFIUS about the recently blocked Broadcom bid to buy 

Qualcomm which have already been released into the public domain. Our witnesses today are barred by law from discussing specific transactions in an unclassified setting, so I encourage my colleagues to read them. In my view, the letters make clear that 

Broadcom had taken repeated action in defiance of CFIUS interim 

orders to preserve the status quo while they reviewed the transaction including initiating steps to redomicile to the United States 

potentially causing CFIUS to lose jurisdiction. 

There are companies who are seeking to do an end run around 

the rules set in place to ensure foreign investment does not harm 

our national security. Now if we are in a race for the latest technology, I will be the first to say we are not going to win unless we 

run faster by investing in our knowledge and our infrastructure 

and do more to make sure that nobody in this country is left behind. I want the U.S. to remain a great place for foreign investment because we can’t accomplish those goals without it. 

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But I think it is also important to keep the other guys from 

cheating, and protecting ourselves against underhanded tricks. 

That is why we need a modernized, well-resourced CFIUS process. 

Congressman Pittenger, Senator Feinstein, Senator Cornyn, and I 

worked together on the bill to accomplish that—FIRRMA. Since we 

introduced that bill in November, we have been working closely 

with CFIUS to incorporate feedback into the bill to make it stronger and even more tightly focused on the national security gaps we 

need to address. 

The progress we have made is in large part thanks to the critical 

and constructive engagement of our witnesses today. While we are 

still working through some issues, principally resources, I look forward to addressing those and to your testimony today. Nobody 

knows CFIUS like you do and your knowledge will be invaluable 

as our committee moves forward on this issue. Thank you very 

much, Mr. Chairman. 

Chairman BARR. The gentleman’s time has expired and the 

Chair now recognizes the Vice Chair of the Subcommittee on Terrorism and Illicit Finance, the author of the legislation in question, 

the gentleman from North Carolina, Robert Pittenger, for 1 minute 

for an opening statement. 

Mr. PITTENGER. Thank you, Chairman Barr, for your leadership 

and calling this hearing. Thank you to the witnesses for being with 

us today. There are significant gaps in CFIUS’ ability to fulfill its 

responsibility to protect the U.S. from foreign investments that 

threaten our national security. Our adversaries, the Chinese Government in particular, are aware of CFIUS deficiencies and are actively exploiting them. 

Specifically, the Chinese Government has used weaponized foreign direct investment to evade our safeguards and review processes in order to acquire state-of-the-art, military-applicable technologies from U.S. firms. In recent years, we have seen a massive 

transfer of dual use technology from U.S. firms to Chinese entities 

with close ties to the Chinese Government. This technology and 

know-how has been instrumental in China’s military buildup and 

modernization efforts and has denigrated America’s military industrial base and alarmingly depleted our technological superiority. 

Mr. Chairman, this is a very serious problem that needs to be 

addressed with diligent haste. As I detailed in my op-ed for the 

Washington Journal published this morning, export controls alone 

are not capable of protecting the U.S. from harmful foreign investment. Last fall, I introduced bipartisan legislation called the Foreign Investment Risk Review and Modernization Act, which modernizes CFIUS’ process by addressing national security deficiencies 

in a measured and highly targeted manner. FIRRMA has been endorsed by the White House and is the product of nearly a year of 

outreach with close collaboration with Treasury, DOD, DOJ, ODNI, 

and DHS. 

Years of Chinese exploitation of CFIUS and outdated processes 

has been detrimental to U.S. national security. This is a serious 

problem that we must address now and my bill does that in a diligent and laser-focused manner. 

Thank you, Mr. Chairman. I yield back. 

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Chairman BARR. Thank you and the gentleman’s time is expired. 

Today we welcome the testimony of the Honorable Heath Tarbert, 

Assistant Secretary for International Markets and Investment Policy at the U.S. Department of Treasury. Dr. Tarbert oversees a diverse portfolio of issues in Treasury’s Office of International Affairs. He focuses on investment security, supporting the work of the 

Committee on Foreign Investment in the United States to promote 

U.S. investments while protecting national security. The Assistant 

Secretary earned his JD and SJD from the University of Pennsylvania and his Ph.D. in Philosophy from Oxford University. 

The Honorable Richard Ashooh, Assistant Secretary for Export 

Administration, U.S. Department of Commerce, in this role he is 

responsible for the U.S. dual use export control policy and also participates on the Committee on Foreign Investment in the United 

States. Prior to assuming his current role, he served as the Director of Economic Partnerships at the University System of New 

Hampshire, the Executive Director of the Warren Rudman Center 

at the University of New Hampshire School of Law, and was a Senior Executive in the aerospace industry working for both Lockheed 

Martin and BAE Systems. 

Mr. Eric Chewning, Deputy Assistant Secretary for Manufacturing and Industrial Base Policy (MIBP) U.S. Department of Defense, in this capacity he is the Principal Advisor to the Undersecretary of Defense for Acquisition and Sustainment for analyzing 

the capabilities, overall health, and policies concerning the industrial base on which the Department relies for current and future 

warfighting capabilities and requirements. MIBP is also responsible for developing the Department’s position on the business combinations and transactions, both foreign and domestic, that shape 

and affect national security. The Deputy Assistant Secretary is a 

U.S. Army veteran that served in Operation Iraqi Freedom and he 

has earned his MBA from the University of Virginia. 

Each of you will be recognized for 5 minutes to give an oral presentation of your testimony. Without objection, each of your written 

statements will be made part of the record. 

Assistant Secretary Heath Tarbert, you are now recognized for 5 

minutes. 

STATEMENT OF HON. HEATH TARBERT 

Mr. TARBERT. Chairman Barr, Vice Chairman Williams, Ranking 

Member Moore, and distinguished members of the subcommittee, 

thank you for the opportunity to testify in support of FIRRMA and 

about CFIUS more generally. I would also like to thank Representatives Pittenger and Heck for their bipartisan leadership on the 

bill. 

My top priority as Assistant Secretary is ensuring that CFIUS 

has the tools and resources it needs to perform its critical national 

security function. I believe FIRRMA, a bill introduced with broad 

bipartisan support, is designed to provide those tools and resources. 

FIRRMA will protect our national security and strengthen America’s longstanding open investment policy. 

The United States has always been a leading destination for investors. Alexander Hamilton argued foreign capital is precious to 

economic growth. Foreign investment provides immense benefits to 

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American workers and families such as job creation, innovation, 

and higher median incomes. At the same time, we know that foreign investment isn’t always benign. On the eve of America’s entry 

into World War I, concerned by German acquisitions in our chemical sector, Congress passed legislation empowering the President 

to block investments during national emergencies. 

During the Depression and World War II, cross-border capital 

flows fell dramatically. In the boom years of the 1950’s and 1960’s, 

investment in the U.S. was modest compared to outflows. During 

that time, foreign investment also posed little risk. Our main adversaries, the Soviet Union and its satellites, were communist 

countries economically isolated from us. 

But when the post-war trend changed in the 1970’s, CFIUS was 

born. The oil shock that made OPEC countries wealthy led to fears 

that petro dollars might be used to buy strategic U.S. assets. In 

1975, President Ford issued an Executive Order creating CFIUS to 

monitor foreign investments. Then, in 1988, a growing number of 

Japanese deals motivated Congress to pass the Exon-Florio Amendment. For the first time, the President could block a foreign acquisition without declaring a national emergency. For the next 20 

years, CFIUS pursued its mission without fanfare. 

But in the wake of the Dubai Ports controversy it became clear 

that CFIUS needed greater procedural rigor and accountability. In 

2007, some of you helped enact FINSA which formally established 

CFIUS and codified our current committee structure and process. 

Now we find ourselves at another historic inflection point. The foreign investment landscape has shifted more than at any point in 

CFIUS’ 40-year history. Nowhere is that shift more evident than 

in the caseload CFIUS now faces. The number of annual filings has 

grown within the last decade from an average of 95 or so, to nearly 

240 last year. 

But it is the complexity and not simply the volume that has 

placed the greatest demand on our resources. In 2007, about 4 percent of the cases went to the more resource-intensive investigation 

stage. In 2017, nearly 70 percent did. This added complexity arises 

from a number of factors—strategic investments by foreign governments, complex transaction structures, and globalized supply 

chains. Complexity also results from the evolving relationship between national security and commercial activity. Military capabilities are rapidly building on top of commercial innovations. What is 

more, the data-driven economy has created vulnerabilities never 

before seen. 

New risk require new tools. The Administration has endorsed 

FIRRMA because it embraces four pillars critical for CFIUS modernization. First, FIRRMA expands the scope of transactions potentially reviewable by CFIUS to include certain nonpassive investments, joint ventures, and real estate purchases. These changes lie 

at the very heart of CFIUS modernization. Right now we can’t review a host of transactions that present identical national security 

concerns to those we can examine. 

Second, FIRRMA allows CFIUS to refine its procedures to ensure 

the process is tailored, efficient, and effective. Only where existing 

authorities like export controls can’t resolve the risk will CFIUS 

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lar threats and incentivizes our allies to work with us to address 

those threats. 

Finally, FIRRMA acknowledges that CFIUS must be appropriately resourced. Since testifying in the Senate in January, I 

have been meeting regularly with the Members of Congress, the 

business community and other stakeholders to hear their views on 

the bill. While some have proposed changes, all agree on an essential point, Congress needs to pass CFIUS in one form or another. 

As a result of these meetings, we have been working on proposed 

technical amendments to address jurisdictional gaps while encouraging investment in our country. 

There is only one conclusion, CFIUS must be modernized. In 

doing so, we must preserve our longstanding open investment policy, we must also protect national security. These twin aims transcend party lines and they demand urgent action. I look forward 

to working with the subcommittee to improving and advancing 

FIRRMA. Thank you. 

[The prepared statement of Mr. Tarbert can be found on page 49 

of the appendix.] 

Chairman BARR. Thank you, Secretary Tarbert. 

Now Assistant Secretary Richard Ashooh, you are now recognized for 5 minutes. 

STATEMENT OF HON. RICHARD ASHOOH 

Mr. ASHOOH. Thank you, Mr. Chairman, and thanks to you and 

Ranking Member Moore and the members of the committee and 

also in particular to the sponsors of FIRRMA for your important 

leadership on this issue. I appreciate the opportunity to testify before the subcommittee today on CFIUS and to share the perspective of the Department of Commerce in this area both as a member 

of CFIUS and also as an export control agency. 

Within Commerce, the International Trade Administration and 

the Bureau of Industry and Security, or BIS, play important roles 

in the Department’s review of CFIUS matters. BIS is the administrator of the Export Administration Regulations, or EAR, as the 

regulatory authority for the licensing and enforcement of controls 

on dual use items, which are items that have civilian end use but 

could also be used for a military or proliferation related purpose 

and that also includes less sensitive military items. 

The export control system is a process that like CFIUS involves 

multiple agencies, primarily the Departments of Defense, Energy, 

and State. We work closely with these agencies to review not only 

license applications submitted to BIS, but also to review and clear 

any changes to the EAR itself, ensuring that the export control system is robust. Further, the export control system benefits from 

close cooperation with our international partners through four 

major, multilateral export control regimes focused on national security as well as missile technology, nuclear, and chemical weapons’ 

nonproliferation. Through these regimes, the United States and our 

partners coordinate on which items and technologies merit control 

and how those controls should be applied. 

The EAR’s authority covers an array of in-country transfers of 

technology as well as exports of goods, software, or technology to 

foreign countries. For example, the EAR regulates the transfer of 

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controlled technology within the United States to foreign nationals 

under what we call deemed exports. It differentiates between countries that range from our closest allies to embargoed nations thus 

allowing the export control system to handle technology transfers 

under different licensing review policies depending on the level of 

concern over the recipient country. 

The EAR also includes lists of end users of concern that trigger 

extraordinary licensing requirements as well as prohibitions on certain end uses. The export control system is also highly adaptable 

to evolving threats and challenges. BIS is currently reviewing control levels and procedures to specifically address such threats from 

adversary nations as well as their interest in emerging critical 

technologies. 

Our export control system includes aggressive enforcement capabilities. BIS’s special agents are located across the United States 

and overseas with a primary focus on identifying violations of the 

EAR and bringing to justice domestic and foreign violators. In fact, 

just recently BIS, in conjunction with other Federal law enforcement agencies, announced prosecution against two individuals conspiring to violate export control laws by shipping controlled semiconductor components to a Chinese company that was under a commerce license restriction known as the Entity List. 

The export control system and CFIUS are complementary tools 

that we utilize to protect U.S. national security, with CFIUS addressing risks stemming from foreign ownership of companies important to national security and export controls dealing with the 

transfer of U.S. goods, software, and technologies to foreign nationals regardless of the mode of transfer. 

As with the export control system, it is also crucial that CFIUS 

remain adaptive to current and evolving security challenges. The 

FIRRMA legislation introduced in the House and the Senate, if enacted, would take several important steps in this direction, especially the provision requiring mandatory filings for certain transactions involving foreign government controlled entities as well as 

the provision which would facilitate greater cooperation and information sharing with our allies and partners. Such international cooperation is an essential part of our export control system and 

would benefit CFIUS as well. 

In sum, the export control system and CFIUS are both vital authorities and complementary tools that the United States relies 

upon to protect our national security. Strengthening CFIUS 

through FIRRMA, while ensuring that CFIUS and export control 

authorities remain distinct, will enable stronger protections of U.S. 

technology. The Department of Commerce looks forward to working 

with the committee and bill cosponsors on this important effort. 

Thank you and I would be pleased to take your questions. 

[The prepared statement of Mr. Ashooh can be found on page 40 

of the appendix.] 

Chairman BARR. Thank you. 

Now Deputy Assistant Secretary Chewning, you are now recognized for 5 minutes. 

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STATEMENT OF ERIC CHEWNING 

Mr. CHEWNING. Thank you. Mr. Chairman, Ranking Member 

Moore, and members of the subcommittee, thank you for the invitation to share the Department of Defense’s role in CFIUS. Protection of our national security innovation base from strategic competitors like China and Russia is an increasingly important priority 

of the Department and I appreciate the opportunity to speak with 

you this morning. 

The Defense Department strongly supports modernization of the 

CFIUS process to ensure the interagency committee has the authorities required to address the evolving risks to our national security. We are thankful for the broad bipartisan support for the 

FIRRMA legislation. To quote Secretary of Defense Mattis who 

stated this Department’s position in his letter of support, the DOD 

depends on critical, foundational, and emerging technologies to 

maintain military readiness; preserve our technological advantage 

over potential adversaries, FIRRMA would help close related gaps. 

I have spent the last 17 years working at the intersection of national security, industry, and finance in both the private and public 

sectors. It is important that this bill not be considered an additional regulation on business. Under this bill, the United States 

should and will likely continue to welcome the vast majority of foreign investment that does not present any threat to our national 

security. Rather, this bill should be considered a whole of Government response to our critical national security challenge, an insurance policy on the hundreds of billions of dollars per year we invest 

in our own defense industrial base. 

But most importantly, this bill will help safeguard our sons and 

daughters who volunteer to step into harm’s way armed with the 

weapons that that industrial base produces. Simply put, United 

States military fights and wins wars through the unmatched performance of our men and women in uniform and our superior military technology. Knowing this, our competitors are aggressively attempting to diminish our technological advantage through a multifaceted strategy by targeting and acquiring the very technologies 

that are critical to our military success now and in the future. 

China in particular publicly articulates its policy of civil-military 

integration which ties into the intentions for it to become the world 

leader in science and technology and to modernize its military in 

part by strengthening its own defense industrial base. While methods like industrial espionage and cybertheft are clearly illegal, 

other approaches including technology and business know-how 

transferred through acquisitions of U.S. companies may not be. Acquiring or investing in U.S. companies offers an opportunity for our 

competitors to gain access and control over technologies with potential military applications, enabling them to create their own indigenous capabilities ultimately eroding our technological edge and 

military advantage. 

The current CFIUS authorities are limited to investments that 

would result in a foreign controlling interest. There are other 

transaction types such as certain joint ventures and nonpassive, 

noncontrolling investments that pose national security concerns 

such as technology transfer of critical capabilities. Additionally, the 

purchase of real estate by foreign persons provides opportunities to 

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potentially establish persistent surveillance near sensitive military 

sites and this would currently fall outside CFIUS’ scope to review. 

The Department of Defense does not view CFIUS as a panacea. 

Instead, it is part of a layered defense that can along with export 

controls and other regulatory mechanisms stem the flow of critical 

technologies to our potential adversaries. In order to do that, however, CFIUS authorities need to adjust to keep pace with the rapid 

change of technology. Let me add one more important point as I 

conclude my remarks. 

While the Department of Defense believes defensive measures 

like CFIUS modernization are necessary, they alone are not sufficient for winning a technology race. We must be proactive to ensure we improve our technology and innovation base because our 

future economic security will be a key determinant of our national 

security. 

I would like to close with another statement from Secretary 

Mattis. I strongly support the Foreign Investment Risk Review 

Modernization Act of 2017. The Defense Department continues to 

support foreign investment consistent with protection of national 

security. However, as the national security landscape changes, the 

existing processes and authorities must be updated. 

Thank you very much for the opportunity to testify on this important topic, and I look forward to working with the subcommittee 

to improve and advance FIRRMA. 

[The prepared statement of Mr. Chewning can be found on page 

44 of the appendix.] 

Chairman BARR. Thank you all for your testimony, and the Chair 

now recognizes himself for 5 minutes for questioning. I will start 

with you Secretary Tarbert. Thank you again for your testimony. 

I recognize that you cannot talk about some of the specific circumstances related to the Broadcom Qualcomm decision but, generally speaking, does CFIUS currently have and should it have the 

authority to block deals that may not in themselves compromise 

national security but could give an adversary that is unrelated to 

the specific transaction a competitive edge? 

Mr. TARBERT. I think that CFIUS currently is focused solely on 

national security and our view is that it should continue to be focused solely on national security. It would depend on the various 

facts and circumstances of the transaction, but if that competitive 

edge had no major national security implications then I would say 

no. CFIUS is focused solely on national security. 

Chairman BARR. Obviously the definition of national security is 

really critical in establishing those boundaries and those limits. In 

the case of 5G wireless technology, can you just discuss how that 

does implicate national security potentially? 

Mr. TARBERT. I am not sure if I can. I think to be most helpful 

to you, I would recommend a classified briefing on the transaction 

as well the specific national security rationale for the transaction. 

Chairman BARR. OK, thank you for that. 

Let me go to Secretary Ashooh. As you discussed in your testimony, both CFIUS and the export control systems are vital in 

terms of advancing our national security interests and you testified 

that it is important that remain complementary and not overlap 

unnecessarily as that has the potential to overburden the CFIUS 

mcarroll on FSR431 with DISTILLER

11 

process and potentially duplicate the more comprehensive coverage 

of technology transfer under the export control system. 

Could you give us your thoughts in terms of the FIRRMA legislation, how we can structure reform and make the necessary modernization of CFIUS without duplicating your jurisdiction if Commerce already has experienced doing this and doing it quickly and 

tailoring controls beyond a single transaction? 

Mr. ASHOOH. Thank you, Mr. Chairman. In any situation where 

you are expanding authorities, and by the way I am aware that 

there is an effort underway in the House Foreign Affairs Committee to expand and modernize the Export Administration Act, so 

we have a lot of legislating that is necessary. Any time you expand 

in that way you need to make sure that you are going to continue 

the good relationships between authorities that have worked so effectively as CFIUS and export controls have. 

In this particular case, CFIUS and the export control system are 

both well designed to do different things. CFIUS is very well designed to be a transactional review which oftentimes is necessary 

whether or not there is a technology transfer issue, whereas the export control system really is not focused on particular transactions 

and in fact is agnostic to them. What it does do well is focus on 

the very specific nature of the national security threat from a technology transfer. 

As a participant in both processes, I have the unique experience 

of seeing how they not only work together but support each other. 

As we grow authorities that is where we need to make sure that 

they work as designed. 

Chairman BARR. Assistant Secretary Tarbert, could you also offer 

your views about how we can update CFIUS without duplicating 

the efforts of the export control system? 

Mr. TARBERT. Absolutely, and my colleague is exactly right. We 

view it, we view the regimes as mutually reinforcing. I think the 

JV provision which you may be talking about or referring to implicitly, that is meant not to simply be a technology transfer provision 

but it is very specifically meant to be a situation where you have 

what is, in effect, an acquisition by another name where someone, 

a foreign actor, is getting the capability of a U.S. business and replicating it overseas when they could only get that capability if they 

had otherwise bought the business here in the United States. 

We want to make that distinction clear and I think we have 

some technical amendments that can help clarify that even further 

to ensure there is no unnecessary duplication. 

Chairman BARR. You would contemplate that those technical 

amendments would clarify which joint venture arrangements look 

more like a transaction or a concealed, disguised transaction versus 

those joint ventures that would not be implicated in CFIUS jurisdiction. 

Mr. TARBERT. As well as those joint ventures that are already 

subject to specific licensing under other regimes where there is adequate and independent authority that is addressing them. 

Chairman BARR. Thanks for your assistance on that. My time is 

expired and the Chair now recognizes the Ranking Member, Ms. 

Moore, for 5 minutes. 

mcarroll on FSR431 with DISTILLER

12 

Ms. MOORE. Thank you so much, Mr. Chairman. Let me thank 

the witnesses once again, and welcome to the committee. I have a 

couple of questions. I would like to, and I indicated this in my 

opening comments that I was concerned about the expanded jurisdiction that FIRRMA, that this legislation would require. I was 

wondering if there was any notion about the numbers of full-time 

employees or budgetary authority that you would need in order to 

do an adequate job of the expanded responsibilities that are being 

proposed. 

Mr. TARBERT. I will go first, if I may. 

Ms. MOORE. Right. 

Mr. TARBERT. FIRRMA does very specifically address the resource issue or acknowledge that there needs to be resources. But 

the other thing before we even get to the resources that FIRRMA 

does is it allows, as I mentioned in my testimony, the tailoring to 

make sure that really what FIRRMA does is it acknowledges that 

CFIUS doesn’t need to look at every transaction, but we really only 

want to be focused on those transactions that are most likely to 

raise national security concerns. 

Before we can even gauge the amount of resources, I think we 

want to focus on tailoring the bill both on the text itself as well 

in the regulations so the actual transaction— 

Ms. MOORE. OK, I get that. But you would have to look at in 

order to tailor it or narrow it, you would still have a much broader 

range of things you were looking at so it would require resources. 

Mr. TARBERT. It would, absolutely. 

Ms. MOORE. You don’t have a number or anything? 

Mr. TARBERT. We are working on that now, but I think we— 

Ms. MOORE. Anybody else have any notion of some concrete number of employees or departments or offices that would have to be 

created? 

Mr. ASHOOH. We are certainly trying to do some thoughtful planning. But it is important to reiterate that CFIUS, right now the 

caseload is at a historic high and so we are actively seeking resources to meet the current challenges that we are facing. 

Ms. MOORE. Exactly, because sometimes you have to ask people 

to restart the application process, redo it in order to give yourselves 

more than that 30-day time. My time is waning, so let me move 

on. 

You say, I think it was Mr. Ashooh, you talked about real estate 

transactions, something other than intellectual property and sensitive technology, you brought in real estate transactions. I am concerned about real estate and the transactions that are done anonymously through shell corporations and I am thinking now of course 

of Trump Tower where we have numbers of Russians and Chinese 

that are buying real estate and I am wondering if these are the 

kinds of transactions that would trigger a review. 

Mr. ASHOOH. It was not I that mentioned the real estate provision so I may defer to my colleague from Defense, but I do believe 

that is an important provision. There has certainly been in my experience a gap in CFIUS’s authorities to be able to address real estate transactions that could pose an opportunity for nations who 

would appropriate our technology to perform intel activities. But I 

will ask DOD to reinforce. 

mcarroll on FSR431 with DISTILLER

13 

Mr. CHEWNING. Yes. No, and I think just to use a hypothetical 

situation, if there was a piece of real estate outside of Joint Base 

McChord and it didn’t have a business on it, right now somebody 

could go ahead and buy that if it was just real estate and potentially set up a surveillance operation to surveil what is going on on 

the post. If it had a lemonade stand on it, it would constitute a 

business so it would potentially come under current CFIUS jurisdiction. 

I think as we are thinking about the need for modernizing 

CFIUS it is just like let’s look at raw real estate purchases next 

to military installations. 

Ms. MOORE. We have seen, for example, just reported in the 

news recently President Abe in Japan, bought real estate that belonged to the Kushners and it is just sitting there doing nothing. 

Would that generate some review where there is no activity in an 

investment? 

Mr. CHEWNING. The way we approach CFIUS cases now centered 

around what we call risk-based analysis has three parts—threat, 

vulnerability, and consequence—so transactions are viewed along 

that lens. 

Ms. MOORE. OK. All right, well, thank you very much and I yield 

back. 

Chairman BARR. The gentlelady yields back. 

The Chair recognizes the Vice Chairman of the subcommittee, 

Mr. Williams from Texas. 

Mr. WILLIAMS. Mr. Chairman, thank you for your leadership on 

this important issue and to all the witnesses thank you for your 

testimony this morning and for your committed service to the 

American people. 

Foreign investment in the United States touched each and every 

American in one way or another and I represent an extremely diverse district with one of the Nation’s premier military installations, Fort Hood. I represent a booming technology and a welcoming business environment. These factors are all reasons why it 

pays to do business in Texas, as I like to tell people, and certainly 

in our District 25. 

The pervasiveness of Chinese influence is growing. As we continue to discuss CFIUS reform we must be committed to finding 

the right solutions, so such an important tool cannot be left to 

chance and we must ensure that we do our due diligence. I look 

forward to your responses this morning; appreciate the ones you 

have given us in the past. 

Secretary Chewning, I just want to continue to talk a little bit 

about, as I said, I represent Fort Hood, one of the largest military 

installations in the world. As you are aware, wind energy and foreign energy investment around our Texas bases has been an ongoing point of discussion for several years and it is my hope that any 

policy change is in the best interest of soldiers and their families 

in my district. 

Some CFIUS observers believe that purchase of real estate which 

we have been talking about near military bases or other sensitive 

locations is not a transaction CFIUS can review. My question 

would be, according to a 2016 GAO (Government Accountability Office) report DOD has made limited progress in conducting risk asmcarroll on FSR431 with DISTILLER

14 

sessments on foreign encroachment on military bases so how can 

CFIUS effectively review real estate transactions near such sites if 

you have not implemented GAO’s accounting recommendations? 

Mr. CHEWNING. Thank you for the question, Congressman. I 

spent time at Fort Hood, in my time in the Army, so I appreciate 

the beautiful hill country there and the concerns you have outlined. 

We are working on looking at that issue here specifically. It hearkens back to a couple of other questions around resources, hypothetically around how we can improve what we are doing isn’t just 

additional resources but it is process improvements. 

For example, if there were a transaction that would involve a 

change of control that has, let’s say, 1,400 different subsidiaries in 

the United States, right now we have to go request the information 

for all those different locations, physically have an analyst go input 

those addresses, identify the locations, and then cross-queue them 

against military installations. As you might imagine that is a very 

time-intensive effort. 

What we would like to do is move to a model where that can be 

automated where we would require geolocation information to be 

provided that then we could very quickly do that through a larger 

technology solution set. Ideas like that in addition to the ability to 

cover a broader set of transactions are how we plan on balancing. 

Mr. WILLIAMS. OK, thank you. 

Secretary Tarbert, good to see you. In the subcommittee’s oversight hearings we have consistently heard that the CFIUS resources are stretched thin. Again we have talked a little bit about 

that. The caseload has reached record highs due to enhanced scrutiny and the increased complexity of deals. Do you believe that 

CFIUS is sufficiently resourced to each of its member agencies and, 

if not, how does the present Fiscal Year 2019 budget allow CFIUS 

needs to be fully funded? 

Mr. TARBERT. I can’t speak for the other agencies in the committee but I can speak for Treasury. Right now we have resources 

available to meet the statutory obligations and we are meeting the 

statutory obligations. That said, our people who are absolutely topnotch are working long, hard hours and so we are committed to 

making sure that there is adequate resources there. 

CFIUS at Treasury does not have a specific line item, but we are 

part of the departmental offices and so one of the things we are 

looking at is ensuring that all departmental offices meet their obligations and that could mean shifting resources inside of Treasury 

to ensure that CFIUS has what it needs. It is a big priority to the 

secretary. 

Mr. WILLIAMS. Thank you. Another question for you, Mr. Secretary, is some proposals to modernize CFIUS could increase the 

time a case could be examined by the committee by nearly half at 

a time when companies are grumbling the committee already takes 

far longer to complete its work than the statutory 75 days. 

Could you please advise us on the balance between the necessary 

time for adequate review and the point of which a review just takes 

too long, recognizing that the review has to have adequate time to 

be done correctly? Is there a danger that at some point investors 

just throw up their hands and invest elsewhere? 

mcarroll on FSR431 with DISTILLER

15 

Mr. TARBERT. Thanks for that question. The number one thing 

as you said is making sure we actually have adequate time to do 

the national security review. I actually think with the changes that 

FIRRMA is bringing the average case time, particularly for those 

cases that can be cleared more easily, will be shortened. Two reasons for that, one is the review period will be lengthened by 15 

days. But, paradoxically, I think it will actually shorten the period 

because right now we have a lot of cases that normally would be 

cleared in 30 days that are getting kicked to the 75 days. By making it 45 days I think we will be able to clear a lot more, quicker. 

Also there is the declarations provision in there which allows 

short form filings for those cases that can more easily be put 

through and again I think that will also shorten the time. Finally, 

I would mention that many of our other countries that have similar 

security screening programs are much longer than ours than even 

now and even what they potentially could be at the longest under 

FIRRMA. 

Mr. WILLIAMS. Thank you for your testimony. I yield back. 

Chairman BARR. The gentleman yields back. 

The Chair now recognizes the gentleman from New York, Mr. 

Meeks. 

Mr. MEEKS. Thank you, Mr. Chairman. Thank you for your testimony. Thank you for being here today. Let me ask a question. Historically, the CFIUS analysis always focused primarily on, and I 

guess what you are talking about when you said, national security 

and now I think what you are also saying that we need to expand 

the concern, expand CFIUS, its role. I think the Chairman asked 

a question and where I am getting confused, if we are going to expand CFIUS’ role shouldn’t we have a clear definition of what is 

national security or its national security mandate, because otherwise we create uncertainty for companies, for both U.S. companies 

and foreign companies, and that could have a negative economic 

impact here in the United States when it comes to foreign direct 

investments of trade and outbound transactions? My question is 

can you clarify then what is national security because it seems like 

we are just broadening what CFIUS is. 

Mr. TARBERT. Thank you. Just to be clear, I think for the most 

part FIRRMA is not trying to broaden the definition of national security but simply broaden the types of transactions that are potentially reviewable. The statute lists a number of factors that constitute national security and we want to make sure they are clear. 

At the same time, I guess national security concerns are changing 

over time so we would want some flexibility to keep up with new 

national security threats. 

That said, our concept of national security is based ultimately on 

a national security threat assessment by the intelligence community which also feeds into the Defense Department’s input. It is 

certainly not any economic benefits test or anything of that nature. 

I yield to my colleague at the Defense Department to maybe offer 

some more points on that. 

Mr. CHEWNING. If I might, I think that is right. At the heart of 

CFIUS is the RBA, the risk-based assessment. We think about it 

in terms of the threat, vulnerability, and consequences, that the 

threat piece is informed by a national intelligence estimate from 

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16 

the intelligence community, and then there is dialog on the committee about how to think about what that means, what the potential implications are based on our various stakeholders. 

Within the Department of Defense I represent 33 different equity 

holders who may have a concern with a particular transaction and 

what I personally appreciate about the process is there is a discussion around those three elements. For a case to go to the President 

there has, thus far, always been consensus around that. 

Mr. MEEKS. All right. My concern just is that I was thinking if 

there are enough controls currently to prevent CFIUS from misusing its authority to thwart transactions for reasons that may be 

loosely associated with national security so for other reasons, and 

it should be tight. 

But I am running out of time. I have another question I just 

want to ask Mr. Tarbert. For decades, the United States has issued 

a formal open investment policy statement clearly articulating that 

it is open for foreign direct investment and recognizes the contributions that these investments bring. However, the Administration, 

the current Administration, has yet to do so. 

With 232 tariffs and recent CFIUS action it is time that I think 

we should reassure the world that we are indeed open for business 

and want global companies to locate here. As you mentioned, the 

Administration’s commitment to an open investment policy, is the 

Administration going to formally issue a statement as has been 

done for decades? 

Mr. TARBERT. That is obviously a question for the White House 

and the President, but we do support an open investment policy. 

In the endorsement of FIRRMA that came out from the White 

House there was a specific statement about it, open investment policy. 

Mr. MEEKS. I just asked because you said, and I haven’t heard 

it, haven’t happened yet, and I know in talking to some of our companies both ways they are waiting for the statement from this Administration. They are concerned when we hear the way the Administration is moving with regards to the tariff issue. 

The other concern that I have, because whether we like it or not 

our economy is global and there is no way of putting that genie 

back in the box as the way many folks would like to, it is a global 

economy. Countries can put forth policies to protect their companies from globalization but those countries, I believe, will do so at 

their own peril. 

Considering that many U.S. companies are in fact international 

in scope, do you have any concerns that CFIUS’, or if CFIUS’ overreach can disadvantage U.S. companies by limiting their access to 

non-U.S. technologies and could this encourage the offshoring of research and development? 

Mr. Ashooh? 

Mr. ASHOOH. I am happy to respond. Thank you for the question. 

Certainly from an export control perspective, and again this is why 

export controls and CFIUS need to work well together, we want to 

be as narrowly focused on what we control so that the things we 

don’t control can be free to be traded and commercialized. That is 

the primary precept of what informs us as we go forward not only 

mcarroll on FSR431 with DISTILLER

17 

in reviewing how we need to address emerging threats, but also expanding FIRRMA. 

There is no question that there are advantages to having a system, and by that I mean advantages to companies and innovators 

to do that work here under a system, that does protect technology 

that is developed here. We believe it is a reassuring state of affairs 

when we are prepared to protect that technology. 

Chairman BARR. The gentleman’s time has expired. 

The Chair would now recognize the gentleman from Oklahoma, 

Mr. Lucas. 

Mr. LUCAS. Thank you, Mr. Chairman, and I appreciate you 

holding this hearing as we continue to look at the CFIUS reform 

process. Just so the panel is aware, I represent a region that is 

heavy in the oil and gas industry and thus would like to discuss 

with the panel how CFIUS deals with the purchase of energy assets. 

First off, I will note for our witnesses the currently, nearly 30 

percent of the U.S. refining capacity is foreign owned and I don’t 

just mean the owners are foreign, but in this situation, in this instance, most such owners are state-owned or state-sponsored enterprises. My concern about this should be obvious. These are primary 

assets that have a large effect on the American economy and yet 

they are in the hands of foreign state-owned enterprises. In addition, often foreign owners refit their refineries to match their own 

product making it harder to refine oil and gas extracted in the 

United States. 

I want to make sure these transactions are accounted for as a 

part of the CFIUS reform act. One complication, however, is that 

such transactions are increasingly complicated which makes 

CFIUS review harder. For example, in order to get a loan from 

Russia it appears that Venezuela put up energy infrastructure in 

the United States as collateral. Imagine the consequences of that, 

the Russians being able to expand their ownership of critical energy infrastructure in the event of a default without a public transaction. I would note also that Saudi Aramco not only attempted to 

purchase a major facility in Port Arthur, Texas in recent memory, 

but is currently the owner of one of the largest refining facilities 

in the country after dividing up a joint venture. 

Number one, Mr. Chewning, as an initial matter, do you think 

it would be fair to characterize refineries and pipelines as critical 

assets? 

Mr. CHEWNING. Thank you, Congressman, and we agree with 

you. It is complicated, which is why the need for both CFIUS and 

export controls is necessary as an interlocking defensive system. To 

your question specifically, we would evaluate that transaction 

through the same lens of what is the threat, the vulnerability, and 

the consequence. If the critical infrastructure at the time, given 

who the potential buyer would be, was evaluated as a potential 

threat to national security then we would, and then we would want 

to look at it and have a conversation on the committee. 

Mr. LUCAS. In particular, if the enterprise, the transaction involved a state-owned entity it most assuredly would get that review, I would hope. 

mcarroll on FSR431 with DISTILLER

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Mr. CHEWNING. I think that the view on what that threat and 

the potential vulnerability would probably determine the nature of 

who the state owner was. 

Mr. LUCAS. Mr. Chairman, I also want to point out for everyone 

here that this is a real concern for the booming and very successful 

energy industry in the United States. We are on a path to being 

a net energy exporter in only a couple years. We were net energy 

exporters until, I believe, 1958 in particular in crude oil. Energy 

independence depends on being able to maintain our assets and our 

place. 

One other question while I am on the topic, and I would turn to 

Mr. Ashooh for this, explain to us in general terms, and anyone on 

the panel who would care to follow up I would appreciate that, how 

do you make the distinction under present law or the proposed law 

about how we deal with technology when, say, on one hand it 

might involve older, more widely available technology; on the other 

hand cutting-edge technology, things—we don’t care about who can 

make a vacuum tube anymore, but once upon a time it mattered. 

How do you sort out the difference between new and old, what is 

relevant and what is not relevant? Thumbnail sketch, if you would. 

Mr. ASHOOH. Well, thank you. That is core to what we do at the 

Bureau of Industry and Security. We are constantly reviewing the 

commerce control list which is where the things we are concerned 

about go and the things that we are not concerned about, the vacuum tubes, are removed from. To my earlier point so that we are 

not over controlling and focus instead on the things that are a 

threat, we do that through several ways. One important way is certainly the BIS staff, which includes scientists and engineers and 

subject matter experts, which again also provide their expertise in 

the CFIUS process. 

But then, second, we deeply rely on technical advisory committees which draw from private sector subject matter experts because 

that is where the new technology is coming from and we actively 

engage them through these technical advisory committees to help 

us sort out that very question. 

The final point, I would say, is those technical advisory committees also have robust interagency participation so we routinely 

have Department of Defense, Department of Energy, and other representatives there so that they are also able to understand from 

that subject matter expert domain what matters and what doesn’t. 

Mr. LUCAS. Because, after all, we only want to protect the things 

that must be protected. We don’t want to broad brush resources, 

assets, technology that really doesn’t make a difference in our dayto-day existence. 

Mr. ASHOOH. Exactly, sir. Exactly. 

Mr. LUCAS. Thank you. I yield back, Mr. Chairman. 

Chairman BARR. Thank you. The gentleman yields back. 

The Chair now recognizes the gentleman from Texas, Mr. Green. 

Mr. GREEN. Thank you, Mr. Chairman. I thank the witnesses for 

appearing, I thank the Ranking Member as well, and of course I 

thank the members who have been working on the legislation. 

Let’s take a hypothetical situation. Let’s assume that we have as 

President a billionaire who has worldwide investments, any resemblance is just coincidental, and let’s assume that his worldwide inmcarroll on FSR431 with DISTILLER

19 

vestments are huge. With this as a possible possibility, can you 

give me an example of when these worldwide investments might 

become of concern to CFIUS? 

Yes, sir? 

Mr. TARBERT. Thank you. I am not sure if we can provide a specific example, but— 

Mr. GREEN. No, no. Not a specific example that relates to anything that is in fact in existence, just give me an example of when 

a worldwide investment would become of concern. 

Mr. TARBERT. It might be helpful to give you the analysis that 

we would go through. 

Mr. GREEN. I would really prefer an example. Just give me an 

example of when a worldwide investment, one of them, a billionaire 

president, there has to be a circumstance when one of those investments could become of concern. Just give me an example. It doesn’t 

have to relate to anyone. This is a hypothetical. 

Mr. TARBERT. I am not sure. Every— 

Mr. GREEN. You can think of no example of when that would become of concern to CFIUS? 

Mr. TARBERT. I am sure there are instances when potentially 

some type of transaction— 

Mr. GREEN. Give me an example. 

Mr. TARBERT. —depending on the specific— 

Mr. GREEN. Well, just give me an example. 

Mr. CHEWNING. A billionaire, multinational person, Bruce Wayne 

as an example— 

Mr. GREEN. OK. I am good with that. 

Mr. CHEWNING. If Bruce Wayne owned a defense company, if 

that defense company— 

Mr. GREEN. He is president, go ahead. 

Mr. CHEWNING. No. If that defense company— 

Mr. GREEN. In my example he is. 

Mr. CHEWNING. If that defense company was acquired by a non, 

if a non-U.S. entity wanted to make a controlling interest in that 

defense company that would fall under CFIUS review. 

Mr. GREEN. Well, let’s take another possible example. Let’s assume that this billionaire’s son-in-law met with some foreign investors at the White House. Let’s assume that after that there was an 

offer to finance a piece of property that this son-in-law who is an 

investor had. By the way this is a hypothetical. If we took a real 

case someone might say well, that never happened so it didn’t happen, but would CFIUS be concerned? 

Mr. TARBERT. If the case was filed before CFIUS? 

Mr. GREEN. Yes. 

Mr. TARBERT. National—yes. 

Mr. GREEN. Would you be concerned? 

Mr. TARBERT. The intelligence community would perform a national security threat analysis that would involve looking at the individuals who purchased the property, their potential intentions 

and capabilities as well as the vulnerabilities in the property itself 

and that would yield the committee’s analysis. 

Mr. GREEN. Given that there are circumstances where you would 

be concerned, would it be a benefit to know what this hypothetical 

mcarroll on FSR431 with DISTILLER

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billionaire investment actually has invested in on a worldwide 

scope? 

Mr. ASHOOH. Sir, I might jump in to say this is, you are making 

actually an argument of why FIRRMA is important because right 

now the way CFIUS works is it is a voluntary filing system. Under 

certain conditions under FIRRMA there would be more mandatory 

filings and that would certainly allow CFIUS to increase its scope 

into transactions, in particular complicated ones. There are a number of ways that CFIUS is not able to review transactions because 

of the complicated nature of the investments and FIRRMA would 

approve our ability to do that. 

Mr. GREEN. I thank you for that indication because I am concerned about investments that are worldwide that we may not have 

knowledge of because this billionaire who happens to be President 

doesn’t share a lot of intelligence with us and ultimately makes a 

lot of decisions about investments that may conflict with what he 

is doing. I think Mr. Trump ought to be scrutinized a bit closer and 

I hope that this legislation will help us do that. I yield back. 

Chairman BARR. The gentleman yields back. The Chair recognizes an author of FIRRMA, the gentleman from North Carolina, 

Mr. Pittenger. 

Mr. PITTENGER. Thank you, Mr. Chairman, and again thanks to 

the panelists. Considering the public statements of our adversaries, 

competitive adversaries, particularly President Xi, can we afford to 

delay CFIUS any longer even 6 months? What is the impact of 

their aggressive interest to acquire our intelligence and our technology? 

Mr. CHEWNING. Congressman, I don’t believe we can delay 6 

months. We are very concerned about erosion of our technological 

advantage. 

Mr. ASHOOH. Sir, and I would add, and I assume you mean 

FIRRMA, a delay in— 

Mr. PITTENGER. Yes. 

Mr. ASHOOH. I would quote the Secretary of Commerce who essentially said, ‘‘a delay, any day that we delay is an additional day 

of risk.’’ 

Mr. TARBERT. As I said in my testimony I believe it demands urgent action. 

Mr. PITTENGER. Thank you. For clarification, would you kindly 

tell us the distinctions between CFIUS and export control? I want 

to be real clear if updating export control alone would that solve 

the gaps that we have identified? Dispel the rumor, if you would, 

please, that CFIUS and export controls are competing functions. 

Mr. ASHOOH. Sir, I would be happy to and I thank you for the 

question because it is an important one. CFIUS is a tool many people understand. Foreign transaction, it is relatively easy to understand, export control system is not. As one who again participates 

in both processes and in my private life was part of a company that 

was, if you will, CFIUS, I have a perspective from several angles 

and I can tell you that both systems are essential. Both systems 

not only should, but must support each other because they bring 

different strengths to the table. 

As far as one against the other, the threats that we are dealing 

with—and I took on this role approximately 6 months ago and 

mcarroll on FSR431 with DISTILLER

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since that day I have been dealing day in and day out with the 

threats you mention—we cannot do it with one authority alone. We 

need several. Both the export control system and CFIUS need to 

be adaptable to this wave of threats that we are experiencing. I 

have said it before, but I am grateful for your leadership on this 

issue because it is needed. 

Mr. PITTENGER. Thank you. 

Secretary Talbert, the current CFIUS process, do you believe it 

is an overwhelming burden to foreign direct investment and will 

the FIRRMA bill make it an overwhelming burden, overall, do you 

believe, to FDI? 

Mr. TARBERT. Not at all. There is no evidence to suggest that 

America is anything other than a preeminent destination for investors and I believe the FIRRMA bill will not change that if not enhance that. Having represented foreign investors over the last decade in private practice, one of the things that investors look for is 

a country that protects its national security. I think that stronger 

protections on our own national security make America an even 

better investment environment. 

Also some of the specific things that you have in the FIRRMA 

bill to help speed up that process, to have declarations for those repeat players and things that don’t necessarily need to go through 

the full notice, will only make investment easier. 

Mr. PITTENGER. Yes. In this bill which is not included in the current FIRRMA we have a process for a good guys list for our countries who adapt the same type of oversight. Would you clarify how 

that is really going to open up greater foreign direct investment 

and make it even more accessible? 

Mr. TARBERT. Yes. I think it is absolutely critical because many 

of our allies—there was just a newspaper, I think, in the Financial 

Times this morning about how Germany is facing similar risks that 

we are. 

To really be effective CFIUS has to be investment screening the 

same as our allies. The thought is that if our allies are protecting 

their investments, we are protecting our investments, and they 

meet specific criteria that is in our national security, we could potentially exempt some of those investments as well to help facilitate greater investment. 

Mr. PITTENGER. Secretary Chewning, just to close out, clarify for 

us the national security risk that we will face if we do not update 

CFIUS. 

Mr. CHEWNING. Thank you, Congressman. We face the loss of our 

technological edge. Just to underline how important this is, the last 

time we lost a U.S. soldier or marine on the ground to enemy air 

fire was 1953. For the last 60 years, the United States has enjoyed 

complete air dominance because we have great people flying that 

aircraft and we have great aircraft and CFIUS is an important part 

of maintaining that technological advantage that enables our defense industrial base to produce that type of decisive lead. 

Mr. PITTENGER. Thank you, sir. I yield back. 

Chairman BARR. The gentleman yields back. The Chair now recognizes the gentleman from Washington, another valuable contributor to the reform effort, Mr. Heck. 

mcarroll on FSR431 with DISTILLER

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Mr. HECK. Thank you, Mr. Chairman. Indeed I want to reiterate 

my expression of gratitude to you for the manner in which you 

have undertaken this subject in the subcommittee. I am very appreciative. I was sorely tempted to initially begin my questioning 

with asking you all to reiterate the urgency surrounding the need 

to modernize CFIUS, but you guys have really done a good job and 

I thank you for that. I am just not sure that it can be stated too 

often that there is an urgent need here and the threats we are 

talking about aren’t hypothetical in any way, shape, or form. 

Thank you for your testimony today. 

Instead, I think I want to get back to this issue of the relationship between export control system and the need for a modernized 

CFIUS regime. Some have suggested that if we update or modernize the export control system that that would abrogate or mitigate the need to update CFIUS. You all have talked about how 

these things really need to work together. Let’s be clear on this 

point. Assume we update export control system, what is the gap if 

we don’t also modernize CFIUS? Be as specific as possible. Why is 

it important that we do both, and if we don’t, what have we exposed ourselves to? Secretary Tarbert, why don’t we start with you, 

sir. 

Mr. TARBERT. Sure. Well, first of all, our jurisdiction hasn’t been 

revisited in 30 years and so we have pointed out the jurisdictional 

gaps. Several of those jurisdictional gaps have nothing to do with 

export controls, the real estate provision, for example, next to U.S. 

military installations, the nonpassive, noncontrol investments. 

The only provision that I think gets to the export controls issue 

is the so-called joint venture where you are depositing intellectual 

property with associated support. As I mentioned before that is 

something that is very distinct from export controls. I think 

strengthening export controls in our view is very important. It 

helps CFIUS. But not addressing CFIUS and modernizing it not 

only, in my view, will not help CFIUS but it could also undermine 

export controls. 

Mr. ASHOOH. Sir, thank you again for the important question. 

One additional gap that would be represented, it exists right now, 

as I stated earlier the export control system, one of its strengths 

is our ability to work with partner nations. When we agree over a 

certain technology that we are going to deny to what we consider 

to be a common adversary, that is far more potent a solution than 

just a unilateral control on something we are concerned about. 

Well, the same dynamic could apply on CFIUS and it does not 

now. We are limited to working with partner nations, many of 

whom if they don’t already are coming up with a CFIUS-like process. That is an area that I believe would certainly enhance our 

CFIUS process in the way that the export control systems work 

well. 

Mr. CHEWNING. Congressman, I tend to think of them as a first 

line and second line of defense. Export controls, both ITAR and 

EAR, are the first line of defense. We have a list of technologies, 

we control the list of the technologies about who can access that. 

CFIUS is our backstop. If something gets through whether it is a 

real estate transaction, whether it is actual transition of capability 

for the replication of an industrial capability in a competitor state 

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as opposed to just the technology, whether it is our ability to identify something that should have been on the list but wasn’t, CFIUS 

helps us inform what that could look like. There is interaction 

there. 

You have to think about CFIUS as our backstop. I think the 

other point I would make is a keen difference between CFIUS and 

export controls is you can mitigate transactions through CFIUS. 

You can’t necessarily do that with export controls. I think our ability to mitigate transactions is also something that is a very powerful tool. 

Mr. HECK. Thank you. In my time remaining, Secretary Tarbert, 

I want to deal with this elephant in the room, get back to something that Congressman Meeks talked about which is the concern 

some have expressed to be blunt that someone might block a transaction for either political reasons or for protectionist reasons as opposed to the national security reasons. Can you briefly summarize 

why it is you do not think that concern is valid? 

Mr. TARBERT. Yes. There is a statutory and a regulatory process 

that is focused on national security and there are a number of 

steps that are taken every single transaction that CFIUS reviews. 

There is a national security threat assessment made by the intelligence community that is then supplemented by a risk-based analysis which involves all the CFIUS agencies again focused on the 

specific national security factors laid out in the statute. Only then 

is a recommendation made to clear or potentially present it to the 

President. 

There is a documented process that focuses on national security 

and, moreover, under FIRRMA Congress has the ability to request 

a classified briefing. If there is a transaction where Congress is not 

sure, well, what was the actual rationale, obviously we can’t talk 

publicly about the rationale in pretty much all cases because of 

classification, but then Congress has the ability to look at it and 

to provide that extra check on the process. 

Mr. HECK. Thank you, sir. 

Chairman BARR. The gentleman’s time is expired. The Chair now 

recognizes the gentleman from Arkansas, Mr. Hill. 

Mr. HILL. I thank the Chairman. I thank the Ranking Member. 

I appreciate the opportunity to follow up on Mr. Pittenger’s good 

work here in the House and Mr. Cornyn’s good work in the Senate. 

There is no doubt that with the changing strategies by our adversaries in finance and economics that CFIUS has to catch up with 

that and be very clear and intentional in how our review process 

is done and also not burden the committee’s efforts to the point of 

too much congestion, because you are asking for a very broad increase in the types of transactions that you will review. I hope that 

Congress is well aware of the staffing that you need in order to 

adequately do that work should this proposal become law. 

I also have said before on this topic, no doubt America for 60 

years has led the world in market development, transparency, global trade, and at the same time carefully protected things that we 

consider integral to our intelligence and security requirements. 

With that said, I want to bring up this recent transaction on 

Broadcom Qualcomm because I think this is an issue where we 

have to be very clear. You have said Congress can request a classimcarroll on FSR431 with DISTILLER

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fied brief and all this, we have to be very clear about why something is in the national security interest as we look at each of these 

transactions. Since that one is in the news now, it gives me a 

chance to talk about something that was in the letter regarding it. 

In the Department’s concern list it said that Broadcom could 

take a, quote, ‘‘private equity style direction if it acquired 

Qualcomm, which means reducing long-term investment such as 

R&D and focusing only on short-term profitability,’’ close quote. 

That sounds more like an opinion to me and indicting a business 

strategy or a business model rather than the national security concerns. 

Should Congress be suspect of private equity investors from a national security point of view? Who wants to tackle that? Sir? 

Mr. TARBERT. I will tackle it. The answer is not at all. Every 

transaction goes through the specific analysis. I would encourage 

everyone not to read anything other than the particulars of the 

transaction as to the specific and I would also encourage you to undertake the classified briefing, because then it will put everything 

into much greater context. But what I will say is that we regularly 

clear private equity transactions and I don’t suspect that would 

change. 

Mr. HILL. Right. Well, I think that is important because business 

people, you are right. This right now is a voluntary submission to 

the committee for review and we want that as clear and transparent and easy for those companies and their lawyers to anticipate this so that we do maintain that international flow of goods 

and services where America is a leader and not bog down transactions that don’t deserve it. 

When people see a business model question, you can imagine the 

lawyers at your former employer’s asking, oh my gosh, we have to 

do a CFIUS review, or are we micromanaging the private sector by 

this, because you are going to broaden your reach. I think those are 

things that as we talk about the exact language in the bill we need 

to be sensitive to that and certainly the report language and the 

direction to the Executive Branch what we mean in Congress, let’s 

be clear and intentional about what we mean in Congress. 

I love the joint venture addition. I think that has been a loophole 

for a long time. I like the intellectual property licensing piece. I 

like the careful scrutiny of subsidiaries that are in other countries 

that have a different ownership. I think those are all improvements. But when you think about joint ventures like a code sharing 

arrangement in airlines and things like that clearly with national 

carriers out there they are in countries that are not necessarily always in favor with the U.S. Government. 

Can you reflect on that subject when it is, I guess that is a joint 

venture. It is certainly a memorandum of understanding to share 

revenue on passengers. But talk about a little bit like that where 

it is very open. These are for the most part public companies in the 

United States who are entering into those. What is your— 

Mr. TARBERT. Sure. I will be happy to address it. 

First of all, I think that the joint venture provision right now in 

FIRRMA is pretty clear. It requires the depositing of intellectual 

property along with associated support. In many joint ventures 

that don’t have anything to do with intellectual property they 

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wouldn’t be brought into this. Second, we have been meeting with 

industry groups as I mentioned, other stakeholders, Members of 

Congress, to make sure that this provision is narrowed through 

technical amendments to get at those transactions that are really 

most likely to raise national security issues. 

Mr. HILL. Well, we appreciate your service to the country in protecting the national security and intelligence assets of our private 

sector and public sector, and thanks for the opportunity, Mr. Chairman. 

Chairman BARR. Thank you. The gentleman’s time is expired. 

The Chair now recognizes the gentleman from California, Mr. Sherman. 

Mr. SHERMAN. I have so many questions that a lot of them will 

have to be questions for the record. The first is if you could tell us 

what is the cost of the CFIUS process both in terms of the direct 

cost, the budget of the agencies you represent, and then some estimate of the indirect costs. The intel community of course does an 

awful lot of work to support what you do. Then this Congress 

would have to evaluate whether it is appropriate that the taxpayer 

pay for the costs caused by businesses that choose to merge or engage in other acquisition transactions or whether those costs 

should instead be borne by the businesses whose actions are under 

review. 

The second question for review is we already have a requirement 

that we look in cases involving government controlled entities 

whether the foreign country’s record on cooperating in counterterrorism efforts is what we would like to see. The problem with that 

is for most of those with bad participation with us in counterterrorism, they don’t have our model of separation between business 

on the one hand and the government on the other. To say that a 

business in Iran or China is independent to the government is to 

cast upon their society our legal system. I hope I will convince my 

colleagues that we should look at these factors based on where the 

company is based whether or not it claims to be independent of the 

government. 

I want to focus on the media. The question is whether national 

security should include control of the most important element of 

soft power, what people hear and see. We already have China exercising control over our studios by their system, and this is outside 

the scope of this hearing, of only allowing 35 or so movies into 

China. Every studio has to figure out how they can kiss something 

in Beijing so that maybe they get five or eight of their movies into 

the Chinese market. 

No one is going to make a movie about Tibet. Not only will that 

movie not be shown in China, but none of your other movies are 

going to be shown in China. But it goes worse. CFIUS allowed, and 

I guess that is because of the statute as much as anything else, 

AMC Theaters to be controlled by a Chinese enterprise. Even if you 

could make a movie about Tibet and not worry about your Chinese 

revenue, who is going to show it, how is that going to pencil out 

if one-third or one-quarter or one-eighth of the movie screens in the 

country are not allowed? 

Let me ask, do we have a statute adequate to prevent foreign entities from controlling our media either by being in physical control 

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like owning the studio or being in a position where they can turn 

on or off the studio’s profits so as to thereby exercise soft power 

over our soft power? 

I don’t know who it is—Mr. Tarbert? 

Mr. TARBERT. I don’t believe we have a specific statute that 

would forbid that. As far as CFIUS goes, so we review foreign acquisitions of U.S. companies where there is control. In the national 

security threat assessment, the intelligence community would do 

an analysis of what are the intentions of the foreign acquirer and 

capabilities and conceivably, if there was a specific intention to utilize media for propaganda purposes or other things to undermine 

our national security that would be something that would no doubt 

be analyzed. 

Mr. SHERMAN. Let me move on to one more question and then 

I will have even more questions for the record that will just be for 

the record. 

Keeping jobs in the United States is not explicitly part of CFIUS’ 

mandate, but our industrial base is critical as one of our witnesses 

pointed out. We haven’t been hit on the ground from the air since 

1953 for a reason and that is our industrial base. If we lose the 

factories we lose the know-how, we lose the industrial base. I will 

ask all three panelists, does anyone here disagree that we should 

take into account how a foreign investment can result in the loss 

of American jobs especially when outsourcing means our industrial 

base and our knowledge goes overseas? 

Mr. CHEWNING. I am happy to take a first cut at it. Under 

FISMA, or the statute in 2007, loss of critical production capability 

with an adverse impact on national security is one of the factors 

we are to look at and so access to critical capability within our own 

domestic industrial base typically would warrant concern. 

Mr. SHERMAN. But jobs are not— 

Mr. CHEWNING. It would depend on the context of the jobs. Just 

any job not necessarily, a job that would create a national security 

concern, would. 

Mr. SHERMAN. Let’s hear from the other witnesses. 

Mr. ASHOOH. Yes, sir, if I might chime in. This is where the 

value of the interagency nature of CFIUS really, really comes 

home. Because in addition to as you have heard me go on about 

the export controls system, one of the other authorities that Commerce holds is management of the Defense Priorities & Allocation 

System, which is essentially a review of our industrial, defense industrial base to make sure that it is not only adequate but ready. 

That is a sensibility that we bring into CFIUS transactions. 

Chairman BARR. The gentleman’s time is expired. 

Without objection, the gentleman from California, Mr. Royce, is 

permitted to participate in today’s subcommittee hearing. Mr. 

Royce is a member of the Financial Services Committee and chairman of the House Foreign Affairs Committee with jurisdiction over 

the export controls system and we appreciate his interest in this 

important topic also as the author of the Export Control Reform 

Act of 2018. 

Mr. ROYCE. Thank you very much, Mr. Chairman. I thank the 

panel for being here. As we have heard today, export controls and 

CFIUS have different, independently important, and complemenmcarroll on FSR431 with DISTILLER

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tary responsibilities. I think U.S. technological leadership is going 

to be essential. Personally, I am a little chagrined that we didn’t 

have higher standards a long time ago with respect to chip manufacturers in terms of the security aspect of that and the reliability 

of that and I think that our leadership with respect to emerging 

and foundational technologies are absolutely essential to our longterm view as national security concerns here. 

My view is that the U.S. should pursue a whole of Government 

strategy that does not rely exclusively on CFIUS or exclusively on 

export controls, but builds strength by countering illicit technology 

transfer and enhancing the U.S. economic competitiveness and enhancing our technological superiority. I think we have to keep an 

eye on that in its totality. Does anyone disagree with that proposition or want to make a caveat to that? 

Mr. ASHOOH. No, sir, heartily endorse what you are saying. 

Mr. CHEWNING. Yes, 100 percent. 

Mr. ROYCE. I thank the panel. 

Secretary Ashooh, then I will ask you. The Export Administration Act was designed to impose trade controls on the Soviet bloc 

and it was never comprehensively updated. It has been in lapse 

most of the last quarter century. I have introduced the Export Control Reform Act of 2018, as the Chairman mentioned, which would 

repeal the expired authorities and replace it with a modern structure, a structure to regulate the export of dual use items and 

emerging critical technologies. 

Do you agree with the proposition that it is time to enact a modern statute that lays out clear policies and procedures for the Administration of our dual use export controls including requirements 

that such controls are adapted and regularly updated to respond to 

the evolving demands of the 21st century? 

Mr. ASHOOH. Sir, it is not just time, it is overdue. I will reiterate 

my gratitude for your thoughtful leadership on this issue. The statute that is in lapse refers to cold war anachronistic not only terminology but authorities and so this is a very, very important initiative you have begun. Dual use technology at one time was a fairly 

slim slice of American technology leadership. It used to be, quite 

frankly, driven out of the national security establishment. That has 

changed as we all know and we need to update our authorities to 

reflect that. 

Currently, we are operating under an Executive Order called 

IEEPA, the International Emergency Economic Powers Act, and 

that allows us to operate but is not reflective of the challenges we 

are trying to meet. Your efforts on this are really quite important 

and we appreciate it. 

Mr. ROYCE. Well, thank you. My own view on this and that is 

reflected in the hearing that we had before the Foreign Affairs 

Committee yesterday is that it is actually the export control system, in my view, that is best place to lead a whole of Government 

solution to this, especially when we consider what is necessary to 

counter Chinese and other adversarial efforts to acquire sensitive 

U.S. technology, to do this in tandem with CFIUS. Our export in 

controls and CFIUS both require this attention. 

But in terms of how we are going to lead to this to achieve this 

result, I think it is an important point and I raise it here at the 

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committee today and I again thank the Chairman for giving me 

some time to make that point. Thank you very much, panel. 

Chairman BARR. Thank you and the gentleman yields back. The 

Chair now recognizes the gentleman from Ohio, Mr. Davidson. 

Mr. DAVIDSON. Thank you, Chairman, and I thank our witnesses. 

I really appreciate the attention that this topic has received by our 

whole committee, by the subcommittee, by Mr. Pittenger, and by 

Mr. Heck as well. I really appreciated Mr. Heck’s opening remarks 

in particular about the sense of urgency that this topic needs. 

I was a cadet at West Point when similar topics came to mind 

to me because that was when release authority for sensitive technology migrated from Defense to Commerce. One of the first actions was for Hughes to transfer the technology to launch multiple 

vehicles off of one launch platform. One rocket goes up, multiple 

little satellites go out into precise orbit, obvious applications for 

warheads and other things. I felt like we started down a bad path 

with that very decision, I don’t know that we have entirely recovered. 

But in that same timeframe we have seen that China has figured 

out a grand strategy in a way that the rest of the world really 

hasn’t. We have been playing in a very different dynamic. In a lot 

of ways, in my opinion, we haven’t figured out a course of action. 

We have vacillated from the, say, John Bolton school of thought to 

the John Kerry school of thought and there is a wide gulf in between. But we don’t have a unified way to deal with much of our 

national security. That has implications from everything like we 

are still on the same authorization for military force that happened 

days after 9/11 despite missions that we know can’t be jammed 

down it, but we lack the sense of cohesion. Until we really get that 

top level grand strategy I don’t think we will get a lot of things 

right. 

In the meantime, we can’t afford to get this wrong or continue 

to get this wrong because underlying it technology is being used by 

those people that do employ grand strategy and all the resources 

of their country, not just militarily but their economy, their academia, to accomplish their stated national objectives. China’s One 

Belt One Road is probably the best example of that though not the 

only one. 

With that a lot has already been said by the time you come to 

someone in the rank order that I get to question, but Mr. Pittenger 

and Mr. Royce had good dialog about the concern and the differentiation between export control. Mr. Ashooh, you had a good answer 

to that but I guess, if you could, just boil it down into the why 

should CFIUS control intellectual property if that intellectual property is already controlled by Commerce? 

Mr. ASHOOH. Well, intellectual property is actually a broader 

term than just the technology transfers that export control worries 

about so it is a much larger category. But again I go back and it 

is less about the subject matter of the technology and more about 

the method that we are talking about. CFIUS is designed to get at 

transactions and quite frankly there are a lot of innovative transactions out there that CFIUS has trouble getting at. Again this is 

why we are here today. 

mcarroll on FSR431 with DISTILLER

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But by the same token, export control system is trying to aim at 

those technologies that are a problem. In the current state where 

China is in particular, although let’s not forget there are other adversary nations that are also quite aggressive, but China in particular has a strategy to accost our system to appropriate technology. Again that is why they are both necessary, but they are designed to do different things. 

Mr. DAVIDSON. Thanks for that. 

Mr. Tarbert, some of the country’s largest tech firms have been 

concerned that if CFIUS reform is done incorrectly it could create 

a parallel export control system so that balance that is there, differentiation, the group believes that the impact of a dual system 

could greatly hinder the speed of which business transactions are 

done. Frankly, sometimes because of the structure it has been a little bit ambiguous as to whether the transaction desired would fall 

under what type of oversight or regulation. Is there a risk that 

technology companies’ fears are justified? 

Mr. TARBERT. No. I think every intention was made for the regulations to make sure there is unnecessary duplication. We have 

been meeting with the technology companies and firms and all 

sorts of other stakeholders. I think now we are working with a set 

of technical amendments to make sure that clarification is in the 

text of the bill itself so we won’t create a dual two-tiered system. 

Mr. DAVIDSON. Thanks. I think there has been a lot of attention 

given to that and as my time wraps up I do want to echo Mr. Hill’s 

concerns about the designation of private equity as a suspect way 

to transfer technology. I hope we can keep the vibrant economy we 

have and protect the vital technology that we need to. With that, 

Chairman, I yield. 

Chairman BARR. Thank you. The gentleman yields. Now the 

Chair recognizes the gentleman from Indiana, Mr. Hollingsworth. 

Mr. HOLLINGSWORTH. Well, happy Thursday. I appreciate the opportunity to frankly listen to a lot of the testimony and hear some 

of the remarks and frankly wanted to add that I really appreciate 

Mr. Pittenger’s effort here and the legislation before us to talk 

about how we might reform some of these programs that, as you 

well said, haven’t been reformed in a long period of time. I am no 

advocate for the status quo. I think with the emergence of new 

threats, the emergence of new opportunities, we need to make sure 

that we are keeping up with the times. But I admittedly do have 

a lot of concern about the potential unintended effects of creating 

a larger and larger structure here. 

I think one thing that this town does very poorly is we see a 

problem and there may be an existing solution to that problem that 

we could revise and fix but instead we layer a whole new superstructure on top of it to layer over the problem and then we get 

into more and more duplicative work, more and more duplicative 

regulations that end up having a chilling effect on American competitiveness around the world. I certainly don’t believe that we 

need to put American national security in the backseat but I don’t 

believe that we should put American firms at a competitive disadvantage around the world. 

There are so many great things about this legislation and the 

concern that I continue to have and wanted to really talk through 

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today with you guys was really about this outbound portion making 

sure that U.S. firms are still able to work abroad. What I want to 

be careful of is the insinuation that certain companies or certain 

firms are engaged in inherently un-American activities, inherently 

handing away their prized possession, the intellectual property 

that they have spent decades and billions of dollars developing in 

some willy nilly approach instead of a thoughtful, dutiful approach. 

Taking it as a given that we want to reform the status quo, I 

guess I want to better understand what the unintended consequences could be to American firms and the American economic 

competitiveness around the world and their ability to engage with 

other firms and in other markets around the world. What might be 

the unintended consequences of taking an expanded CFIUS to outbound transactions as well? Let’s just think about the negative, 

and I will start with Mr. Tarbert. 

Mr. TARBERT. Sure. Actually CFIUS now can cover outbound 

transactions. Our regulation now allows us anytime there is a U.S. 

business that is being taken outside of the United States and put 

in a JV we have— 

Mr. HOLLINGSWORTH. This is certainly an expansion of the outbound. Yes. 

Mr. TARBERT. Yes. I would say what this does is it looks at a 

business capability, something that falls a little below what we can 

actually, technically, view as a business. I think we are very mindful of ensuring that our American businesses can compete abroad. 

Obviously national security is our first priority, but I don’t think 

it is an and/or. I think we can get this right through technical 

amendments, through rolling up our sleeves working with you and 

your staff to ensure we do both. 

Mr. HOLLINGSWORTH. Yes. Additionally, so we have talked a lot 

about this legislation and I am a big fan of legislative process. I 

am a big fan of Article 1 certainly, but legislation takes time. Writing the rules, putting forth the procedures from this legislation 

isn’t something that we are going to pass on day one, day two we 

are going to get this thing up and running. I continue to come back 

to some of the existing structures that we have in place, really updating those, really making sure that we can enforce something 

very quickly. It is two to 3 years that it might take to pull this together from a legislative aspect. That is forever in technology 

today. 

I wondered if Mr. Ashooh might talk a little bit about what we 

might do in the interim that could be a better, more appointed solution at controlling some of this work that might need to be done 

on those emerging technologies we don’t want to be transferred to 

other countries. 

Mr. ASHOOH. Thank you, sir. Yes, to your point, we can’t afford 

to wait if there are things we can do now, we need to do them now. 

The Department of Commerce is doing that. We have talked a little 

bit about emerging technologies. That is clearly an area where we 

need to up our game. We are not waiting for legislation. 

Mr. HOLLINGSWORTH. How do we up our game? Is it going back 

to export control? Is it making sure that we update these and have 

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panded CFIUS? How do we do that in the interim? What does up 

our game mean? 

Mr. ASHOOH. Well, we do that now and gratefully we do it with 

the help of the interagency where we are constantly reviewing our 

controls. That has always occurred. It is more in terms of what are 

the challenges we have been facing recently. In one area commonly 

referred to as emerging technologies, that is this class of technology 

that really is coming at us at a rapid pace, very broad, very deep, 

but it is also coming from nontraditional areas, the classic two people in a garage come up with some idea. They know nothing about 

CFIUS. They know nothing about export controls. 

What Department of Commerce does have is an outreach capability to encourage knowledge, so that they comply with the system 

that we have, that we need to do better at and are. 

Mr. TARBERT. May I just chime in? I just want to say, we are 

modernizing CFIUS so we are not creating a new process, but rather we are taking something that has worked for 30 to 40 years. 

Mr. HOLLINGSWORTH. Yes, but it is certainly an expansion of the 

existing process and it is certainly an expansion of the resources. 

Mr. TARBERT. It is. 

Mr. HOLLINGSWORTH. What I am really worried about is that in 

order to continue to build and maintain this competitive advantage 

companies have to have the ability to work around the world to be 

able to garner the type of revenues needed to continue the huge 

amount of R&D that they have to do to compete around the world 

and to continue this advantage. The more speed bumps we put in 

their place, the more opportunity we give other countries’ firms the 

opportunity to be able to develop R&D faster than us. To me it is 

accelerating our own R&D, not just putting speed bumps in place 

around the world. 

Mr. TARBERT. We fully agree and we don’t view it as a speed 

bump. 

Mr. HOLLINGSWORTH. All right. With that I will yield back. 

Chairman BARR. The gentleman yields back. With the indulgence 

of the witnesses, and I see Mr. Chewning may have an interest in 

chiming in on that point as well, just a few more brief questions 

if we could on related topics. 

Let me start again with the Secretary Tarbert. I think you have 

made a compelling case for the need for modernization of CFIUS. 

Certainly I applaud the gentleman from North Carolina and his 

work and Senator Cornyn and Mr. Heck, here, for their work. The 

case I think has been made that we do need to modernize CFIUS. 

But what the committee continues to hear and it dovetails with 

what Mr. Hollingsworth was saying that is a concern is that if 

FIRRMA were enacted as it is presently proposed CFIUS cases 

could rise to an estimated 10,000 cases in short order. Even if that 

expansion is only a couple thousand additional cases that is still 

a massive increase and every business that we talk to says that 

CFIUS resources are already constrained. 

The question is both one of caseload, the agency’s capabilities to 

handle increased caseload that very well may be justified by national security developments, but answer that question for us, all 

of you, the capabilities of handling an increase in caseload and, second, what that means in terms of your resource needs. The current 

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legislation has a mechanism for a fee. There are some concerns 

that fees associated with additional costs for benign transactions 

would create those speed bumps that Mr. Hollingsworth was talking about. 

Could you just respond to those concerns and how you would propose this legislation address those concerns? 

Mr. TARBERT. Sure, so I will go first. I think again as I have said 

before, we want to narrow the scope of transactions to those that 

are most likely to raise national security concerns and not look at 

other transactions that are not likely to raise national security concerns. The more we can put that tightening in the text of the bill 

itself the easier that will be for us. It will provide added clarity for 

the business community. That is number one. 

Number two, I would say, is that the fees are an important factor 

here. I think we want to make sure that the level of the fees, if 

we decide to charge them, don’t impact the economics of the transaction, but at the same time shift some of that burden to the people 

in the business that are actually doing the transaction instead of 

the American taxpayer. Those would be my points. 

One final point to Mr. Hollingsworth’s good question about, look, 

what are we going to do now. Section 26 of the bill says that this 

doesn’t go into effect until the secretary signs, certifies that we 

have the resources, the regs in place, but the other thing it does 

in subsection C is it allows us to conduct pilot programs. If there 

is a very specific national security risk that we need to focus on, 

a subset of transactions, we could do that on day one, conceivably 

the day that a legislation is passed. 

Chairman BARR. OK, thank you for your answer there. 

Mr. Chewning, I wanted to follow up with you and if you wanted 

to react to Mr. Hollingsworth’s questions, please feel free, but it 

was very helpful your testimony about thinking of CFIUS as a 

backstop and I wanted to follow up on that. How does the FIRRMA 

legislation update CFIUS in a way to capture technology transfers 

that the export control system might miss and could you maybe 

give us a scenario of how that would work? 

Mr. CHEWNING. Yes. No, I think happy to and I think I can probably respond to both. I think it is important just to reframe the 

context for why we think this is important from a national security 

dimension. The National Defense Strategy which recently came out 

from the Department of Defense said, inter-state rivalry is now the 

primary national security concern for the Department of Defense. 

One of the competitors we are facing is the second largest economy in the world and spends about 2 percent of their GDP on military equipment. They have an industrial policy that is designed to 

extract technology from Western companies, put up walls to defend 

their own industry so they can get global scale, and then eventually outcompete our domestic industry. I think it is important to, 

as we think about this measure, also make the point that ultimately it is about protecting U.S. industry and putting appropriate 

value on intellectual property so it can’t be stolen through technology transfers. That is in the long run good for American business. 

Chairman BARR. Thank you. 

Secretary Ashooh, did you want to chime in on that? 

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Mr. ASHOOH. Well, I would certainly go back to the resource 

question because that is an important one. As has been said, we 

are already at an all-time high. From a Commerce perspective, one 

of the ways that I think is an effective way that we approach 

CFIUS is that we actually have very few, hundred percent dedicated to CFIUS, employees. We leverage the bureaus, science, and 

technology and business transaction personnel that we have now. 

Having said that, in the case of a large scope increase that might 

occur that means is, it is going to put pressure on the whole organization which does all the other things that we talked about. We do 

need to be thoughtful about how we go forward. Having said that, 

we also think it is a really good approach to leverage the organization as a whole rather than have as many dedicated. 

Chairman BARR. Thank you. My time is expired and the Chair 

will now recognize for a second line of questioning, Mr. Pittenger. 

Mr. PITTENGER. Thank you, Mr. Chairman. I do appreciate it. To 

the point of my friend Mr. Hollingsworth’s inquiry, I would say 

that what we have done in this bill, in creating a good guys list, 

is going to create even greater access to foreign investment, capital 

investment in this country, to those who subscribe to the same 

standards that is not correct today. 

In consideration of the resources that are needed, I think we 

should keep in mind the Chinese, particularly, investment, and 

there are other concerned parties, in 2010 was about $4 billion, 

2016 is $46 billion. Let’s assess the scope of the problem that we 

are addressing now. Since 2015, they have acquired 43 semiconductor companies, 20 of which have been in the United States. This 

is a very significant concern. These are supply chains to our DOD 

very often. 

The crisis is there, the concern is there. I would welcome the 

comments from those on our panel to again show the distinction between export control and CFIUS. CFIUS is prospective. CFIUS 

looks—this is export control. Apple is CFIUS. It is the company 

that owns this. I think what gets lost in the maze here is the distinction of what CFIUS is capable of doing that is not consistent 

with export control, if you would comment on any of those issues. 

Mr. ASHOOH. Sure. Sir, sometimes there are just transactions 

that cause concerns. By that I mean a marriage of two entities may 

just not be what you want to see done and it could have reasons 

that go beyond technology transfer and I won’t go into specific 

cases. Having said that and why you need them to work together 

is if CFIUS denies a transaction that doesn’t necessarily stop the 

technology transfer if there is technology transfer at concern. But 

most importantly is there are transactions that could be a concern 

to the United States national security establishment even though 

there is no technology transfer issue there, so we need both. 

Mr. PITTENGER. Are you concerned historically that we have an 

issue with the transfer of intellectual property in the past and that 

is why we need to address this today? 

Mr. ASHOOH. Oh yes, absolutely. I think it is important to note 

America is the technology world leader, no question, has been for 

awhile. That is the result of authorities we have been using to this 

point. The authorities that we have had, export controls, CFIUS, 

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those authorities have worked but they have also been adapted 

along the way and it is time to continue that. 

Mr. PITTENGER. Is this a particular concern in China in terms of 

their enhancing their avionics or their— 

Mr. ASHOOH. Yes, in particular in two ways and I think it is important to be specific. Eric has already mentioned the volume of 

dollars that China is willing to spend. That is clear. But even 

trickier is they are becoming quite adept at using their massive 

market as almost a bludgeon to U.S. industries that need access to 

large markets in order to keep our industrial base secure. That is 

the path that we need to find a way to— 

Mr. PITTENGER. They have accessed that through American markets and through the ability to obtain intellectual property through 

our own companies. 

Mr. TARBERT. Representative Pittenger, I think I am not the best 

person to speak to your point about the costs because I am from 

the Treasury Department and we generally don’t like to spend 

money. But I think it would be helpful if maybe the Pentagon could 

weigh in on the proposition, the value proposition here. 

Mr. PITTENGER. Yes, sir. 

Mr. CHEWNING. Yes. I think you can look at the costs or the incremental costs, but you also have to look at what it is protecting. 

If you think about it is an insurance policy on the hundreds of billions of dollars a year we spend on our own defense industrial base, 

it is a really small investment to make sure that what we are investing for our own military advantage and we are investing in our 

companies to be able to continue to replicate that still can and that 

investment doesn’t get eroded because of theft. 

Mr. PITTENGER. Thank you. I would like to ask if I can quickly, 

regarding technologies in the avionics industry would you all consider that a critical industry that must be protected and addressed 

by both our export controls and CFIUS processes? 

Mr. TARBERT. Yes, sir. 

Mr. CHEWNING. Yes. 

Mr. PITTENGER. Well, there are specific firms in China that have 

been very engaged in this concerns of national security way. Do 

you think there are scenarios where private sector engagement 

with Chinese firms could create national security vulnerabilities? 

Mr. CHEWNING. Yes. 

Mr. PITTENGER. Can you speak to the industries and capabilities 

in China that have benefited from the gaps identified in our export 

controls and CFIUS process and which industries in particular 

have benefited most from the gaps identified in our CFIUS laws? 

Mr. CHEWNING. I think to provide a complete context for that we 

probably need to have a closed door session. I think just in general 

the way we would view that is, think of the emerging technologies 

that we all would imagine that would have military application but 

that may not be on specific military programs right now. 

Chairman BARR. The gentleman’s time is expired. 

Just for the record we are going to clear two, possibly three more 

members for questions and then we will conclude the hearing. With 

that we recognize the gentleman from West Virginia, Mr. Mooney. 

Mr. MOONEY. Thank you, Mr. Chairman, for hosting this hearing 

and Congressman Pittenger for putting the bill in. I am already a 

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cosponsor. Thank you for coming to testify on this important issue 

with these cyberthreats and advanced technology, this is just a critical, critical issue. 

I guess my first question is to Mr. Chewning. In a 2006 report, 

the Government Accountability Office noted that the Militarily 

Critical Technologies List, MCTL, and the Developing Science & 

Technologies List, which your Department manages, have produced 

critical technology lists of questionable value. In a 2003 report, 

GAO further found that the MCTL, quote, ‘‘remains outdated and 

updates have ceased. The MCTL is not used to inform export decisions, its original purpose. Export control officials from DOD and 

the Department of Commerce and State reiterated their longstanding concern that the MCTL is outdated and too broad to meet 

export control needs,’’ close quotes. 

Mr. Chewning, can CFIUS agencies rely on you to promptly and 

effectively identify emerging technologies given the Pentagon’s own 

lack of confidence in the MCTL? 

Mr. CHEWNING. Yes. Just to be clear, the MCTL updates to that 

we have carried through, through on the USML and the CCL. 

While the MCTL itself we may have stopped updating, by statute 

we considered updates to USML and CCL as official updates. 

But your point, I think, is very accurate when, Congressman, in 

terms of how to think about the need for updating lists and obviously the role that that has in terms of export control versus the 

more holistic evaluation that a transaction would go through under 

FIRRMA and CFIUS. I think attention between knowing that technology has military application ahead of time versus realizing a 

specific transaction is worrisome based on the threat, the vulnerability, and the consequence evaluation that is done to complete it. 

Mr. MOONEY. OK, thank you. This is a separate question for 

whoever wants to answer, do you believe it would benefit or harm 

our national security if we included some NATO allies on a CFIUS 

white list but not other NATO allies on that white list? 

Mr. CHEWNING. What we are currently doing with our allies because they recognize a similar set of concerns, the 2017 National 

Defense Authorization Act asked the Department to establish the 

NTIB or the National Technology Industrial Base which is a partnership between ourselves, Canada, Australia, and the United 

Kingdom. That program is beginning to get underway now. One of 

the pilot programs that we are doing as part of that is a collective 

FDI protection regime so that we can create a common standard 

for foreign direct investment protection within that global set of industrial based activities. 

Mr. MOONEY. On a follow up to that also, I saw Australia and 

New Zealand are not part of NATO but they are members of the 

Five Eyes intelligence alliance, so intelligence and academic reports 

have noted that China has sought influence in these countries’ political systems through the use of campaign donations. Do you believe Australia and New Zealand should be on a CFIUS white list 

in light of China’s actions? 

Mr. CHEWNING. I think we need to make sure our allies are 

aligned with us and we have a collective set of protection regimes 

for our friends who are also under threat from the same set of concerns that we have here. 

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Mr. TARBERT. Congressman Mooney, first of all, thank you for 

your cosponsorship of FIRRMA and, second, the criteria for that 

list hasn’t been established yet. It will be established hopefully in 

FIRRMA and then also further by regulation. But I can tell you 

that we are working closely with all of our allies now because they 

are facing similar threats to us and they are starting to do similar 

processes in their legislatures and their regulatory to beef up their 

investment security as well. We are having an active dialog. 

Mr. MOONEY. OK. Thank you, Mr. Chair. I will yield my time 

back to the Chair. 

Chairman BARR. The gentleman yields back. The Chair now recognizes for a second round, the gentleman from Indiana, Mr. Hollingsworth. 

Mr. HOLLINGSWORTH. Back again. I probably won’t take the full 

5 minutes but I did want to address a few things that were said 

over the last little bit. The reality is America’s technological advantage wasn’t created or wasn’t enduring because of CFIUS, because 

of Export Control Act, it was created and enduring because of the 

R&D of thousands of firms across this country because of the great 

academic institutions we have, because of the ingenuity of Americans overall. 

That is what I am concerned about. What I am concerned about, 

as the gentleman Mr. Chewning said, was their Chinese goal of 

reaching global capacity and then competing with us. Well, if we 

did deny our firms the same capability and say now you can’t do 

business over there, you can’t do business over here, you can’t do 

business over there, then we deny them the ability to gain more 

and more resources to do more and more R&D so that we compete 

with this advantage. 

I think the history of moats has been very poor over time, but 

the history of doubling down on your advantage, continue in your 

work, and using older technology, these companies spent billions of 

dollars investing in and now they can use that as a cash cow so 

they can pour more money into R&D to develop new technology. I 

want that to happen in the United States. I want that to happen 

and be led by U.S. firms. What I am worried about is we are denying them the ability to do that and that things through the regulatory or bureaucratic process will begin to get mired up such that 

they can’t leverage those capabilities that they spent decades and 

billions of dollars building these platforms for. 

I think there have been instances and continue to be instances 

where we use decades-old technology, go to emerging world countries, go to other countries and begin to sell that relatively low cost, 

high margin businesses that they can use those dollars to reinvest 

back here so that we have those advantages in the future. I think 

that history has shown time and time again that that is what creates enduring competitive advantages and gaps between us and the 

other world. 

I am not in any way saying CFIUS needs to remain unchanged. 

I am not in any way saying that China doesn’t have a comprehensive, thoughtful, and tactful strategy for how they might get at 

these technologies. What I am simply saying is they will find some 

way to get in the door. I have seen them hack OPM down the 

street. We need to make sure that we have the advantage because 

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our companies are leading the world in the work that they do in 

their fields and their industries and I am worried we are putting 

them at a disadvantage in doing this. 

With that I will yield back, Mr. Chair. 

Chairman BARR. The gentleman yields back. 

Does anybody seek—the gentleman from Washington seeks—OK. 

The gentleman from Washington is recognized. 

Mr. HECK. Thank you, Mr. Chairman. I appreciate the comments 

from my friend from Indiana very much and would like to, however, at least put it within a different context. Namely, our technological advantage was developed over a long period of time which 

was not within a global economy. We exist today under a much different world than we did at the time in which our technological advantage accelerated. In fact, I think I read recently that global 

trade has increased fivefold just since 1980. It is a stunning increase in the interweaving of the economies of the nations of the 

earth in the relatively recent past. We have a different context. 

I think it is also important to note that our technological advantage has been brought about in no small part because of public investment in research and development and that is an investment 

that we need to continue to make. Indeed, I have also read recently 

that the public investment in basic science research and development as a percentage of GDP is the lowest level that it has been 

since the early 1950’s. There are a lot of dimensions to this in order 

for us to keep our technological advantage. 

Again, those of us who are cosponsors and supportive of FIRRMA 

also believe very much that foreign investment in the United 

States is an important part of our Nation’s future and that this bill 

in fact will enable that by virtue of providing them with the certainty and us with the security that we need in order to do that. 

But the essential point remains and it should not be forgotten 

that what we are talking about here is an existential threat to the 

national security of our country. For those of you who aren’t yet behind that, I strongly encourage you to go back and, for example, 

be the beneficiary of the classified briefing that could be available 

to you and to look at as an example the Broadcom effort to acquire 

Qualcomm. I understand the concerns. That is a part of this process and I am glad they have been brought forward. I think, however, that the theoretical concerns, the hypothetical concerns are 

materially outweighed by what has clearly been demonstrated to 

be, as I indicated, an existential threat. 

What we should leave here with is consensus on a conclusion. 

CFIUS needs to be modernized. CFIUS needs to be updated. Let’s 

engage in the give and take about what the specifics of that may 

look like, but nobody should doubt that in the best national security interest of this country this is something that this Congress 

should do and should do immediately. 

With that I would be glad to yield my time to my friend from 

North Carolina. 

Mr. PITTENGER. Thank you, Mr. Heck, and thank you for your 

leadership with this important legislation. You have been a real 

thoughtful individual to work with. I would like, Mr. Chairman, to 

submit for the record a Department of Justice statement regarding 

the FIRRMA bill— 

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Chairman BARR. Without objection. 

Mr. PITTENGER. —Unanimous consent for that. One more question if I could ask the panel, if that is OK. 

We just would like for you all to just comment on the importance 

of the inclusion of joint ventures within the jurisdiction of CFIUS. 

Mr. TARBERT. I think it is incredibly important. We have seen a 

number of cases where people have had an M&A transaction that 

is under CFIUS jurisdiction and they have simply restructured it 

as a joint venture to evade our jurisdiction. 

Mr. PITTENGER. Thank you. I yield back, Mr. Chairman. 

Thank you very much to each of you. 

Chairman BARR. Thanks to all of our witnesses for their testimony today. It has been a very helpful hearing for all members and 

we appreciate your contributions to this important work. 

The Chair notes that some Members may have additional questions for this panel, which they may wish to submit in writing. 

Without objection, the hearing record will remain open for 5 legislative days for Members to submit written questions to these witnesses and to place their responses in the record. Also, without objection, Members will have 5 legislative days to submit extraneous 

materials to the Chair for inclusion in the record. I would ask our 

witnesses to please respond as promptly as you are able. This hearing is now adjourned. 

[Whereupon, at 12:04 p.m., the subcommittee was adjourned.] 

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