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[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]

                     OVERSIGHT OF THE COMMITTEE ON
                       FOREIGN INVESTMENT IN THE
                    UNITED STATES (CFIUS) AND OTHER
                     EFFORTS TO STRENGTHEN NATIONAL
                     SECURITY IN THE UNITED STATES

=======================================================================

                                HEARING

                               BEFORE THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 13, 2023

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 118-44
                           
 [GRAPHICSNOT AVAILABLE IN TIFF FORMAT]                          
 
                               __________

                   U.S. GOVERNMENT PUBLISHING OFFICE                    
53-872 PDF                  WASHINGTON : 2024                    
          
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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

               PATRICK McHENRY, North Carolina, Chairman

FRANK D. LUCAS, Oklahoma             MAXINE WATERS, California, Ranking 
PETE SESSIONS, Texas                     Member
BILL POSEY, Florida                  NYDIA M. VELAZQUEZ, New York
BLAINE LUETKEMEYER, Missouri         BRAD SHERMAN, California
BILL HUIZENGA, Michigan              GREGORY W. MEEKS, New York
ANN WAGNER, Missouri                 DAVID SCOTT, Georgia
ANDY BARR, Kentucky                  STEPHEN F. LYNCH, Massachusetts
ROGER WILLIAMS, Texas                AL GREEN, Texas
FRENCH HILL, Arkansas, Vice          EMANUEL CLEAVER, Missouri
    Chairman                         JIM A. HIMES, Connecticut
TOM EMMER, Minnesota                 BILL FOSTER, Illinois
BARRY LOUDERMILK, Georgia            JOYCE BEATTY, Ohio
ALEXANDER X. MOONEY, West Virginia   JUAN VARGAS, California
WARREN DAVIDSON, Ohio                JOSH GOTTHEIMER, New Jersey
JOHN ROSE, Tennessee                 VICENTE GONZALEZ, Texas
BRYAN STEIL, Wisconsin               SEAN CASTEN, Illinois
WILLIAM TIMMONS, South Carolina      AYANNA PRESSLEY, Massachusetts
RALPH NORMAN, South Carolina         STEVEN HORSFORD, Nevada
DAN MEUSER, Pennsylvania             RASHIDA TLAIB, Michigan
SCOTT FITZGERALD, Wisconsin          RITCHIE TORRES, New York
ANDREW GARBARINO, New York           SYLVIA GARCIA, Texas
YOUNG KIM, California                NIKEMA WILLIAMS, Georgia
BYRON DONALDS, Florida               WILEY NICKEL, North Carolina
MIKE FLOOD, Nebraska                 BRITTANY PETTERSEN, Colorado
MIKE LAWLER, New York
ZACH NUNN, Iowa
MONICA DE LA CRUZ, Texas
ERIN HOUCHIN, Indiana
ANDY OGLES, Tennessee

                     Matt Hoffmann, Staff Director
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    September 13, 2023...........................................     1
Appendix:
    September 13, 2023...........................................    49

                               WITNESSES
                     Wednesday, September 13, 2023

Rosen, Hon. Paul, Assistant Secretary, Investment Security, U.S. 
  Department of the Treasury.....................................     8

                                APPENDIX

Prepared statements:
    Rosen, Hon. Paul.............................................    50

              Additional Material Submitted for the Record

Lucas, Hon. Frank:
    Letter to Chairman McHenry and Ranking Member Waters in 
      support of H.R. 3378, dated September 20, 2023.............    53
Luetkemeyer, Hon. Blaine:
    Wall Street Journal article, ``A DuPont China Deal Reveals 
      Cracks in U.S. National-Security Screening,'' dated August 
      12, 2023...................................................    54
Rosen, Hon. Paul:
    Responses to questions for the record from Representative 
      Fitzgerald.................................................    62
    Responses to questions for the record from Representative 
      Lawler.....................................................    65
    Responses to questions for the record from Representative 
      Lucas......................................................    64
    Responses to questions for the record from Representative 
      Meuser.....................................................    67
    Responses to questions for the record from Representative 
      Waters.....................................................    69

 
                     OVERSIGHT OF THE COMMITTEE ON
                       FOREIGN INVESTMENT IN THE
                    UNITED STATES (CFIUS) AND OTHER
                     EFFORTS TO STRENGTHEN NATIONAL
                     SECURITY IN THE UNITED STATES

                              ----------                              

                     Wednesday, September 13, 2023

             U.S. House of Representatives,
                   Committee on Financial Services,
                                                   Washington, D.C.
    The committee met, pursuant to notice, at 10:11 a.m., in 
room 2128, Rayburn House Office Building, Hon. Patrick McHenry 
[chairman of the committee] presiding.
    Members present: Representatives McHenry, Sessions, Posey, 
Luetkemeyer, Huizenga, Wagner, Barr, Williams of Texas, Hill, 
Loudermilk, Davidson, Rose, Steil, Timmons, Norman, Meuser, 
Fitzgerald, Garbarino, Kim, Donalds, Flood, Lawler, Nunn, De La 
Cruz, Houchin, Ogles; Waters, Velazquez, Sherman, Meeks, Lynch, 
Green, Cleaver, Himes, Foster, Beatty, Vargas, Gottheimer, 
Gonzalez, Casten, Pressley, Horsford, Tlaib, Garcia, Nickel, 
and Pettersen.
    Chairman McHenry. The Financial Services Committee will 
come to order.
    Without objection, the Chair is authorized to declare a 
recess of the committee at any time.
    Today's hearing is entitled, ``Oversight of the Committee 
on Foreign Investment in the United States (CFIUS) and Other 
Efforts to Strengthen National Security in the United States.''
    There are a few housekeeping items before we begin. The 
hearing notice for this hearing identified two panels, and the 
only witness in the first panel, Assistant Secretary Rosen, 
will testify this morning in an unclassified setting in this 
hearing room. And there will be a second witness panel that we 
anticipate will occur after the first series of votes to 
discuss the classified portions of the CFIUS report.
    So, we are going to do this in two different settings, two 
different rooms, two different panels, but one hearing. 
However, pursuant to clause 2(g)(2) of House Rule XI, the 
committee must take a vote to move into a classified session to 
discuss testimony that has the potential to endanger national 
security. We will take that vote now in order to expedite the 
hearing later this afternoon.
    With that, pursuant to House Rule XI, clause 2(g)(2), I 
move that when we return from the first series of Floor votes 
this afternoon, the remainder of the hearing will be closed to 
all persons other than Members of the House, staff of the 
committee with TS/SCI clearances, the official reporter, and 
the witnesses and their counsels and representatives with 
appropriate TS/SCI clearances. We will close that portion of 
the hearing because the testimony we expect to receive may 
include material designated as classified, the disclosure of 
which would endanger national security.
    The question is on closing the remainder of the hearing to 
the public. The clerk will call the roll.
    The Clerk. Mr. Hill?
    Mr. Hill. Aye.
    The Clerk. Mr. Hill votes aye.
    Mr. Lucas?
    [No response.]
    The Clerk. Mr. Sessions?
    [No response.]
    The Clerk. Mr. Posey?
    Mr. Posey. Aye.
    The Clerk. Mr. Posey votes aye.
    Mr. Luetkemeyer?
    Mr. Luetkemeyer. Aye.
    The Clerk. Mr. Luetkemeyer votes aye.
    Mr. Huizenga?
    [No response.]
    The Clerk. Mrs. Wagner?
    Mrs. Wagner. Aye.
    The Clerk. Mrs. Wagner votes aye.
    Mr. Barr?
    [No response.]
    The Clerk. Mr. Williams?
    Mr. Williams of Texas. Aye.
    The Clerk. Mr. Williams votes aye.
    Mr. Emmer?
    [No response.]
    The Clerk. Mr. Loudermilk?
    Mr. Loudermilk. Aye.
    The Clerk. Mr. Loudermilk votes aye.
    Mr. Mooney?
    [No response.]
    The Clerk. Mr. Davidson?
    Mr. Davidson. Aye.
    The Clerk. Mr. Davidson votes aye.
    Mr. Rose?
    Mr. Rose. Aye.
    The Clerk. Mr. Rose votes aye.
    Mr. Steil?
    Mr. Steil. Aye.
    The Clerk. Mr. Steil votes aye.
    Mr. Timmons?
    [No response.]
    The Clerk. Mr. Norman?
    [No response.]
    The Clerk. Mr. Meuser?
    [No response.]
    The Clerk. Mr. Fitzgerald?
    [No response.]
    The Clerk. Mr. Garbarino?
    [No response.]
    The Clerk. Mrs. Kim?
    Mrs. Kim. Aye.
    The Clerk. Mrs. Kim votes aye.
    Mr. Donalds?
    [No response.]
    The Clerk. Mr. Flood?
    Mr. Flood. Aye.
    The Clerk. Mr. Flood votes aye.
    Mr. Lawler?
    [No response.]
    The Clerk. Mr. Nunn?
    Mr. Nunn. Aye.
    The Clerk. Mr. Nunn votes aye
    The Clerk. Ms. De La Cruz?
    Ms. De La Cruz. Aye.
    The Clerk. Ms. De La Cruz votes aye.
    Mrs. Houchin?
    Mrs. Houchin. Aye.
    The Clerk. Mrs. Houchin votes aye.
    Mr. Ogles?
    [No response.]
    The Clerk. Ms. Waters?
    Ms. Waters. Aye.
    The Clerk. Ms. Waters votes aye.
    Ms. Velazquez?
    Ms. Velazquez. Aye.
    The Clerk. Ms. Velazquez votes aye.
    Mr. Sherman?
    Mr. Sherman. Aye.
    The Clerk. Mr. Sherman votes aye.
    Mr. Meeks?
    [No response.]
    The Clerk. Mr. Scott?
    [No response.]
    The Clerk. Mr. Lynch?
    Mr. Lynch. Aye.
    The Clerk. Mr. Lynch votes aye.
    Mr. Green?
    Mr. Green. Aye.
    The Clerk. Mr. Green votes aye.
    Mr. Cleaver?
    Mr. Cleaver. Aye.
    The Clerk. Mr. Cleaver votes aye.
    Mr. Himes?
    Mr. Himes. Aye.
    The Clerk. Mr. Himes votes aye.
    Mr. Foster?
    Mr. Foster. Aye.
    The Clerk. Mr. Foster votes aye.
    Mrs. Beatty?
    Mrs. Beatty. Aye.
    The Clerk. Mrs. Beatty votes aye.
    Mr. Vargas?
    [No response.]
    The Clerk. Mr. Gottheimer?
    Mr. Gottheimer. Aye.
    The Clerk. Mr. Gottheimer votes aye.
    Mr. Gonzalez?
    Mr. Gonzalez. Aye.
    The Clerk. Mr. Gonzalez votes aye.
    Mr. Casten?
    Mr. Casten. Aye.
    The Clerk. Mr. Casten votes aye.
    Ms. Pressley?
    Ms. Pressley. Aye.
    The Clerk. Ms. Pressley votes aye.
    Mr. Horsford?
    [No response.]
    The Clerk. Ms. Tlaib?
    [No response.]
    The Clerk. Mr. Torres?
    [No response.]
    The Clerk. Ms. Garcia?
    Ms. Garcia. Aye.
    The Clerk. Ms. Garcia votes aye.
    Ms. Williams?
    [No response.]
    The Clerk. Mr. Nickel?
    [No response.]
    The Clerk. Ms. Pettersen?
    Ms. Pettersen. Aye.
    The Clerk. Ms. Pettersen votes aye.
    Mr. Chairman?
    Chairman McHenry. Aye.
    The Clerk. Mr. Chairman votes aye.
    Mr. Sessions. Am I recorded?
    The Clerk. Mr. Sessions, you are not recorded.
    Mr. Session. Please register me as an ``aye'' vote.
    The Clerk. Mr. Sessions is recorded as aye.
    Chairman McHenry. Mr. Huizenga?
    Mr. Huizenga. Mr. Chairman, I would like to be recorded as 
an aye.
    The Clerk. Mr. Huizenga is recorded as aye.
    Chairman McHenry. Mr. Barr?
    Mr. Barr. Aye.
    The Clerk. Mr. Barr is recorded as aye.
    Chairman McHenry. Are there any other Members who wish to 
record their vote?
    Mr. Ogles. Mr. Ogles as aye.
    The Clerk. Mr. Ogles is recorded as aye.
    Chairman McHenry. Any other Members not recorded who wish 
to be recorded or wish to change their vote?
    [No response.]
    Chairman McHenry. If not, the clerk will report.
    The Clerk. Mr. Chairman, on this vote, the ayes are 34.
    Chairman McHenry. A majority having voted in the 
affirmative, we will move into a classified session later this 
afternoon after the first series of votes on the House Floor. 
Room HVC 301 of the Capitol Visitor Center has been prepared 
for the closed portion of this hearing. If there is no first 
vote series at 1:30, the Chair will announce the exact timing 
of that closed portion at a later time in this hearing.
    I now recognize myself for 4 minutes to give an opening 
statement.
    Today, we will conduct oversight of the Committee on 
Foreign Investment in the United States, or CFIUS, and examine 
efforts to strengthen our national security. Thank you, 
Assistant Secretary Rosen, for being here, and I look forward 
to your testimony.
    CFIUS operates under a dual mandate: to address national 
security risks in foreign investments; and to maintain the 
United States' commitment to an open investment climate. Five 
years ago, Congress enacted the most far-reaching changes to 
CFIUS in a generation. This legislation, the Foreign Investment 
Risk Review Modernization Act, or FIRRMA, extended CFIUS's 
jurisdiction to certain non-controlling investments as well as 
real estate transactions to sensitive U.S. Government sites. 
FIRRMA also made operational updates so that CFIUS officials 
could complete investment reviews more effectively. This 
included creating the position that you now occupy, Mr. Rosen. 
These efforts were carefully tailored to legitimate national 
security risks.
    Yet, at the same time, FIRRMA underscored the United 
States' longstanding embrace of foreign investment. In addition 
to reforming how we look at inbound transactions, Congress also 
strengthened national security through a major outbound policy, 
the Export Control Reform Act (ECRA). This was the first long-
term reauthorization of export controls in nearly 4 decades.
    This legislation, which passed with FIRRMA, now serves as a 
legal basis for our export controls against adversaries like 
China and Russia. Like all previous CFIUS laws, FIRRMA 
recognized that an outside investor may pose a risk to the 
country receiving the investment. That is common sense, but now 
the Biden Administration is proposing to use CFIUS to regulate 
Americans' investments into China. That is nonsense.
    Congress has repeatedly dismissed this idea, and for good 
reason. If you oppose Beijing's state-owned enterprises, you 
want more Western investment into China, not less. And if you 
are concerned about Chinese technology companies, you want more 
Americans in control of them, not fewer. And if you want to 
expand the reach of U.S. sanctions and export control laws, you 
want Americans in Chinese boardrooms who are required to comply 
with these laws, not Chinese Communist Party (CCP) cronies and 
not Saudi princes. This is precisely why Xi Jinping has been 
attacking Western influence in Chinese companies. The Biden 
Administration's outbound investment proposal will only help 
him achieve that goal more quickly. That is not in the U.S.'s 
interest. And that is not in global economic interests.
    Since it was first floated a few years ago, the premise of 
an outbound CFIUS has lacked the basic facts necessary to 
warrant such a move. If you hear of loopholes and gaps, there 
is not a single real-world example. In May, I sent a letter to 
Secretary Yellen asking for data to justify outbound 
restrictions. Not one of my questions was answered, and that is 
because there is no data.
    Mr. Rosen, you have an unenviable job. Now that outbound 
regulations have been announced through Executive Order, 
Treasury must seek to avoid a disaster in its implementation, 
and I think you are the right person to do this and make the 
best out of a really tough situation. You know as well as I do 
that we must use time-tested tools to get tough on China, not 
novel concepts. We need clear rules of the road and action 
based on data and facts, not political gamesmanship.
    And as I have said all along, to outcompete China, we 
cannot become more like the Chinese Communist Party (CCP). We 
must double down on our commitment to free people and free 
markets. That is the smart, balanced approach that is 
bipartisan and time-tested. Taking concrete action is the 
toughest approach to countering the generational threat posed 
by the CCP. I look forward to hearing from you today, Mr. 
Rosen, about how we can work together to achieve our shared 
goals.
    The Chair now recognizes the ranking member of the 
committee, Ms. Waters, for 4 minutes.
    Ms. Waters. Thank you, Mr. Chairman. Good morning. My 
Democratic colleagues and I have long worked in a bipartisan 
way to protect our national security interests by closely 
monitoring foreign investment. We all agree that the Committee 
on Foreign Investment in the United States, or CFIUS, is a 
critical tool towards that end. That is why I am disappointed 
that once again extreme MAGA Republicans are trying to shut 
down the government. If they are successful, everyone in this 
country will be at the greatest security risk.
    I am so deeply concerned about the legislation that 
extremist Republicans here in Congress and in States like 
Florida and South Dakota are jamming through to protect certain 
groups of people with no connection to actual security risk 
from purchasing land. Let me be clear: This approach would do 
nothing for national security, would waste valuable resources, 
and, in many cases, is simply racist. CFIUS and its resources 
should be focused on actual legitimate threats to our nation's 
security, not on barring individuals from economic 
opportunities on the sole basis of their national origin.
    Next, I want to discuss outbound investments and whether 
American investments are being used to prop up U.S. 
adversaries. I have applauded the Biden Administration's latest 
actions on this issue. For years, committee Democrats and I 
have sounded the alarm on how private equity and venture 
capital funds are being used to finance military and 
adversarial technology in the People's Republic of China. The 
President's Executive Order is a good first step, but more can 
be done. For instance, an outbound screening framework could 
also address U.S. companies' supply chain resiliency, how 
workers are treated overseas, and climate risk, all of which 
deeply affect our economy and security.
    In addition, the Administration could review certain 
passive forms of investment, such as mutual funds and index 
investments, so Americans know whether and how their hard-
earned savings support adversarial nations. We also need to 
review the investments that private equity and venture capital 
firms are making in China-based companies because they may also 
pose ongoing threats. I hope my Republican colleagues agree 
that if we are truly to confront our adversaries, we need to 
ensure that CFIUS agencies are adequately funded and that 
trillions of dollars in American capital markets are not 
working against our interests.
    Lastly, I want to be clear that as we discuss national 
security, CFIUS is only one of many areas we should be 
concerned about. Not only are we weeks away from an extreme 
MAGA Republican shutdown that will pose grave harm to our 
nation's security, but Republicans are leading the charge to 
halt supplemental aid to support Ukraine in its fight against 
Putin's unlawful invasion. If they succeed, this will cause 
immeasurable harm to U.S. national security interests and 
democratic values and only embolden countries like China. So, I 
urge my colleagues to reverse course immediately before it is 
too late. I yield back the balance of my time.
    Chairman McHenry. The Chair now recognizes the gentleman 
from Missouri, Mr. Luetkemeyer, who is also the Chair of our 
Subcommittee on National Security, Illicit Finance, and 
International Financial Institutions, for 1 minute.
    Mr. Luetkemeyer. Thank you, Mr. Chairman. Today, the 
Communist Chinese Party poses the most significant strategic 
threat to the United States, both economically and militarily. 
For years, based on wishful thinking, Americans have been told 
that the rise of China would be peaceful, through trade and 
increased business, and that American interests could coexist 
with the CCP. As demonstrated by the Chinese spy balloon, which 
flew directly over my district in Missouri, Americans now know 
otherwise. Under Xi Jinping, the CCP seeks to undermine the 
United States at every turn. As we work to maintain our 
strategic advantages over the CCP, CFIUS plays a critical role 
in ensuring those foreign direct investments don't end up 
putting sensitive U.S. technology, data, or real estate into 
hostile hands.
    To that end, I am concerned about the integrity of the 
CFIUS process as it is being eroded, and that the cracks in our 
national security screening process are getting worse at a time 
when they should be getting better and tougher. We must ensure 
that CFIUS resources are focused on identifying and stopping 
investments that are dangerous to our national security, 
especially by the CCP switching roles, and I look forward to 
discussing that with you today. With that, Mr. Chairman, I 
yield back.
    Chairman McHenry. The Chair now recognizes the ranking 
member of the Subcommittee on National Security, Illicit 
Finance, and International Financial Institutions, Mrs. Beatty, 
for 1 minute.
    Mrs. Beatty. Good morning, and thank you, Mr. Chairman, and 
Ranking Member Waters, for holding this hearing to conduct 
oversight of the Committee on Foreign Investment in the United 
States, or CFIUS.
    I want to highlight three points. First, we must ensure 
that the agencies that make up CFIUS remain fully funded with 
sufficient resources to carry out their vital work. Second, we 
must make sure that CFIUS remains a narrowly-focused tool that 
protects the United States from legitimate threats to national 
security. And third, I want to take this time to re-emphasize 
the points made by Ranking Member Waters about the 
unquestionable importance of CFIUS as a critical tool in our 
national security toolbox. I look forward to hearing from you, 
Assistant Secretary Rosen, about not only the work of this 
committee, but about protecting our national security. I yield 
back.
    Chairman McHenry. The gentlelady yields back.
    Today, we welcome the testimony of the Honorable Paul 
Rosen, Assistant Secretary for Investment Security at the 
Department of the Treasury. Assistant Secretary Rosen, we thank 
you for taking the time to be here. We will recognize you for 5 
minutes for an oral presentation of your testimony, and without 
objection, your written testimony will be made a part of the 
record. Assistant Secretary Rosen, you are now recognized for 5 
minutes.

  STATEMENT OF THE HONORABLE PAUL ROSEN, ASSISTANT SECRETARY, 
      INVESTMENT SECURITY, U.S. DEPARTMENT OF THE TREASURY

    Mr. Rosen. Thank you, and good morning, Chairman McHenry, 
Ranking Member Waters, and members of the committee. Thank you 
for the opportunity to provide an update on the work of the 
Committee on Foreign Investment in the United States, or CFIUS.
    CFIUS, as many have mentioned here this morning, is a 
critical national security tool that conducts reviews of 
foreign investment for national security risks. The Secretary 
of the Treasury is the Chair of the Committee, which is 
comprised of the heads of nine Executive Branch departments and 
offices, with additional offices playing critical roles as 
national security demands. As Assistant Secretary, I lead and 
help execute the Secretary's role as Chair in that regard. 
Whenever necessary, the Committee takes action to address 
national security risks, while maintaining the status of the 
United States as the world's top destination for foreign direct 
investment.
    The Committee protects national security by screening 
foreign direct investment from any country, and, by law, we 
analyze the facts and circumstances of each transaction on a 
case-by-case. Our risk analysis is robust and it is focused on 
three factors: first, the potential threat emanating from the 
foreign investor; second, the national security vulnerabilities 
presented by the U.S. business; and third, the consequence of 
the transaction to national security. For example, if the 
Committee learned that an investor with ties to a hostile 
foreign actor was going to gain a controlling stake in a 
critical government contractor, the committee would almost 
certainly take action to address that national security risk. A 
few risks, however, are black and white.
    It is for this reason that our case-by-case assessment and 
due diligence is so important. When we identify risks, our 
mandate is to resolve them, whether by mitigating through 
enforceable restrictions on the parties, or, as a last resort, 
by recommending that the President block or unwind a 
transaction. As designed by Congress, the Committee does not 
implement a blanket country or sector-by-sector prohibition. 
Through our case-by-case approach, we actually gain greater 
insight and the ability to address actors and activities of 
concern.
    Over the years, as the national security threat environment 
has evolved, so has CFIUS. Most recently, Congress enhanced our 
authorities with the bipartisan Foreign Investment Risk Review 
Modernization Act, as was mentioned. The Committee has 
dedicated substantial time and resources to the successful 
implementation of FIRRMA and the efficient processing of a 
caseload that is at an all-time high. Prior to the enactment, 
the Committee processed 237 transaction filings in 2017, and 5 
years later, we have nearly doubled to 440 case filings last 
year.
    Among other things, FIRRMA provided the Committee with 
important authorities over certain non-controlling but non-
passive investments into sectors of particular importance, 
which had previously fallen outside the Committee's 
jurisdiction. It also provided the ability to review certain 
transactions involving real estate in close proximity to 
sensitive facilities such as military bases.
    We appreciate the continued bipartisan congressional 
support for our mission, which has enabled our office to 
continue growing across all functions. Since I was confirmed, I 
have sought to ensure that CFIUS is marshaling all available 
tools to support our national security mission. For example, 
when CFIUS reviews a transaction that raises national security 
concerns, we can and do mitigate those transactions by 
requiring certain measures to be taken. These measures are 
typically formalized in what is called a national security 
agreement or a mitigation agreement, which places requirements 
and conditions on the parties that are enforceable.
    And we do not stop in our mission after a mitigation 
agreement is signed, and the parties should not stop either. In 
monitoring the parties' compliance, we routinely conduct site 
visits, collect documents and information, and engage with 
third-party monitors and auditors to ensure that agreements are 
upheld. While preventing violations from occurring is our 
primary focus, the availability of robust remediation and 
enforcement tools is necessary because of the potential harm a 
breach could have on national security.
    As I conclude my remarks, you have my commitment that the 
Committee will continue to use every available tool to protect 
national security in the United States. Five years after the 
passage of FIRRMA, we continue to assess what additional tools 
or authorities may be necessary to protect national security, 
and I look forward to working with the committee on these 
efforts. And while I am mindful of the strict confidentiality 
obligations that Congress imposed on aspects of our work, I 
look forward to answering what questions I can in the open 
setting, and I understand that there will be a follow-up in a 
classified and closed-door setting to address additional 
matters.
    Thank you again for the opportunity to appear before you 
today, and I look forward to your questions.
    [The prepared statement of Assistant Secretary Rosen can be 
found on page 50 of the appendix.]
    Chairman McHenry. Thank you. We will now move to Member 
questions, and I will recognize myself for 5 minutes.
    Secretary Rosen, the Treasury's Office of Foreign Assets 
Control (OFAC) has years of experience managing restrictions 
related to outbound investment and other financial 
transactions, correct?
    Mr. Rosen. Correct.
    Chairman McHenry. And that is the case even when it is not 
qualified as a blocking transaction or a blocking sanction. For 
instance, OFAC administers outbound investments, and 
prohibitions against Chinese military companies, and does that 
well. It manages those restrictions for Russian energy 
entities, and it does that well. Does the Office of Investment 
Security have that kind of experience?
    Mr. Rosen. I'm sorry. Is your question, do we have the same 
experience as OFAC, Mr. Chairman?
    Chairman McHenry. Right.
    Mr. Rosen. We have different experience and different 
authorities, sir.
    Chairman McHenry. Right. We have an agency, OFAC, that does 
this well. Yet, we are trying to build a regime with an entity 
that doesn't have that kind of experience. Is that a fair 
assumption? Isn't what you are trying to stand up the kind of 
capacity that OFAC has?
    Mr. Rosen. It is similar but also has differences in many 
regards. One of the similarities, as you know, is standing up 
this Executive Order under the International Emergency Economic 
Powers Act (IEEPA), which is obviously the same authority that 
OFAC operates under, but the way the Executive Order is written 
is a bit different.
    Chairman McHenry. So, why not just do it through OFAC? We 
have done this for generations, so why not use OFAC?
    Mr. Rosen. We believe that the Office of Investment 
Security has learned important lessons from operating CFIUS. In 
terms of the Executive Order and what it requires, it sets up a 
notification and prohibition regime, and OFAC, while not under 
my jurisdiction, as you point out, is more of sort of a 
blocking and sectoral-based program.
    Chairman McHenry. Okay. Thank you for the answer. Mr. 
Rosen, let's just drill into this, because the specifics of 
implementation are going to matter. They are going to affect 
industries more broadly than just what the Executive Order 
says, so just let's get into specifics. We have a big 
discussion on the Senate side about our artificial 
intelligence. What are the specific differences between an 
artificial intelligence that helps a drone operator identify a 
military target on an image and an artificial intelligence that 
helps a doctor identify cancer on an MRI?
    Mr. Rosen. Mr. Chairman, it is a good question, and the way 
the Executive Order approaches artificial intelligence is, as 
you know, it identifies it as one of the categories of concern 
for U.S. investments. We are in the midst of a rulemaking 
process. We are working to collect information so that we can 
strike the right balance, because what we want to get at is the 
People's Republic of China's (PRC's) use of artificial 
intelligence for military modernization. We understand it is 
a----
    Chairman McHenry. But that is done through companies, and 
OFAC has a regime where we identify companies and people and we 
target companies and people. And then, we are setting up a 
regime where we are trying to identify through technology, 
companies and people who target them. It seems redundant to me, 
sitting on Capitol Hill and having been through the FIRRMA 
reauthorization process, of which you have done a good job of 
implementing huge facets. And so, in technical terms, how can 
you hold these things to be mutually exclusive when you use 
artificial intelligence in one company one way and in another 
company in another way? It is difficult, right? So, setting up 
this new expertise with this new approach as a result of the 
Executive Order could be tricky and cumbersome and time-
consuming, when we should be using the time-tested tools of 
OFAC.
    Mr. Rosen. Mr. Chairman, these are all important questions 
that you raise, and all questions that we have grappled with 
through implementation and working on the Executive Order. One 
of the important distinctions in this Executive Order that what 
we want to get at is, in addition to the issues that you 
identified in terms of companies we know about, we want to get 
at the development of these technologies before they are on an 
export control list, before they are on a sanctions list. We 
don't want the PRC and American investments to help fund the 
development of the next generation of military technology for 
the PRC. That is what we are trying to get at.
    Chairman McHenry. Right. So rather than using a CFIUS 
process that is cumbersome already for inbound investment, we 
have a capacity problem, and that is not specific to budgets. 
It is not specific to this Administration. We have a capacity 
problem given the amount of investment, and this is what I will 
just raise. Why not use the time-tested tools of OFAC and 
enhance that with budget capacity and everything else? That has 
been our approach. That is what our approach was as a matter of 
export controls and a reauthorization of FIRRMA, and I think 
that is what we should return to. That is my clear message I am 
sending to you.
    And with that, I will go to the ranking member for her time 
for questioning.
    Ms. Waters. Thank you very much. Mr. Rosen, I think that we 
all have so many questions and so many concerns on this issue, 
and there are many that I could talk about. But I thought I 
would bring up one that I and Chairman Brown of the Senate 
Banking Committee sent Secretary Yellen regarding the announced 
merger of the PGA Tour, the DP World Tour, and LIV Golf. This 
transaction largely benefits Saudi Arabia's sovereign wealth 
fund and, thus, its government.
    And as you and Secretary Yellen know, Saudi Arabia has a 
repressive government known for killing dissent, jailing 
dissidents, and enacting draconian punishments. Under Section 
721 of the Defense Production Act, CFIUS has jurisdiction over 
transactions that result in foreign government control, 
transactions involving companies that maintain or collect 
sensitive personal data of U.S. citizens, and certain real 
estate transactions, among others. I am asking now whether 
CFIUS assessed the nature of this merger to determine whether 
it has jurisdiction over the transaction. And if so, did you 
resolve any national security risks related to the transaction, 
and what did Mohammed bin Salman have to do with this merger?
    Mr. Rosen. Ranking Member Waters, thank you for raising 
this issue. I know this is an important issue for you and for 
many others. As you point out, we do have tools at CFIUS thanks 
to Congress' bipartisan effort to get, at on a case-by case 
basis, risks, particularly as they relate to foreign government 
control transactions, and sensitive personal data, as you have 
mentioned. Those are all critical components of how we assess 
and look at a review.
    Of course, CFIUS and FIRRMA impose strict confidentiality. 
And so, while I can't get into any specific transaction in this 
open setting, I want to reiterate our commitment to making sure 
that this committee knows that we look at issues that pose 
risks on a case-by-case basis, particularly as it relates to 
data and some of the issues that you raised. And I would 
reserve the balance of the discussion for the closed-door 
setting.
    Ms. Waters. Thank you. Let me just ask, did the brutal 
murder of Jamal Khashoggi by Mohammed bin Salman, at his 
direction--was that taken into consideration at all? He was an 
American citizen.
    Mr. Rosen. Again, I can't address any particular case in 
this context. As I laid out in my opening, we do engage in a 
very robust analysis that looks at the threat posed by the 
foreign acquiror and the vulnerability to the U.S. business to 
assess a national security risk.
    Ms. Waters. Does the Saudi Government benefit from this 
merger? That is one of the issues that certainly must be 
considered by us when we allow for these kinds of investments. 
Does the Saudi Government benefit from the merger?
    Mr. Rosen. Again, as a matter of statute, I am unable to 
address any particular case, but I would welcome a further 
discussion as permitted in a closed-door setting.
    Ms. Waters. Let me just say that I really do appreciate the 
work that you and the President have done on this issue of 
foreign investments, but I want you to know that we have to be 
tougher. We have to be a lot tougher. There is information that 
I cannot disclose in this hearing where I believe that our 
adversaries are continuing to have investments and purchases 
that I think are not in the best interest of this country. So, 
even though I consider what you have done to be very good, we 
have to be tougher and we have to be more focused because I 
think that our country, our democracy, et cetera, is at stake 
unless we really, really bear down on the investments from 
adversaries and others. So, I thank you for being here today, 
but my message is, get tougher. I yield back.
    Chairman McHenry. The ranking member yields back. We will 
now go to the gentleman from Texas, Mr. Sessions, for 5 
minutes.
    Mr. Sessions. Mr. Chairman, thank you very much. Mr. Rosen, 
welcome to the committee. We are delighted that you are here.
    Mr. Rosen does CFIUS have jurisdiction and review over what 
I might call real estate purchases that take place in 
agricultural lands?
    Mr. Rosen. Thank you, Congressman. CFIUS has three primary 
aspects of jurisdiction, and we do have jurisdiction over 
certain real estate transactions that involve agricultural 
land, and they occur in two primary ways. One is the 
acquisition by a foreign person of a U.S. business, and that 
acquisition results in control, broadly speaking, of that U.S. 
business, whether that is an agricultural business or 
otherwise. The other way that we get at a jurisdiction of this 
kind of activity is through the real estate jurisdiction that 
in FIRRMA, Congress provided to CFIUS, which provides 
jurisdiction for pure real estate transactions unrelated to a 
business in close proximity to a sensitive facility. And we 
work closely with our counterparts at the Department of Defense 
(DOD) to assess what is a sensitive facility. We have recently 
updated our regulations to expand the list of sensitive 
facilities and now have some 875,000 square miles of coverage 
in the United States for pure real estate jurisdiction.
    Mr. Sessions. Mr. Rosen, is that related to individuals, 
because they are not a United States citizen, or is that 
directly related to where there is a government entity behind 
that transaction?
    Mr. Rosen. On the control side that I mentioned, we look 
very closely at who the foreign acquirer is, who is doing the 
buying. What are their connections? What do we know about them 
from a threat perspective working with the Director of National 
Intelligence (DNI) and others. And in that context, we look 
very closely on a case-by-case basis to determine what are they 
getting and what are they going to have access to. Who are 
their commercial relationships with? What do we know about 
them, who sits on their board, et cetera. So, we very much look 
at the identity of the purchaser in that context.
    In the real estate context, we are looking at that, but 
what we are also looking very closely at is the proximity 
question, and we work very closely with our partners to assess, 
is this a proximity concern, what is the threat based on that 
analysis that I talked about, sir.
    Mr. Sessions. And certainly, the control of the money. Mr. 
Rosen, I have a bill with Congressman Ronny Jackson, where we 
have proposed that the Secretary of Agriculture sit on your 
Committee, your board that offers this analysis. How do you 
receive your information from the Agriculture Secretary?
    Mr. Rosen. Thank you for raising this because the United 
States Department of Agriculture (USDA) is one of our key 
partners that I talked about. While not a member, we have a 
process in place to ensure that we work closely with them, and 
it is important to unpack that a bit. We share visibility to 
USDA with all of the filings that we get so we can ensure, from 
USDA's prospective, where there is a food security issue, where 
there is an agricultural-related issue where they need to play 
a part and an active role. And looking at all the filings, when 
they do say, look, this filing has agriculture implications, we 
bring them in just as if they were a full member of the 
Committee, where they would be responsible for the risk-based 
analysis as well as providing certifications at the Secretary 
and Deputy Secretary level, so----
    Mr. Sessions. Thank you. According to United States 
Department of Agriculture, 37.6 million acres today of U.S. 
agricultural land is owned by foreign investors. That is nearly 
3 percent of all privately-held land in the United States. Have 
you done a good review of that, and do you believe that your 
purview takes that into account, and have you issued a report 
or how would you issue a report on those 37.6 six million acres 
of which the Agriculture Department speaks?
    Mr. Rosen. We would be happy to work with USDA and look at 
that question. We do through the----
    Mr. Sessions. See, this is my point, Mr. Rosen. If the 
Secretary of Agriculture were a regular part of your 
interaction and they had a person who looked at that, you would 
be able to tell me, ``Congressman Sessions, we have looked at 
that 37.6 million acres because we have been working with and 
they are a part of our team.'' Now, you are telling me you will 
be glad to look at it, and this is, I think, the concern that 
many of us on our side, meaning Members of Congress, have about 
the sensitivity we have about this as opposed to looking 
forward.
    I hope that you will take my comments as I intended them 
and that you will respond back to me, and I will accept your 
fair answer. Mr. Chairman, thank you very much. I yield back.
    Chairman McHenry. And if the witness will respond in 
writing to the gentleman's request.
    The gentleman from California, Mr. Sherman, is now 
recognized for 5 minutes.
    Mr. Sherman. Some have argued, and I fear the Chair was 
making this argument that somehow if we invest in China and 
Americans are on their boards, that we will have political 
influence in Beijing. As the former Chair of the Asia 
Subcommittee, I am here to say that is simply not the case. The 
Chinese Communist Party is not going to listen to business 
lobbyists. The Chinese Communist Party does not need political 
action committee (PAC) contributions in order to run in the 
next election.
    Since the beginning of this century when we granted Most 
Favored Nation status to China, we were told that if we share 
our economy with them gratuitously, they will share our values. 
That is simply not the case. The problem is that we have this 
enormous trade deficit with China. We have that because we do 
not have adequate tariffs. We have that because Walmart makes a 
lot of money importing from China, et cetera. And every year, 
we ship them $300 billion to $400 billion. That is close to $4 
trillion every decade, and that money is sitting there. It is 
going to do something, and almost everything it can do is bad.
    But we add to that our investment policy, which is closer 
to the jurisdiction of this committee. Half of the foreign 
initial public offerings (IPOs) here on Wall Street are from 
China. We send our investment dollars to China. I am looking to 
work with others to prohibit American index funds from 
investing in Chinese companies because the risks for investing 
in China should not be handled by paint-by-the-numbers index 
investing where you just automatically invest in companies.
    But even greater is the capital gains allowance. We provide 
an incentive for investors. We tax investors lower than we tax 
secretaries and nurses, and we do it because we want to 
encourage investors to build economies and create jobs by 
making investments in economies, and we provide that incentive 
to those who build the Chinese economy and provide jobs in 
China. So, we have this undefendable incentive for investing in 
China.
    Now, once the Chinese have this money, it is said, well, we 
don't want them to buy American farmland. Well, they can buy 
farmland in Ethiopia and upset our Africa policy. They can buy 
farmland in Russia and fund Putin's war. They can buy U.S. 
Treasuries, and numerous articles have been talking about how 
Chinese ownership of Treasuries is a problem. They can buy our 
companies. They can buy influence in Europe, or they can 
repatriate the money and spend it on AI technology. Once we 
incentivize investment in China, once we roll over and run a 
huge trade deficit with China, they have these funds, and 
perhaps the most benign thing they could do is buy American 
farmland. When they buy American farmland from an American, 
that American puts the money in a U.S. bank where it is 
available to build the American economy. It puts the money in 
the U.S. stock market where it is there to build the U.S. 
economy, and if we do have a fight with China, we can simply 
seize the farmland, just as they will take hostage all of our 
investments in China.
    My question is regarding investment in China. The argument 
is we want to choke off investment to strategic sectors, but 
money is fungible. How much do we accomplish by saying to an 
American, don't invest in an AI company in China, invest in a 
furniture factory in China, and then the Chinese investor, who 
would otherwise get the best return for investing in the 
furniture company, invests in AI? If we fund the non-strategic 
part of investment in China, won't they have all the capital 
they need to invest in the strategic party?
    Mr. Rosen. Thank you, Congressman, for the question and 
your interest on this important issue with regard to outbound 
investment to China. As this committee knows well, the 
President issued an Executive Order, and what underpins that 
Executive Order is the national security concern emanating from 
American investments that come with certain intangibles: 
branding, expertise, and the like.
    Mr. Sherman. So, the concern is that if you incentivize an 
American to want to see an AI company in China do well, that 
American may provide the technology and the expertise, not just 
the capital?
    Mr. Rosen. That is one of the bases upon which we are 
concerned.
    Mr. Sherman. Thank you.
    Chairman McHenry. The gentleman's time has expired. I will 
now go to the Vice Chair of the committee, Mr. Hill of 
Arkansas, for 5 minutes.
    Mr. Hill. I thank the Chair. Mr. Rosen, thank you for being 
here and representing the Treasury Department in front of this 
committee. We enjoy our engagement with your Department, and 
particularly on something important like this And you have seen 
strong bipartisan interest in the work of CFIUS, and that we 
are, on both sides of the aisle, laser-focused on making sure 
that it works well, and is effective in protecting against 
national security risk potentially posed by foreign investors.
    Mr. Rosen, your appearance today is ostensibly to talk 
about the Foreign Investment Risk Review Modernization Act 
(FIRRMA), and we are glad to have you here. It has been 5 years 
since it was enacted. It is hard to believe that 5 years has 
gone by. But also, the Biden Administration issued Executive 
Order 14083, ensuring robust consideration of evolving national 
security risk by CFIUS. Notably, the Executive Order doesn't 
change the committee's existing legal jurisdiction over the 
regulatory process, but it provides guidance on the national 
security risk factors that CFIUS should consider. Is that your 
understanding of that Executive Order?
    Mr. Rosen. Yes, Congressman. The guidance coming out of 
that order sharpens CFIUS's focus. It is also important from a 
public messaging standpoint so the community understands the 
things about which we are quite concerned.
    Mr. Hill. Good, and the risk factors include supply chain 
security and resiliency for eight specific industries, 
including artificial intelligence and quantum computing, but it 
also goes on to include clean energy and climate adaptation 
technologies. Is that right?
    Mr. Rosen. I believe there is a mention of that in the 
Executive Order, Congressman.
    Mr. Hill. Russia's invasion of Ukraine, I think, shows the 
whole world just how dangerous it could be for countries to 
make their essential energy dependent on a single country or a 
single source, and the failure to take an all-of-the-above 
approach to a diverse energy production portfolio or diverse 
geography threatens countries, and we have seen that in Europe 
in spades with the dependency on Russian gas, for example.
    But I feel the same way about our own energy security here 
in the United States. We passed H.R. 1 with an idea that we 
want to have an all-of-the-above energy strategy for decades 
ahead as we move to a less carbon-dependent world. So, Treasury 
and CFIUS thinking about national security risk factors as it 
relates to clean energy and adaption technology--what does that 
have to do with national security from a CFIUS point of view?
    Mr. Rosen. Congressman, thank you for the question on these 
factors, and as you pointed out at the top, Congress gave CFIUS 
broad authority to assess, through its analysis, what has an 
impact on national security. We look at all factors that may 
have relevance to national security, so in FIRRMA----
    Mr. Hill. Would you agree that if we had foreign investment 
in this country that was only interested in renewables, but we 
had no battery storage for any renewables, and that we 
dislocate our baseload power, that would be a national security 
risk as well, right?
    Mr. Rosen. Congressman, we have the benefit of looking at 
the facts and circumstances presented by each transaction, and 
we don't get into----
    Mr. Hill. Could TotalEnergies build a new refinery in the 
United States? Would you approve that?
    Mr. Rosen. I'm sorry. I didn't hear----
    Mr. Hill. TotalEnergies, the French energy company, would 
they be able to build a refinery? Would you approve a refinery 
in the United States?
    Mr. Rosen. Again, Congressman, it is important----
    Mr. Hill. I know it is. I am being rhetorical. I know I am 
not going to get the answer I am seeking, I understand, and I 
respect you for that. But you have to understand that Chairman 
McHenry and I write frequently to the Office of International 
Affairs at Treasury about making sure that an all-of-the-above 
energy policy is critical to the U.S. for our own domestic 
needs, but also for projecting America's influence around the 
world. For example, the European Bank for Reconstruction and 
Development (EBRD) does not finance nuclear. That is not smart, 
and they are very reluctant to finance the Romanians' or the 
Bulgarians' efforts to develop natural gas in their own Black 
Sea. I think that is shortsighted, and I think that is 
shortsighted at the World Bank and at the other international 
lending organizations. Do you agree that energy security is 
national security?
    Mr. Rosen. Certainly, energy security can be national 
security, but, again, we focus on the facts of a specific 
threat----
    Mr. Hill. I understand that CFIUS also considers foreign 
investments that might expose personal data. I know that is in 
the Executive Order as well. Can you tell us how you are 
protecting health and biological data in your work?
    Mr. Rosen. We are focusing on this very closely. The PRC 
has a demonstrated intent and capability to get access to 
troves of American personal data for espionage and other 
purposes. And any time a situation comes up in a case that 
presents potential exposure and other tools are not available 
to deal with it, CFIUS looks very closely at that, and----
    Mr. Hill. Thank you very much. I yield back, Mr. Chairman.
    Mr. Luetkemeyer. [presiding]. The gentleman's time has 
expired. With that, we will go to the gentleman from 
Massachusetts, Mr. Lynch, for 5 minutes.
    Mr. Lynch. Thank you, Mr. Chairman, and thank you, Mr. 
Rosen, for your willingness to testify before the committee and 
help us with our work.
    This past August, Executive Order 14105 was also released. 
This Executive Order directs the Treasury to draft regulations 
that require disclosure of or prohibit certain outbound foreign 
investments into mainland China, to Hong Kong, or to Macau. 
Some argue that the scope of this Executive Order is too 
narrow. They actually point out that it only covers certain 
aspects of advanced computing, quantum information 
technologies, and AI, and that other activity, including 
financial investment, might not be covered.
    So, I would like to just get your assessment and your view 
of how efficiently Executive Order 14105 would address U.S. 
policymakers' concerns about U.S. investments in Chinese 
technology and their capabilities, and if there are gaps, and I 
realize any Executive Order cannot be full spectrum over every 
concern, but if there are any gaps that you recognize that 
might be covered, just to give Congress an idea of what 
direction we might be looking at. Thank you.
    Mr. Rosen. Thank you, Congressman, and thank you for 
raising the important issue of outbound investment. As you 
point out, this is the President's Executive Order, and really 
what underpins the Executive Order is a concern that is 
squarely rooted in national security, that the PRC in this case 
can use not just American investment dollars, but the know-how, 
expertise, and branding that comes with those dollars, to help 
make their surveillance capabilities, their military 
applications, and intelligence more successful, more quickly, 
in a way that directly threatens American national security.
    So, we share concerns about supply chain resilience and 
supply dependence on China, but the purpose of this Executive 
Order is to focus on a narrow set of national security 
objectives with the clear mandate by the President to revisit 
on an annual basis to assess, to your point, what gaps may 
exist, and how we can improve it. And I think also, the benefit 
of the notification scheme is to collect more information and 
more data, as one of the issues that the chairman pointed out. 
And that is what underpins this Executive Order.
    Mr. Lynch. And I know we are going to revisit this over and 
over again, but any advice in terms of direction where you 
think Congress should be looking next?
    Mr. Rosen. We think that the right policy balance was 
struck in this Executive Order. We think that we are going to 
learn more over time. We think these three sectors are critical 
to the modernization of the PRC's military and intelligence 
state apparatus, and that is why we started with that focus. 
But of course, as we learn more, we would look forward to 
working with this committee to enhance the order and any 
follow-on legislation.
    Mr. Lynch. Thank you. Congress also passed the Foreign 
Investment Risk Review Modernization Act, as you mentioned 
earlier in your testimony, which was intended to strengthen and 
modernize CFIUS and enhance its ability to address concerns 
involving non-passive, non-controlling investments in 
technology, critical infrastructure, and personal data business 
and real estate transactions in close proximity to military 
installations or are a part of maritime ports or airports. What 
is Treasury's approach to protecting U.S. critical technologies 
in ways that promote U.S. competitiveness? You have this 
balance here, but how do we balance those needs for security, 
but also, we are trying to promote U.S. competitiveness in 
those areas when we have these outstanding concerns about 
China's investment in U.S. industrial policies related to 
tactics that acquire sensitive U.S. capabilities?
    Mr. Rosen. Thank you for that, Congressman. You raise a 
very important issue because, the wisdom of FIRRMA and what 
this Congress did in its enactment is to make clear that we 
need to look at transactions on a case-by-case basis, and we 
need to act as a scalpel as opposed to a sledgehammer to make 
sure that we are doing what we can to attract all sorts of 
investment, and addressing the particular and acute national 
security risks that arise, and then either mitigating those 
risks or, if they are unmitigable, referring to the President 
for a block. And I think the way Congress set up FIRRMA gives 
us the ability to be tactical in that regard.
    Mr. Lynch. Thank you very much, Mr. Rosen. Mr. Chairman, I 
yield back.
    Mr. Luetkemeyer. The gentleman yields back. The gentleman 
from Florida, Mr. Posey, is now recognized for 5 minutes.
    Mr. Posey. Thank you, Chairman Luetkemeyer. Mr. Rosen, why 
did the Biden Administration file an amicus brief saying that 
the current Florida law prohibiting anyone domiciled in China 
from purchasing agricultural land in Florida is discriminatory?
    Mr. Rosen. I'm sorry, Congressman. I am having a hard time 
hearing you. Could you repeat the question, please?
    Mr. Posey. Why did the Biden Administration file an amicus 
brief saying that the current Florida law prohibiting anyone 
domiciled in China from purchasing agricultural land in the 
State is discriminatory?
    Mr. Rosen. Congressman, thank you for that question. In 
terms of litigation, I would respectfully refer you to the 
Department of Justice in that regard, but I would be happy to 
sort of talk about how we deal with threats from certain 
countries on a case-by-case basis, which was the----
    Mr. Posey. Okay. The last time CFIUS was in committee, I 
asked him how many Americans own land in China, and if there 
were any, how much they owned. That was months ago. They said 
they didn't know and would get back to me. You have had a few 
months to get up-to-date on that. Would you please tell me?
    Mr. Rosen. This is the first time I have heard about that 
question, so I can commit to you that I will take that back and 
I will be happy to get back to you with an answer, sir.
    Mr. Posey. Do you believe there are any benefits to letting 
people domiciled in China own agricultural land in this 
country?
    Mr. Rosen. Congressman, it is an important issue, and I 
know one that this Congress is looking closely at. Again, the 
wisdom of FIRRMA and my mandate, as Congress has prescribed, is 
to look at the particular facts and circumstances of a 
transaction. And I can tell you that what we know about the 
conduct of our adversaries, including the PRC, we take a very 
close look at in connection with any----
    Mr. Posey. But can you give me one benefit to China buying 
up land in our country?
    Mr. Rosen. Again, Congressman, it is an important issue. My 
job is to look at the----
    Mr. Posey. So, you can't. Okay. Thank you. That is okay. I 
will take that. On September 21, 2022, the Senate, in a 96-to-0 
vote, approved an amendment declaring that China is not a 
developing country and should not be treated as such by the 
international community, yet China continues to get loans from 
the World Bank and the Asian Development Bank in spite of 
carrying on a questionable program of foreign investments in 
other countries. Do you know if the Administration will support 
Senator Barrasso's bill to help end such loans to China?
    Mr. Rosen. Congressman, when we look at a threat, as the 
analysis requires, we look very closely at the intent and 
capability of our adversaries. In the case of the PRC, what we 
see is very concerning, but we look at that on a case-by-case 
basis.
    Mr. Posey. Okay. Will the Administration work with Congress 
so that Members can get summary reports of foreign ownership by 
country for sectors of the economy based on their survey 
completed on June 30th, without violating any confidentiality?
    Mr. Rosen. I'm sorry. You cut out, sir. I didn't hear the 
full question.
    Mr. Posey. Will the Administration work with Congress so 
that Members can get summary reports of foreign ownership by 
country for sectors of the economy based on their survey 
completed on June 30th?
    Mr. Rosen. I would be happy to work with this committee on 
questions or follow-up that you have. We put together an annual 
report that answers questions that Congress has asked. If there 
is more data or information that we can be helpful with, we 
would be happy to follow up with you on that.
    Mr. Posey. Okay. Thank you, Mr. Chairman. I yield back.
    Mr. Luetkemeyer. The gentleman yields back. The gentleman 
from Texas, Mr. Green, is recognized for 5 minutes.
    Mr. Green. Thank you, Mr. Chairman. I thank the ranking 
member as well, and, of course, I thank the witness for 
appearing today. Is it fair, sir, to conclude from your 
testimony that you believe CFIUS has sufficient authority to 
address national security concerns posed by foreign persons and 
foreign entities investing in the United States? I think you 
have spoken well. I think you have been very clear. Is it fair 
to conclude that you believe that you have sufficient 
authority?
    Mr. Rosen. Thank you, Congressman, and thank you for the 
question and your attention to these important matters. I do 
think, thanks to the good work of this committee and Congress, 
we have a robust set of authorities that I outlined earlier, 
control jurisdiction, but also what was expanded upon in 
FIRRMA, non-controlling, non-passive investments and certain 
real estate jurisdiction. Those are important authorities. We 
are always looking at our docket, we are looking at what is 
happening, and we are always assessing and reassessing where we 
may be able to improve, but I think the Committee has a strong 
set of authorities to be able to protect national security.
    Mr. Green. Thank you. I mention this because the 
legislature in my State proposed restrictions that would be 
directed toward specific persons, and it created quite a stir, 
because the people who pass these laws don't have to interact 
with the people who can suffer from some of the consequences 
that may not be intended, persons of Chinese ancestry, for 
example. When you start using specificities of this type, there 
are people in this country who suffer. They suffer in terms of 
how people approach them generally, but they also suffer in the 
sense of consternation as to what they will do with land that 
they currently hold, or will they be able to purchase 
additional property.
    I think that allowing 50 States to enact laws regulating 
land purchases by foreign-born persons puts our entire country 
at risk of retaliation because of actions taken by a single 
State legislature. We have had one legislature conclude that no 
one who is a noncitizen can purchase real estate. Fifty 
legislatures acting independently on issues that can have 
foreign policy implications, in my opinion, is a very dangerous 
thing for us to allow. We cannot allow persons whose motives 
may be less than honorable to pass laws that can impact the 
entirety of our country in just one State. This is why I and 
the Honorable Judy Chu introduced H.R. 3697, a preemption bill 
that will prevent States from acting in what appears to be an 
arbitrary and capricious fashion. I will not speak for her, but 
I am honored that she would support the legislation.
    I believe that we have a duty and an obligation to allow 
CFIUS, at the executive level, to deal with these issues 
because you have a broader view. You have a better 
understanding of the geopolitical implications of allowing one 
State to make a decision that can impact the entirety of the 
people in the United States of America. I am grateful that you 
believe you have the authority, and I am grateful that you are 
flexing your muscles, and I would concur with the ranking 
member; if you can flex even more, I think we will have a 
better result. I yield back the balance of my time.
    Mr. Luetkemeyer. The gentleman yields back. With that, I 
recognize myself for 5 minutes.
    Thank you, Mr. Rosen, for being here today. I would like to 
start out my discussion this morning with you by letting you 
know I sit on the China Select Committee as well, and we had an 
interesting discussion the other day with two dissidents who 
were at the Tiananmen Square protests years ago. One wound up 
in jail for 7 years, and another one for 16 years. And we asked 
those gentlemen the question: What can we, the United States, 
do for the Chinese people, because our argument is not with the 
Chinese people. It is with the Chinese Government and the 
Chinese Communist Party. And five words is what we got back: 
``Quit helping the Chinese Government.'' You could have heard a 
pin drop. That is what our mission should be, to stop helping 
the Chinese Government.
    I made that comment to, I think, our Deputy Secretary of 
Commerce the other day in our hearing. She had no idea what I 
was talking about because they don't understand, and Mr. 
Sherman was very articulate about this, and Ranking Member 
Waters also made comments to the fact that we have to stop 
investing in and helping China.
    To that end, let me begin my discussion this morning, Mr. 
Rosen, with a comment that was made in August 2023. The Wall 
Street Journal published a troubling article exposing the 
internal divisions and flaws in the CFIUS review process that 
ultimately gave the Chinese Communist Party access to sensitive 
technology that Defense Secretary Austin warned could fuel 
cutting-edge weapons systems.
    And with that, I ask unanimous consent to submit a copy of 
that article for the record.
    Specifically, the article covered the DuPont sale of a 
sustainable materials business to a Chinese company which CFIUS 
approved despite intense opposition from the DOD and the 
intelligence community due to national security concerns. My 
question, Mr. Rosen, is why were DOD's and intelligence 
agencies' warnings essentially ignored? Are the Treasury and 
Commerce Departments better equipped to assess national 
security risks than DOD?
    Mr. Rosen. Congressman, thank you for that question and 
raising the issue of compliance as a general matter with our 
national security agreements. When I came into this job, I made 
monitoring and compliance one of my top priorities, monitoring 
national security agreements. And that is because the 
agreements that we set in place are only as good as those that 
can be complied with. And that is why, for the first time ever, 
within about 100 days, we issued our first-ever penalty and 
enforcement guidelines to make clear to the public, but also to 
establish----
    Mr. Luetkemeyer. Was there a penalty on this particular 
entity, because that is my next question.
    Mr. Rosen. Yes. As I have talked about earlier, I can't get 
into any particular matter by statute in this open setting.
    Mr. Luetkemeyer. This is already in a Wall Street Journal 
article here. This is common knowledge at this point. And I 
understand that you reached an agreement with the Chinese 
purchaser to set up a separate entity in which the information 
will be held, and everybody thought this would all work, and 
within less than a month, the Chinese had the information. It 
has slipped through the cracks, and off they went. The question 
then is, did anybody at CFIUS get fired over this, because 
where is the accountability? Where is the ability for CFIUS to 
hold people accountable for these sorts of things? You made a 
deal, and you just said this. Is somebody going to be held 
accountable for this deal here?
    Mr. Rosen. Congressman, again, thank you for raising the 
important issue of compliance and monitoring. What I would say 
is Congress prescribed a very specific and robust analysis to 
assess national security consequences to transactions. Congress 
also made nine members a part of CFIUS, and we engage in a very 
robust risk analysis in every single case, putting aside any 
particular transaction.
    Mr. Luetkemeyer. Along that line, Mr. Rosen, I would hope 
that you learned your lesson from this situation. Number one, 
don't trust anything that the Chinese Government is involved in 
or may be even touching. But you mentioned a while ago in your 
testimony that there are three separate threats that you look 
at, and one of them is the potential threat emanating from a 
foreign investor.
    Well, the Chinese Government has a plan, a 100-year plan to 
take over the world, and it includes taking over the United 
States. That is an imminent threat, I would think. Look at all 
of the actions that they have taken over the last 25, 30 years, 
and what they are doing right now is even more concerning, and 
yet we don't look at that as an imminent threat, and say, no, 
no, no, no, no. To me, if I was in your shoes, if it had the 
word, ``China,'' in any sort of proposal, it would be an 
automatic no, absolutely, positively. Do we now want to help 
China in any way whatsoever? Imagine, for instance, if instead 
of, ``China,'' that you are talking about, it was, ``Nazi 
Germany.'' Would you be approving it then? I think not. Why 
would we be helping our enemy? That is the question, and 
remember what those folks said, quit helping the Chinese 
Government. With that, I yield back.
    The gentleman from Missouri, Mr. Cleaver, is now recognized 
for 5 minutes.
    Mr. Cleaver. Thank you, Mr. Chairman. And I thank the 
ranking member for this hearing, particularly because all 
around the country--certainly, I can speak for my congressional 
district, although I think it is of significance all around the 
country--it has been, I think, crystal clear for some time now 
that foreign actors are using social media to sow discord and 
even present divisive information, trying to get us fighting 
with one another, and it is reaching a large swath of America. 
And my concern is that there are many people in our country, me 
included, who would consider this to be a significant threat to 
our national security. So, I am wondering what foreign 
investment and U.S. telecommunications, such as Twitter or 
Facebook, or X, Y, Z, whatever they call it in this alphabet 
deal, would that trigger a CFIUS review?
    Mr. Rosen. Congressman, thank you for the question, and 
this important topic and raising it. As I mentioned earlier, 
there are sort of various aspects that we can get jurisdiction. 
One is, irrespective of the U.S. business that has been 
invested in, if there is a controlling investment by a foreign 
person into a U.S. business, that will give CFIUS jurisdiction.
    The second way, as it relates to your hypothetical, is in 
the authorities that Congress granted us in FIRRMA in 2018, 
expanding our jurisdiction to encompass certain non-controlling 
investments into critical infrastructure, critical technology, 
or companies that would have certain amounts of sensitive 
personal data. And so again, it would depend on the facts and 
circumstances of the transaction. But Congress was very clear 
in expanding our jurisdiction to direct us to look at those 
kinds of investments that would give us jurisdiction.
    Mr. Cleaver. I am not sure a lot of research has been done, 
but I did stumble across something from Oxford University, 
which reported through research that there are over 70 
countries in the world right now that are engaged in 
manipulating social media, and almost any meeting I go to, 
there are parents who are talking about social media in another 
realm. But it is becoming at least clear to me, and I think 
everyone, probably even you, that this is something that 
deserves our strong attention.
    And I am wondering if international companies have made and 
are continuing to make significant investments in the U.S. 
healthcare sector? I don't think we need to become an isolate 
in the world, but they create jobs, and research leads to 
significant discoveries that can prolong life in the country, 
and so forth. I am not against that, but I am concerned about 
the security issues. What happens with these acquisitions of 
U.S. healthcare companies? Does that fall under the scope of 
being a potential national security concern?
    Mr. Rosen. Congressman, first of all, the issue around 
healthcare companies can raise a whole host of issues. One that 
comes to mind is sensitive personal data and access to 
Americans' sensitive personal data. We know certain adversaries 
are trying to exploit that data for their own purposes, against 
the interests of the United States. And it would depend on the 
facts and circumstances of the particular transaction. But 
certainly, investments into healthcare companies, when we have 
jurisdiction, would be something that we would look at to 
assess whether national security risk----
    Mr. Cleaver. But can you look at it without--I yield back.
    Mr. Luetkemeyer. The gentleman's time has expired. The 
gentleman from Michigan, Mr. Huizenga, is recognized for 5 
minutes.
    Mr. Huizenga. Thank you, Mr. Chairman, and I appreciate Mr. 
Rosen for being here today.
    In 2013, China, the largest automaker at that time, was 
given U.S. Government approval to buy a company, a Michigan-
based company called A123. That was a battery company back 
then. Are you familiar at all with that case or that name?
    Mr. Rosen. Not sitting here today, Congressman, no.
    Mr. Huizenga. No. Okay. I would encourage you to take a 
look at that. In fact, I was pulled into a classified briefing 
on that and a CFIUS review of that. Earlier this year in a 
hearing before the House Committee on Foreign Affairs, which I 
also serve on, I had the opportunity to revisit that A123 deal 
with Under Secretary of Commerce Alan Estevez. In response to 
my questions, the Under Secretary noted that the A123 approval 
was, and I am going to quote him, ``probably not the best 
decision that CFIUS made.'' I would agree, and at the time, I 
was very critical of the deal, especially after the classified 
briefing that I and a few others had received. And I think the 
conclusion then and now is that American taxpayers should not 
be funding technology that will in turn be used in competition 
against American enterprises.
    Fast forward a decade, and here we are, and it seems that 
we are still struggling with many of the issues that the A123 
deal brought to light. And in August of this year, another 
battery maker, Gotion, whose parent company is backed by the 
CCP, acquired 270 acres in Green Charter Township in the middle 
of the Lower Peninsula in my home State of Michigan. And at the 
time, unofficial reports stated that Treasury concluded that 
the Gotion deal to purchase the land was not a covered 
transaction, which they define as a, ``purposed or pending 
transaction with any foreign person which could result in the 
control of a U.S. business by a foreign person.'' Mr. Rosen, 
are you familiar at all with the Gotion deal that is happening 
in Michigan?
    Mr. Rosen. Congressman, I am happy to sort of get into what 
I can in this setting, and reserve the balance for the closed-
door setting.
    Mr. Huizenga. Yes, but you are familiar with it?
    Mr. Rosen. I have read public reports.
    Mr. Huizenga. Okay. And are you aware that some have 
expressed concern about the proximity of Gotion's land purchase 
to military installations in Michigan?
    Mr. Rosen. I am generally aware of the public reporting on 
the matter.
    Mr. Huizenga. Okay. Does CFIUS have the ability to review 
foreign purchases of land that pose a surveillance risk to U.S. 
Government sites?
    Mr. Rosen. As a general matter, Congress gave CFIUS real 
estate jurisdiction for transactions in close proximity to 
sensitive facilities, and that is as identified by the 
Department of Defense and other committee members.
    Mr. Huizenga. So, that is a, yes. Okay. Do you believe 
CFIUS should have formally reviewed the Gotion deal?
    Mr. Rosen. Congressman, what I want to do in this setting, 
and again, I will reserve for future settings to talk about any 
particular transactions, but it is important to----
    Mr. Huizenga. Okay. Well, let's be more general. Should 
CFIUS be able to review deals like this that have been 
described?
    Mr. Rosen. Congressman, what I would say on this important 
issue, and I know it is important to you, and it is important 
to me as well, is that CFIUS has certain jurisdiction in close 
proximity. There are also certain areas that Congress was very 
deliberate not to provide CFIUS with jurisdiction over, for 
example, greenfield investments, licensing arrangements, and 
the like. And what I am trying to do is execute Congress's 
mandate from a jurisdictional aspect. I share your concerns 
deeply about PRC access and control to our critical 
technologies, and it is something that we are very focused on. 
And I would be happy to follow up----
    Mr. Huizenga. Very briefly, do you believe that it is 
sufficiently tight enough, that you have enough authority, that 
the parameters are tight enough that you can review deals like 
this Gotion deal?
    Mr. Rosen. What I would say is I believe that the 
authorities that Congress gave us are strong, and they are 
robust, but it is not unlimited as Congress designed it.
    Mr. Huizenga. Okay. I am going to close with this in my 
last few seconds. Michiganders and Americans, frankly, rightly 
are concerned about the CCP buying up land and utilizing 
taxpayer dollars in our States and elsewhere. And if CFIUS 
cannot learn from past mistakes or fully understand the 
adversarial nature of the CCP, I believe CFIUS needs to be 
modernized even further, and we need to review that and meet 
our current national security risks and the challenges that we 
face today. And as you noted, we are going to be going into an 
executive classified session later on today, and I will have 
some follow-up questions on this specific topic that I will 
hold for now. With that, Mr. Chairman, I appreciate the 
opportunity, and I yield back.
    Mr. Luetkemeyer. The gentleman yields back. I now recognize 
the gentleman from Illinois, Mr. Foster, for 5 minutes.
    Mr. Foster. Thank you. As you look at the balance you have 
to do, I think it is important that we recognize the tremendous 
benefit that the U.S. consumer realizes from the integration of 
our economies, with not only China, but with less-developed 
countries throughout the world. And anyone who says we should 
make everything in the United States, I invite them to come up 
with a business plan to make a microwave oven that will retail 
for $42, manufactured in the U.S. with highly-paid labor, okay? 
We just have to be realistic about this.
    On the other hand, putting pressure on the system towards 
friend shoring of these industries, I think is the right 
direction. You are an important part of that. Now, you have to 
evaluate these purchases or investments, both for the nature of 
the foreign government involved and also for the national 
security relevance of these, and this is really tough, and when 
you get into dual use technologies, for example, things like 
drones, which can be used to deliver groceries or deliver hand 
grenades. And it gets even tougher when you talk about 
technologies you mentioned, like quantum computing.
    Now, how do you actually get the expertise you need to 
understand whether a given quantum computing investment is just 
sort of an abstract theoretical thing versus something that 
actually might be of near-term use, and do you have trouble 
getting the expertise you need?
    Mr. Rosen. Yes. Congressman, it is an excellent question 
and topic. And it is one that, as Congress set it up, CFIUS is 
well-suited to address because with our nine permanent members, 
in addition to access to other Executive Branch agencies, we 
have access to subject matter experts across the agencies to 
help us understand whether a product is dual use. Does the 
business even know it is dual use, but maybe somebody at DOD 
has identified a dual use. And so we leverage across the 
Federal Government the subject matter experts to make those 
determinations. And it is critical in our analysis to 
understand what those uses are and also to understand, as you 
point out, the balance. What are the commercial benefits of the 
technology? How are those used? And that goes into both our 
risk-based assessment about what the risk is but also what the 
right outcome in the matter is.
    Mr. Foster. Yes. And just what was previously mentioned 
about Gotion, for example, they just announced a $2-billion 
battery factory that they are going to be making as an 
investment in Illinois. And it is my understanding that it will 
be pretty much a copy of technology that they already use, and 
there won't be, I don't believe, a big national security 
downside of this. Also, we have to acknowledge the huge 
benefits that we get when we get foreign investment from any 
location. You know, when any individual or company comes in and 
buys farmland anywhere in the United States, as Representative 
Sherman mentioned, the American who sells that land gets to put 
that money in the bank or into other investments that will grow 
the U.S. economy. So, I think we have to look at this in a more 
balanced way than we are seeing right here.
    Now, back to the issue of getting the technical expertise, 
because in issues like the attempts that the previous 
Administration made in trying to shut down certain kinds of 
scientific collaboration, they, frankly, sort of covered 
themselves in shame by not having the technical expertise that 
was necessary to understand what was truly a national security 
risk and something which someone without the expertise thought 
sounded bad. Are you getting the responsiveness that you need 
and the expertise that you need from the agencies, or do you 
need a bigger carrot or a bigger stick to get more responsive, 
high-quality analysis of that?
    Mr. Rosen. Yes, Congressman, I think one of the benefits of 
having nine members is not only do we have nine active members, 
but they are all quite active. We have full engagement from the 
committee, which is important. We can leverage the expertise 
across the members. We can get experts, for example, at the 
Office of Science and Technology Policy or the Department of 
Defense or the Department of Commerce. So, we are able to dig 
into these issues, which provides us with very important facts 
and analysis for us to come up with that determination, which 
very much relies on that.
    Mr. Foster. I see that as being a satisfactory 
relationship. You do get the responsiveness you need because 
there is always a danger if it is not the agency's main line of 
business to say, okay, this is sort of a noise, we have to 
respond to it, but we are not going to put our best people on 
it fast. You are pretty satisfied with that?
    Mr. Rosen. I am quite satisfied, and that is in part 
because of the relationships that we have. There are Assistant 
Secretaries at the various agencies that I engage with on a 
regular basis to make sure we----
    Mr. Foster. Thank you. That's good to hear. I yield back.
    Mr. Luetkemeyer. The gentleman's time has expired. We will 
now go to the gentlelady from Missouri, Mrs. Wagner, for 5 
minutes.
    Mrs. Wagner. Thank you, Mr. Chairman. Assistant Secretary 
Rosen, thank you for being here today. Congress enacted the 
Foreign Investment Risk Review Modernization Act (FIRRMA) and 
the Export Control Reform Act (ECRA) in 2018, which I 
supported, to ensure that our export and investment control 
regimes were fit for the challenge of safeguarding against 
predatory Chinese investment and business practices. These laws 
reflect the most comprehensive updates to CFIUS and the first, 
I think, long-term reauthorization of U.S. export controls in 
decades. Congress crafted these reforms to improve CFIUS's 
ability to, I would say, connect the dots when investigating 
and mitigating the serious national security risks posed by 
countries like China. Mr. Rosen, how would you describe China's 
strategy when it comes to its investments in the United States, 
and how have the 2018 reforms helped CFIUS better approach 
transactions involving China and other strategic competitors?
    Mr. Rosen. Congresswoman, thank you very much for that 
question. What we see is what the intelligence community sees. 
It is what the FBI has talked about. We see a PRC with a 
demonstrated intent and capability to use any and all means, 
legal and illegal, seen and unseen, to gather U.S. critical 
technology and anything else that it deems is in the national 
interest.
    Mrs. Wagner. Any and all, legal and illegal, these are 
strong words. Since these laws were implemented, sir, have you 
seen Chinese companies restructuring their transactions in an 
attempt to prevent CFIUS from using its new authorities under 
FIRRMA and ECRA?
    Mr. Rosen. I want to be careful and reserve part of the 
threat discussion for the classified session.
    Mrs. Wagner. Yes.
    Mr. Rosen. But what I would say is that we are working very 
hard to stay on offense. That means understanding what our 
adversaries are doing, how they are doing it, how they are 
trying to evade our jurisdiction, and how we can stay ahead of 
it. And that is a good portion of how I spend my day, trying to 
think creatively, which this committee and Congress plays a 
critical role in, in terms of coming back and regularly 
reassessing our authorities, regularly reassessing where we can 
be stronger.
    Mrs. Wagner. Are CFIUS's current authorities sufficient to 
catch and address attempts to skirt its review?
    Mr. Rosen. I think our authorities are well-calibrated to 
address the threat that Congress has identified and that we are 
working to address and assess. That said, we are constantly 
looking to assess whether we can enhance our authorities 
through regulations under the umbrella of FIRRMA or even 
whether we need statutory changes.
    Mrs. Wagner. You need to keep us informed regarding this 
because it is extremely important to our national security and 
our future. Assistant Secretary Rosen, according to the CFIUS 
annual report, there were 8 covered transactions involving 
China and critical technologies in 2022, although it is unclear 
whether this includes re-filings. Has CFIUS approved any 
investment giving China access to critical technologies?
    Mr. Rosen. What I would say, Congresswoman, is that CFIUS 
will never approve a transaction unless it resolves any and all 
national security risks that it identifies, critical technology 
and the PRC being very high on our list.
    Mrs. Wagner. Good. Again, Assistant Secretary Rosen, when 
assessing national security risks, CFIUS seeks to know who the 
ultimate owner or parent company might be. Does it prove more 
challenging to determine these facts when a Chinese investor is 
involved?
    Mr. Rosen. It can be. Ultimate beneficial ownership is a 
very important topic, as you point out.
    Mrs. Wagner. Yes.
    Mr. Rosen. It is critical to our work. We have ways to get 
at that information. We have access to databases, public and 
private. We also have a system set up where the parties are 
very incentivized to provide us any and all of the information 
that we need, and we have the ability to test that as well.
    Mrs. Wagner. Is it as challenging when a Russian investor 
is involved, sir?
    Mr. Rosen. Any time you have a foreign investor with the 
demonstrated intent and capability to get access to critical 
technology in any and all ways, we want to be very careful. We 
want to be very circumspect, and we are.
    Mrs. Wagner. Lastly, if a foreign investor connected to 
adversaries like Russia, China, or Iran seized control of the 
U.S. business in the agriculture sector, do your current 
authorities allow you to review these deals for national 
security risks?
    Mr. Rosen. The short answer is, yes. When a foreign person 
seeks to get control of a U.S. business, that triggers CFIUS 
jurisdiction.
    Mrs. Wagner. Thank you. I yield back.
    Mr. Luetkemeyer. The gentlelady yields back. With that, we 
go to the gentlelady from Ohio, Mrs. Beatty, for 5 minutes.
    Mrs. Beatty. Thank you, Mr. Chairman, and to our ranking 
member, and thank you, Mr. Rosen. We have kind of taken you all 
over the issues here, on this issue, so I want to try to get in 
two questions, one on the outreach to the business community. 
Can you tell me more about that, because I am always concerned 
about whether we are doing sufficient outreach to the business 
community to ensure education, awareness, compliance, and 
Federal regulations in the process. To what extent have firms 
indicated confusions over CFIUS procedures and determinations, 
and what kind of outreach to the business community have 
Treasury and your partner agencies done?
    Mr. Rosen. Congresswoman, thank you for that question. We 
spent a lot of time talking about risk, but this is also a very 
important component to what Congress has set up and required us 
to do. These regulations, these laws, are cumbersome, and they 
are confusing, but intentionally so to make sure that we act as 
a scalpel to address the risk. So, we spend a lot of time 
engaging with the business community, engaging with our 
international partners, educating on not just sort of the 
nuances of the regulatory framework, but also on the risk 
factors that are important.
    And that is why the President's Executive Order from last 
year was one of the reasons why it was important. Messaging to 
the public about the ideas, the issues that we are concerned 
about, critical technology and the like, how we view these risk 
factors is important so that businesses can continue to 
operate, they can continue to invest, and they can continue to 
do so with a real-time understanding of issues that may get 
CFIUS's attention.
    Mrs. Beatty. It is interesting that you mentioned the 
Executive Order, which almost a year ago to date, if you are 
talking about the Executive Order, I think it was 14083, which 
expanded the national security factors considered by CFIUS. Can 
you tell me if the new factors were included: the examination 
of transactions; effects on the resilience of United States 
critical supply chains; and the technological leadership or 
aggregate industry investment trends, cybersecurity risk, or 
risk to the United States' person-sensitive data?
    Mr. Rosen. Yes. That Executive Order added factors that 
Congress started a very good list at Section 721(f) of our 
authorizing statute. That Executive Order added to that but 
also highlighted and sharpened CFIUS's focus on some of these 
very important issues, for example, cybersecurity and data, a 
real area where we see more and more transactions presenting 
risk as it relates to U.S. personal data, which we try very 
hard to keep safe and out of the hands of our adversaries and 
those that would do us harm.
    Mrs. Beatty. Are there any specific ways that you can tell 
us that the Executive Order has had an effect on the reviews 
and practice?
    Mr. Rosen. Of course, Congress gave CFIUS the ability to 
look at any factor that CFIUS deems and deemed appropriate. I 
think one of the various benefits of the Executive Order was to 
sharpen the committee's focus on some of these issues about 
emerging threats and emerging technologies. It is also to be 
able to show and tell to the public the issues that we are 
concerned about, and so we spend time talking about it, but we 
make sure that we look at the factors, again, on a case-by-case 
basis, as it may raise national security risk.
    Mrs. Beatty. And lastly, and maybe in part you have 
answered this, but can you tell us if there are any ways that 
CFIUS has improved coordination with the allies and partners in 
information sharing or in the investment screening efforts 
mandated by FIRRMA?
    Mr. Rosen. Yes, Congresswoman, that's another very 
important area. We have an entire office dedicated to this kind 
of international engagement. Since FIRRMA has been enacted, we 
have helped other countries stand up their own versions of 
inbound screening, over a dozen of them. We engage in regular 
interactions, technical exchanges, tabletops, and, of course, 
we have used the accepted foreign state status that Congress 
provided in FIRRMA, to bring, as of last year, all of our Five 
Eye partners into that structure. And we have regular and 
active engagement because we recognize that the more that we do 
here in the United States--we want to prevent spillover, 
backfill of these issues to our allies, and as a result, we 
engage very closely with them.
    Mrs. Beatty. Thank you so much, and I yield back.
    Mr. Barr. [presiding]. The gentlelady's time has expired. I 
now recognize myself for 5 minutes. Assistant Secretary Rosen, 
you are doing a good job. I appreciate the work that you and 
your team are doing at CFIUS to screen malign investment, 
particularly from China, but as an author of the Foreign 
Investment Risk Review Modernization Act, I wouldn't be doing 
my job if I didn't offer some constructive feedback, both in 
terms of CFIUS being under-inclusive in its screening and also 
over-inclusive.
     Let me start with under-inclusive. Grand Forks Air Base: 
It is disturbing that it took the Air Force commander and 
Congress to motivate CFIUS to list Grand Forks Air Base in 
North Dakota in its regulations and that such a glaring threat 
to U.S. national security wasn't immediately on CFIUS's radar. 
I do understand that CFIUS has now expanded the list of 
sensitive sites, but I am worried that CFIUS could be focused 
on the wrong activities, targeting benign foreign investment, 
but missing such a glaring major national security threat on 
our home soil. Why did it take the Air Force and Congress to 
apply pressure for CFIUS to begin investigating this real 
estate sale, acknowledging that, ultimately, CFIUS did block 
the transaction?
    Mr. Rosen. Congressman, thank you. I appreciate the 
exchanges that we have had on this important issue. Your 
leadership on FIRRMA has been instrumental. I think you raise 
important issues, and what I would say is Congress set up a 
system for establishing jurisdiction in close proximity to 
sensitive facilities. We have developed a list-based approach, 
as you have identified, and we rely on our partners to provide 
us with updates to what are sensitive facilities. There is 
active engagement, and that engagement has become more active 
recently, and we are in close contact with our partners at the 
Department of Defense and elsewhere to make sure that we are 
going to and do regularly update the list, relying, of course, 
on their expertise to do so.
    Mr. Barr. Thank you, and I look forward to talking about 
the list of sensitive sites in the classified setting.
    In terms of the other category of maybe being a little bit 
over-inclusive, as you know, Congress authorized CFIUS to 
exempt certain categories of foreign persons known as accepted 
investors from the expanded jurisdiction and mandatory filing 
requirements. To qualify as an accepted investor, that person 
must, among other things, be associated with an accepted 
foreign state, such as Five Eyes nations, and the practical 
utility of the program has been, we think, limited by some 
onerous eligibility criteria.
    For example, not only must investors be organized under the 
laws of and have their principal place of business in an 
accepted foreign state, but an investor must also be able to 
demonstrate, with respect to itself and its parents, that the 
majority of its voting and economic interests are held by 
nationals or entities of an accepted foreign state or the 
United States, and that any individual or entity holding more 
than 10 percent voting or economic interest is a national or an 
entity of an accepted State.
    This requirement poses challenges for publicly-traded 
companies, which typically have little visibility into the 
identity and nationality of under-5-percent individual 
shareholders. The question is, how many, if any, investors have 
qualified for the accepted investor status?
    Mr. Rosen. Congressman, the accepted foreign state 
framework that you put into place in FIRRMA has been very 
important. We have been working to implement that. In terms of 
specific numbers, I would be happy to look at the annual report 
and look at our data and provide updates. I do think, however, 
that looking not just at who the investor is, but issues behind 
that are important to our analysis to assess risk. But if you 
see an issue in this area, I am happy to look at it and work 
with you and continue to work with you to make sure that we are 
addressing the national security risk while also achieving 
Congress' intent with accepted foreign status.
    Mr. Barr. You have a tough job, because we want to invite 
the benign investment, but also screen out some of this more 
malign investment like we saw at Grand Forks.
    Final question: On the Executive Order on investments in 
national security technologies and products in countries of 
concern, can you describe the role of the Office of Investment 
Security in CFIUS in the implementation of that Executive 
Order? And this is a bit of a follow-up to the chairman's 
questioning because we do believe that OFAC should be the 
primary point on outbound investment.
    Mr. Rosen. Yes, Congressman. Thank you. The way that I lead 
the Office of Investment Security, the primary function of 
which is CFIUS and leading that effort, it is envisioned that 
the implementation of this Executive Order will reside outside 
of CFIUS, but within the Office of Investment Security, working 
closely with our partners in the Office of Foreign Assets 
Control (OFAC), given the International Emergency Economic 
Powers Act (IEEPA) authorities. But that is the answer to your 
structural question.
    Mr. Barr. What we need is clarity for investors--green 
light/red light--not a bureaucratic black hole. With that, my 
time has expired.
    The gentleman from Illinois, Mr. Casten, is now recognized.
    Mr. Casten. Thank you, Mr. Barr. And thank you, Mr. Rosen, 
for your time today.
    There was a report in January of this year that CFIUS was 
reviewing Binance's proposed $1-billion acquisition of Voyager. 
Binance has since withdrawn that proposal, but the reporting 
said that CFIUS was reviewing it on the basis of national 
security concerns. Are you able in this format to give us any 
color on why you were reviewing it and what concerns you had 
with that transaction?
    Mr. Rosen. Congressman, the short answer to your question 
is I would reserve that for the closed-door setting.
    Mr. Casten. Okay. Maybe we can follow up on that offline 
then or some other more appropriate setting. I asked the 
question really to make a larger point that last year there 
were reports that North Korean hackers stole more than $1.7 
billion of cryptocurrency. I think over the last 5 years, it 
has been something like $5 billion. There have been public 
reports from U.S. intelligence officials that more than half of 
North Korea's nuclear missile program has been funded by 
cybercrime and crypto theft. It is, of course, that we know 
that there is similar crypto theft and money laundering crypto 
networks that are driving Chinese production of fentanyl 
compounds. And we know that Iran has been using crypto to get 
around some of their sanctions.
    The Wall Street Journal reported that Binance has actually 
been assisting Russia in evading sanctions. Recognizing this 
isn't all of it, but the public reporting is that the crypto 
market has at least $20 billion in illicit transactions. My 
question for you in your capacity is, if we know that North 
Korea is stealing billions of dollars' worth of crypto and 
using Chinese money laundering networks in order to fund their 
nuclear program, is it safe to say that poses a threat to 
national security?
    Mr. Rosen. Congressman, these issues around crypto and the 
actors that you identified are very concerning and ones that we 
similarly take very seriously. We would look at these kinds of 
issues in the context of a particular transaction. For example, 
one of the things that we look at is third-party risk, right? 
You mentioned hacking activity. We may be concerned about a 
foreign acquirer that may on paper not pose a particular 
concern, but we know that certain entities are trying to hack 
them and steal intellectual property or crypto and the like. 
So, I think we really need to look at this through a lens of 
the facts and circumstances of the particular case, but this 
issue of third-party risk and who the investors are and where 
it is coming from are issues that are very much on our radar.
    Mr. Casten. Yes. I have been only half joking to some 
friends recently that as long as we have anonymized wallets, 
all blockchain really is, is a lousy accounting technology 
because you can't track the record of transactions.
    In April of this year, the Treasury Department released a 
report, ``Illicit Finance Risk Assessment of Decentralized 
Finance,'' and they specifically flagged that there are 
loopholes within the Bank Secrecy Act (BSA) that need to be 
closed to the extent that they allow these distributed finance 
blockchain crypto companies to fall outside of the scope of the 
BSA's definition of financial institutions to facilitate money 
laundering and other things we would like to protect against. I 
guess what I am curious about is, do you agree that we need to 
strengthen the Bank Secrecy Act and fix those loopholes so that 
we can prevent our adversaries from laundering money, evading 
sanctions, and potentially funding terrorism?
    Mr. Rosen. These issues, Congressman, are very serious and 
ones that I know my colleagues at Treasury take very seriously. 
The BSA, of course, as you know, is administered by the 
Financial Crimes Enforcement Network (FinCEN), which is outside 
of my direct domain. I know these are issues that they are 
concerned about and they are focused on, and I would be happy 
to talk to them about following up with you.
    Mr. Casten. Okay. I want to make sure that you all and all 
the agencies have the tools to address it. And I tee that up to 
thank my colleagues in the Senate, Senator Warren and Senator 
Marshall, who have just introduced a bill, which we will be co-
introducing in the House shortly, to close those gaps in the 
Bank Secrecy Act to make sure that we don't allow people to use 
crypto to skirt anti-money laundering rules so that we can have 
a robust national security presence. I would welcome any 
support or guidance you have on that, and I would invite all of 
my colleagues on this committee to join me in that effort to 
see if we can make this bipartisan and bicameral, and close 
that barn door that we know is open. Thank you very much, and I 
yield back.
    Mr. Loudermilk. [presiding]. The gentleman yields back. The 
gentleman from Texas, Mr. Williams, is recognized for 5 
minutes.
    Mr. Williams of Texas. Thank you, Mr. Chairman, and thank 
you, Mr. Rosen, for being here today.
    The United States' agricultural sector plays a vital role 
in our national security, and this sector contributes 
significantly to our economic stability, and is responsible for 
our nation's food security. As we have talked about today, the 
increase in foreign investors purchasing farm lands to try and 
gain control of U.S. businesses in the agricultural sector is a 
growing threat. In my home State of Texas, foreign entities 
control more than 4.7 million acres of land, and that is a 
concern that my constituents have, and should any hostile 
nation want to cause permanent harm to our food supply chains, 
this avenue provides them with the means to achieve it.
    CFIUS has jurisdiction over real estate purchases, we have 
talked about that, and leases near military bases and sensitive 
government sites. Any acquisition of land in the U.S., 
particularly near military installations, must be handled with 
caution and genuine oversight. Could you elaborate on the 
current process CFIUS uses to review these deals, and how does 
your committee determine if a foreign purchase of agricultural 
land is a national security risk?
    Mr. Rosen. Thank you, Congressman. This is a vital issue. 
Issues, as you point out, like food security and our supply 
chain, agricultural security and the like, are very important 
issues that we take very seriously, and let me unpack that. 
There are a couple of ways that we get a jurisdiction in these 
challenges. One is through our control jurisdiction. Any 
foreign person acquiring control, broadly speaking, not defined 
as 51 percent, for example, of a U.S. business and agricultural 
business, for example, would provide us with jurisdiction to 
review the matter.
    As you point out, our added real estate jurisdiction that 
Congress provided us would also give us jurisdiction to review 
pure real estate transactions within close proximity, sometimes 
up to 100 miles of an Air Force base, and we have 875,000 
square miles of coverage in that regard. And what we would do 
when we do have jurisdiction is look to our partners at the 
U.S. Department of Agriculture to provide us insights and 
expertise to help us assess the transaction in terms of 
assessing who is doing the buying? What is the threat from that 
individual or entity? What are they buying in agricultural 
business, farmland, et cetera, and what is the specific impact 
to national security? That is the analysis that Congress 
requires us to go through, and we would look very closely to 
our partners across the committee, including at USDA, to help 
assess that, and we have done just that.
    Mr. Williams of Texas. That is good, the harder, the 
better. There is no question that China is a hostile nation 
towards the United States and that their goal is to weaken our 
country in any way possible, and the interference and 
aggression coming from the Chinese Communist Party poses a 
significant threat to U.S. financial systems.
    Our lack of information on China's economy and the CCP's 
continued abuse of the system in place has jeopardized our 
national economic security. There is a huge cloud of 
uncertainty surrounding the Chinese financial sector, their 
investments, and their industry practices. So this Congress, I 
have championed legislation to address these threats by 
requiring an analysis on the risks presented by the Chinese 
financial sector along with a report providing recommendations 
on strengthening internal cooperation to monitor and mitigate 
these risks. We must hold China accountable for their abuse of 
the financial sector. I think we all agree with that. The 
question would be, has CFIUS ever had to recommend the 
prohibition or mitigation of a real estate purchase or lease by 
a Chinese investor?
    Mr. Rosen. Congressman, it is a good question, and I would 
want to look at some statistics, but I am quite confident that 
various instances of a controlled transaction or a real estate 
transaction, we have had experience in terms of mitigating. I 
am not sure if you said mitigate or refer?
    Mr. Williams of Texas. Either/or.
    Mr. Rosen. Yes. I am quite certain, although I would want 
to confirm.
    Mr. Williams of Texas. Will you look at that and get back 
to us?
    Mr. Rosen. Of course.
    Mr. Williams of Texas. In the time I have remaining, can 
you quickly highlight the kinds of mitigation measures CFIUS 
would consider for a semiconductor deal involving the Chinese?
    Mr. Rosen. PRC investment into a U.S. semiconductor 
company, while I don't have the facts in front of me, would 
likely raise a lot of questions and analysis in CFIUS. The 
kinds of things that we would look at from the threat 
perspective is, who is doing the buying? You obviously said it 
is a PRC entity, so we would look at the intent and capability 
of the actor. It would be very concerning.
    Mr. Williams of Texas. I yield back. Thank you.
    Mr. Loudermilk. The gentleman's time has expired. I now 
recognize the gentlewoman from Massachusetts, Ms. Pressley, for 
5 minutes.
    Ms. Pressley. Thank you, Mr. Rosen, for joining us for this 
hearing. The Committee on Foreign Investment in the United 
States certainly plays an important role for our national 
security by sounding the alarm on foreign control of critical 
technologies and industries. I want to build upon and follow up 
on Ranking Member Waters' question line regarding the 
Committee's review of a country with many human rights abuses, 
yet seems to have evaded significant scrutiny, and that is 
Saudi Arabia.
    Saudi Arabia has a sovereign wealth fund called the Public 
Investment Fund, which has more than $35 billion in American 
companies like Amazon, Walmart, Rideshare, and the food 
delivery company, Uber Technologies, as well as the major 
ticketing platform, Live Nation Entertainment. Recently, the 
Saudi-backed LIV Golf announced a merger with the PGA. Mr. 
Rosen, I certainly do appreciate that much of the work is 
classified, but what can you share about the Committee on 
Foreign Investment's posture towards Saudi Arabia, these 
investments, and reviewing the potential national security 
risks that are associated with them?
    Mr. Rosen. Thank you, Congresswoman, for the question and 
for your focus on this issue. As a general matter, I would like 
to respond with a couple of points. One is that CFIUS was 
enacted not to be country-specific, but to look at the specific 
transaction in terms of who is doing the purchasing and what we 
know about them. But Congress, in its wisdom, singled out 
foreign government-controlled investments to pay special 
attention to and to create additional requirements when it is a 
foreign government entity or foreign government-controlled 
entity doing the buying, and we look very closely at those 
transactions when we have jurisdiction.
    And the other point that I would make, which is really 
essential in our analysis, which Congress requires, is what is 
being purchased? What are we worried about? Are we worried 
about U.S. person-sensitive personal data, for example? Are we 
worried about the transfer of technology, like critical 
technology? Are we worried about access to critical 
infrastructure or a sensitive facility? These are the kinds of 
factors that we look at in any analysis, but I think it is 
important to highlight the foreign government control piece of 
this as well.
    Ms. Pressley. Right. I appreciate that. I asked the 
question just because I did think that the jurisdiction was 
clear and was there and really just seeking transparency. None 
of us want to be caught flatfooted here, so I appreciate your 
response.
    But I do just want to double down on the fact that Saudi 
Arabia is an oppressive regime. And in fact, just a few weeks 
ago, human rights watchdogs reported that Saudi Arabia killed 
hundreds of Ethiopian migrants and asylum seekers who tried to 
cross the Yemen-Saudi border between March 2022 and June 2023. 
Additionally, a report by the U.S. intelligence community 
concluded that the Crown Prince, who oversees these 
investments, approved of the operation to murder Washington 
Post journalist, Jamal Khashoggi.
    In light of these human rights abuses, Saudi investments in 
U.S. companies, especially those in critical or sensitive 
industries, clearly warrant greater scrutiny. For example, 
building upon the question line of Congressman Cleaver, Saudis 
hold a significant stake in Twitter, or whatever Elon Musk is 
calling it now, and Twitter is within your jurisdiction to 
review as a global social media giant that has sensitive 
personal data on Americans, and is a major communication 
platform for government officials, including the President and 
your agency and the Department of the Treasury. Do you agree?
    Mr. Rosen. I would agree that we have jurisdiction to 
review foreign investment, controlling investment into a U.S. 
business, Congresswoman.
    Ms. Pressley. Very good. Bearing that in mind, has the 
Committee on Foreign Investment reviewed any investments by 
Saudi Arabian companies and nationals into Twitter, 
specifically?
    Mr. Rosen. I understand your question, Congresswoman, and 
these issues are important. They present complex issues and 
they require a specific case-by-case analysis. Of course, 
FIRRMA put in place strict confidentiality requirements, so 
whatever we can get into in a classified and closed setting, I 
would respectfully defer to that.
    Ms. Pressley. Fair enough. In the end, Saudi Arabia should 
not be able to sanitize its image by sports washing, nor should 
it be able to gain sensitive data by investing in American 
companies. We need a review of these investments, and I hope 
the Committee on Foreign Investment will scrutinize the Saudi 
Arabian Government like the human rights abuser that it is. 
Thank you. I yield back.
    Mr. Loudermilk. The gentlewoman yields back. I now 
recognize myself for 5 minutes for the purpose of asking 
questions.
    Mr. Rosen, thank you for being here today and for your long 
career in national security. It is a very important topic. 
Understanding some of the sensitive nature, any questions that 
I ask that the answer may not be suitable for a public setting, 
I understand. Please just let me know and we can address them 
later today.
    I first want to ask you about the CFIUS June 2023 report on 
Committee activities in the prior year. That would be the 
activities of 2022. As you know, Section 7(c) of the Foreign 
Investment and National Security Act of 2007 (FINSA) requires 
an annual report on foreign direct investments in the United 
States by entities from foreign countries that comply with any 
boycott of the State of Israel. In 2022, the Committee 
identified 16 transactions involving investors that comply with 
a boycott of Israel, including one transaction involving 
investors from Iran. Can you elaborate on the nature of these 
transactions at a level that is suitable for a public setting?
    Mr. Rosen. Congressman, thank you for the question. I think 
putting in place these requirements for the annual report were 
very important. We take a lot of time, we look at a lot of 
data, and it is important for us, and we appreciate that. 
Specifically, I am not prepared to address that here, but would 
be happy to follow up with you.
    Mr. Loudermilk. Okay. We will address that later this 
afternoon. At a high level, is there any idea that, and maybe 
we need to do all of this in this setting, but at a very high 
level, did any of these raise significant national security 
concerns?
    Mr. Rosen. What I can tell you is that whether they were in 
connection with these transactions or other transactions, we 
would take a very robust review of, again, the purchaser, the 
threat in connection with that purchaser and what is being 
acquired, what is the U.S. business. So, we would very much 
scrutinize any such transaction, looking at those issues that 
Congress has prescribed, and, again, I will be happy to follow 
up in a closed-door setting.
    Mr. Loudermilk. Okay. Thank you. And my last question on 
this topic is, in this section of the report, you mentioned 
that CFIUS could not independently verify the dollar value of 3 
of the 16 transactions, meaning the total value of 7(c) 
transactions exceeds that which was reported, I assume. What 
particular barriers did CFIUS encounter that prevented CFIUS 
from independently verifying the dollar values of those 
transactions?
    Mr. Rosen. As a general matter, sometimes we will run into 
a transaction that presents a sort of odd restructuring, for 
example, and it may not be your typical merger or acquisition 
transaction, and in some cases, it could be that. In some 
cases, it could be that the information wasn't available. But 
again, with regard to these particular transactions, we would 
be happy to address that in a closed setting, and if we can't, 
we would be happy to get back to you.
    Mr. Loudermilk. Okay. Thank you very much. One of the most 
difficult aspects of policymaking is balancing free and open 
investment ideals with national security concerns. CFIUS has 
the authority to lighten certain regulatory burdens on 
investments from certain friendly countries. For now, CFIUS 
only extends these relaxed standards to the so-called Five Eyes 
countries, countries which directly partner with the U.S. on 
matters of national security and intelligence. And as much as 
you can, can you explain the specifics of how these standards 
are relaxed for investors from Five Eyes partners?
    Mr. Rosen. Yes, and thanks to Congress for giving us the 
tools to be able to execute on that. As a general matter, when 
a country is an accepted foreign state, what that does is 
relieve investors from that country if they meet certain 
qualifications and criteria from certain aspects of CFIUS, for 
example, the expanded jurisdiction that Congress, importantly, 
provided over certain non-controlling investments into critical 
technology, critical infrastructure, sensitive personal data 
companies. If you qualify as both an accepted investor from an 
accepted foreign state, you might be exempt from that, for 
example.
    Mr. Loudermilk. Okay. I have the feeling my remaining 
questions would probably be more suitable for the security 
environment. So at this point, I will yield back the balance of 
my time and recognize the gentlewoman from Texas, Ms. Garcia, 
for 5 minutes.
    Ms. Garcia. Thank you, Mr. Chairman, and thank you to 
Assistant Secretary Rosen for being here and offering his 
testimony today, and I look forward to the afternoon session 
with him also.
    Foreign direct investment has played a key role in the 
Texas economy for nearly 2 decades. As of this year, over 1,700 
foreign corporations are doing business in the State, and that 
is no surprise since the Houston area, which is the area I 
represent, is also one of the most diverse regions in our 
country. It is home to many first- and second-generation 
immigrants and their families representing regions from all 
around the world. In Houston alone, over 5,000 companies are 
engaged in international business, and approximately 1,000 
Houston firms report foreign ownership. Additionally, Houston 
recently ranked fifth in best cities for international business 
according to the Financial Times. All of this has created more 
than 110,000 jobs in Texas since 2015.
    As the interagency committee that reviews these types of 
foreign investments, your agency plays a critical role both by 
protecting our national security and by facilitating the 
approval of these major investments. National security is 
critical. That has to be our top priority. The challenge for 
CFIUS is ensuring its effective exercises in oversight of bad 
actors without discouraging the foreign investment that creates 
these jobs and boosts our economy, as it does in Texas.
    My first question really is much of the concern of others 
with regard to real estate transactions. The Port of Houston 
and the Houston Ship Channel in Texas is home to multiple 
strategic seaports. Houston is also home to a large hub 
airport, a world-renowned medical center, and, as I noted 
earlier, an area of much investment. Certain real estate 
transactions by foreign entities in proximity to ports are also 
reviewable by your organization. Does CFIUS's review authority 
for real estate require additional clarification from Congress? 
I ask this question because last year, there was legislation in 
Texas, Senate Bill 147, that would totally ban land sales to 
dual citizens and businesses associated with adversarial 
nations including China, Iran, North Korea, and Russia. Is 
State action like this harmful, helpful, or a distraction to 
your mission, or does Congress need to step in and further 
clarify any of the authority that you might have with regard to 
real estate transactions?
    Mr. Rosen. Thank you, Congresswoman, for the question and 
for raising this important issue of real estate jurisdiction. 
It is quite important, and Congress recognized that importance 
in 2018 when it granted CFIUS this real estate jurisdiction for 
the first time because it wanted us to have jurisdiction of 
installations and facilities in close proximity to sensitive 
facilities. Since that time, to execute on that mission, what 
we have done is work with our partners at the Department of 
Defense and elsewhere to essentially create a list and assess 
what facilities around the country should sit on this list. 
They can have jurisdiction of up to about 100 miles of 
jurisdiction from a particular facility to get at things like 
surveillance, espionage, and others. And I think that the 
authorities are well-suited to address those risks in that 
regard, but we also need to stay on top of it.
    Just recently, we updated our list of sensitive facilities 
to respond to the evolving nature of the facilities, how they 
change, and to make sure that we are regularly assessing which 
sensitive facilities we should have on the list to make sure 
that we have jurisdiction when we need to from a national 
security perspective.
    Ms. Garcia. Right, but my question was specifically with 
regard to any State legislative action. Is this helpful, 
harmful, or a distraction, or are we just going to sit back and 
let the States continue to file pieces of legislation like 
this?
    Mr. Rosen. Congresswoman, what I would say is my role is to 
address the national security risk at the Federal level, 
irrespective of what occurs in the States, and I can commit to 
you and the committee that we will continue to do that. We will 
continue to assess the national security risk from a real 
estate perspective, from a controlling jurisdiction 
perspective, and from a non-controlling perspective. And that 
is what I am focused on, to make sure that we are not allowing 
any transactions over which we have jurisdiction proceed unless 
we have resolved any and all national security risks.
    Mr. Loudermilk. The gentlelady's time has expired.
    Ms. Gracia. I yield back.
    Mr. Loudermilk. I now recognize the gentleman from Ohio, 
Mr. Davidson, for 5 minutes.
    Mr. Davidson. Thank you. Assistant Secretary Rosen, I 
appreciate you being here, and I also look forward to part two 
of this, but in this public setting, hopefully I can stay 
focused on things you can answer here. If not, obviously, we 
will cover them later.
    But looking through your 2023 annual report to Congress, 
some interesting observations of roughly 50 percent, on average 
over since 2018 of the notices and declarations wind up with 
investigations, and of those, a fair number, once there is an 
investigation, actually, almost half of those, 41 percent of 
those actually end up being withdrawn for some factor. So, how 
do you assess what you do follow up and do the investigation 
on, and then what is behind that number of the percentage that 
just says, yes, we will withdraw? What is going on there?
    Mr. Rosen. Congressman, it is a good question and I 
appreciate any time somebody digs into the data in the annual 
report. They are important data points that Congress has 
prescribed. What I can share is that I am quite proud that 
nearly 60 percent of the transactions we review clear in the 
30-day declaration period or the 45-day initial review period. 
It is true that many matters go into investigation and some 
withdraw. The matters that go into investigation are when we 
cannot determine that a clearance is appropriate at the 45-day 
mark. That may be because an agency needs some additional time 
to conduct a risk analysis. That may be because we have 
identified a risk and that we may need to do more work in that 
regard. And so, we work very closely as a committee to make 
that investigation assessment, is the first part of your 
question.
    The second, with regard to withdraws, they can occur in a 
number of circumstances. The parties may decide that they need 
more time to assess what CFIUS is considering, for example. And 
one of the things in that data, which is important, is you will 
see a larger number of withdraws than you will of re-files 
because oftentimes, when we assess that there is a risk or a 
concern and we are prepared to refer a matter to the President, 
the parties will just voluntarily withdraw and abandon the 
transaction, or voluntary withdraw and divest the transaction 
short of a Presidential referral, so there is more to unpack in 
those numbers.
    Mr. Davidson. Yes, thanks. And no Presidential referrals in 
2021 or 2022, and as far as I know, none in 2023. Anything to 
see there?
    Mr. Rosen. Only to reiterate my last point, which is that 
does not mean that CFIUS has assessed that a transaction cannot 
proceed or needs to be unwound from a national security 
perspective, because rather than face a public Presidential 
order of divestment, many times the parties will voluntary 
withdraw and go away.
    Mr. Davidson. Okay. Thanks for that clarification. One of 
the things that complements this was beneficial ownership 
reporting, and, frankly, that focuses on companies that really 
have 20 employees or fewer, and there is some concern that they 
are shell companies. Ultimately, everyone has to report at 
least once, but for the companies that a lot of the scrutiny is 
on with a handful of employees, what is the status of the 
rulemaking for that? When will this take effect, because 
talking to my constituents, whether they are big businesses or 
small businesses, or, frankly, even CPA firms, they don't 
really know much about this?
    Mr. Rosen. Congressman, the issue of ultimate beneficial 
ownership is critical to CFIUS's work. I know it is critical to 
our partners and other regulatory agencies, including FinCEN, 
which is working on this rule, of course, within Treasury. 
Beneficial ownership is a very important part of what we do. We 
need to assess who the ultimate owner is of the foreign 
acquirer so that we can fully and adequately address any 
potential risk, and we have the means to do that. On your 
specific question about the rule and the timing, that is not 
something that is within my domain, but I am happy to talk to 
my colleagues at FinCEN and see if we can get back to you.
    Mr. Davidson. Yes, so you are doing it now, even in the 
absence of this new reporting requirement, I guess, is part of 
the point that I wanted to make. And many of the members of the 
committee, certainly me, felt there was a smarter, better way 
to do it, in the ultimate way that it became law. And we would 
certainly be open to modifying it because I think you have some 
of the smallest, least-sophisticated businesses that will 
ultimately be subjected to jail time and massive fines, not 
that they will be targeted, but they could be.
    And I think the last thing I would just like to bring up is 
sensitive real estate. I think we will probably go deeper in 
there. It is not like China comes and says, hey, I am from 
China, I want to buy this sensitive property. How do you begin 
those review processes?
    Mr. Loudermilk. The gentleman's time has expired. If you 
could respond in writing, for the record.
    Mr. Davidson. Yes, I think in-depth will probably be in 
part two, but thank you, my time has expired, and I yield back.
    Mr. Loudermilk. The gentleman yields back. The gentlewoman 
from Michigan, Ms. Tlaib, is recognized for 5 minutes.
    Ms. Tlaib. Thank you so much. Assistant Secretary Rosen, 
thank you for being with us this afternoon.
    We all know, and I think in your testimony you talked about 
the expanded criteria factors that have been now been taken 
into consideration since 2022 with the President's action. And 
one of the things that kind of stood out for me is that from 
2017 to now, was it double or triple the caseload? Is that 
correct? Can you talk about----
    Mr. Rosen. Nearly double. In 2017, we had a number of 
transactions, I can get you the exact number, in the 200s or 
so. And just last year, in 2022, we had 440 filings, the most 
ever, in part due to our expanded jurisdiction.
    Ms. Tlaib. Assistant Secretary, I don't know if you would 
have the capacity, if you have the same number of folks on your 
team working in this area. Again, because of the criteria 
expansion, which is necessary for national security, how do you 
prioritize the caseload? I'm sorry, I am a social worker at 
heart, so I say, ``caseload.'' How do you prioritize what you 
are going to work on first and what is a priority, especially 
with----
    Mr. Rosen. Well, we too call it a docket and cases----
    Ms. Tlaib. Docket, there you go.
    Mr. Rosen. ----and all the rest. As a former DOJ 
prosecutor, I am familiar with the dockets. But what I would 
say is the resources that Congress has provided have been 
instrumental in making sure that we can implement FIRRMA, 
building out our non-notified capacity, to identify 
transactions that were not brought voluntarily to the Committee 
to building out our monitoring enforcement and compliance 
functions, for example, building out our staffing to address 
it, which we continue to do. And we are continuing to grow to 
address our broader case docket but also the broader 
priorities.
    We talked about accepted foreign state status, working with 
our allies. We have talked today about engaging with 
stakeholders, working with stakeholders. We need the capacity 
to be able to do all of this. So, as we continue to grow, we do 
need to prioritize the threats to national security. And that 
is the genius behind FIRRMA, that the case-by-case review and 
looking at specific risks arising from transactions, I think 
gave us strong authorities to respond.
    Ms. Tlaib. Assistant Secretary, under the expanded 
jurisdiction, your authority now includes non-controlling 
investment in U.S. companies that maintain or collect U.S. 
citizens' sensitive personal data. That can have an adverse 
effect on national security, correct?
    Mr. Rosen. Correct.
    Ms. Tlaib. We know that the companies have a tremendous 
amount of control in collecting this data, and this is where I 
am mostly interested in protecting our residents' privacy and 
so forth. Is it enough to engage in what they call one-off 
bands or interventions and investments, which may pose security 
risks regarding that particular factor?
    Mr. Rosen. When we look at bad factors, Congresswoman, 
which I agree is a very important factor, what we are looking 
at there is, what is the vulnerability of the U.S. business?
    Ms. Tlaib. Like getting hacked into?
    Mr. Rosen. Or who is going to get access, who is the 
individual or entity or government that is going to get access 
to that information? What do we know about their intent and 
capability to exploit that data for an adverse national 
security impact on the United States?
    Ms. Tlaib. Okay. Yes, literally, that data is going to be 
moved to another company that the constituent resident didn't 
get a right to say whether or not that information can 
continue. Anyway, would the national security risks facing the 
U.S. from foreign direct investment be reduced if there were 
stronger personal data privacy or security protections in 
place, for example, if residents or U.S. consumers or users had 
a say in how their data was collected, sold, and stored by 
private companies?
    Mr. Rosen. Congresswoman, it is an important issue. What I 
think is relevant to the discussion here is that Congress 
established CFIUS to be a tool of last resort. One of the 
things that the President has defined in order to act under 
CFIUS is that there are no other laws or adequate authorities 
to address the risk identified----
    Ms. Tlaib. So, you are familiar with the European Union's, 
what they call the General Data Protection Regulation (GDPR)? 
It is considered one of the strongest and the world's strongest 
data protection rules. Do you agree? Are you familiar with 
their rules?
    Mr. Rosen. I am generally familiar with the GDPR.
    Ms. Tlaib. Yes.
    Mr. Loudermilk. The gentlewoman's time has expired.
    Ms. Tlaib. Okay. I will send you the data because I really 
want your input about what the European Union is doing.
    Mr. Loudermilk. The gentlewoman yields back. The gentleman 
from Tennessee, Mr. Rose, is recognized for 5 minutes.
    Mr. Rose. Thank you, and thanks, Assistant Secretary Rosen, 
for being here with us.
    Mr. Rosen, it is my understanding that the Director of 
National Intelligence (DNI) is only a non-voting ex-officio 
member of the Committee on Foreign Investment in the United 
States. Could you comment on the current role that the DNI 
plays, and specifically, does she have sufficient time to be 
able to review some of the transactions that come before CFIUS?
    Mr. Rosen. Congressman, thank you for that question and for 
raising the important role of the Office of the Director of 
National Intelligence (ODNI) in our work. They are indeed a 
critical partner in our work, and they are a non-voting member, 
as I understand, and as prescribed by Congress, but that does 
not mean that they are not a very active participant and 
important player in our work. What they do is they provide a 
threat assessment in connection with every single transaction 
that is covered under our jurisdiction, and provide us critical 
intelligence so that we can assess the threat posed by the 
foreign acquirer.
    Mr. Rose. And would it be helpful for the DNI to play a 
more active role in the CFIUS process?
    Mr. Rosen. Congressman, they do play quite an active role 
in the intelligence function that they play. And I think, and I 
don't want to get inside of Congress' head here, but my 
understanding is that given the intelligence nature of what 
they do, their role is to be objective intelligence providers 
in connection with transactions as opposed to sort of weighing 
in on policy.
    Mr. Rose. How does CFIUS coordinate its activities with 
other U.S. Government agencies that have a role in protecting 
national security, such as the Department of Defense and the 
Department of Homeland Security?
    Mr. Rosen. We are synced up very closely, Congressman. Each 
agency has dedicated teams. I have dedicated Assistant 
Secretary counterparts that we meet with regularly, that we 
review cases with regularly, and that we correspond with and 
talk to on the phone, but it is not just at my level; it is at 
all levels that regular meetings and engagements on our robust 
case docket do occur.
    Mr. Rose. The President has the ultimate authority to 
prohibit or suspend a covered transaction if the President 
feels there is credible evidence that the transaction would 
threaten to impair national security and could not be addressed 
using authorities and other laws. Mr. Rosen, what controls, if 
any, are in place to ensure that a President with conflicts of 
interest could not allow a transaction to go through that would 
benefit himself or his family, even if it threatens our 
security interests?
    Mr. Rosen. In terms of what controls may be on the 
President, I may refer you to the Department of Justice or 
somewhere else for that. What I can tell you is that within 
CFIUS, we have a very robust, fact-intensive process where we 
look at the facts, we look at the law, and we look at the 
intelligence, and we have a number of national security 
professionals who help inform that. And then, if we determine 
that a case can only be resolved by referral to the President, 
we get together again as a Committee to assess the facts and 
the law and the threat.
    Mr. Rose. But it is safe to say that oversight of the 
President's ultimate authority would rest with Congress or 
outside of CFIUS. Is that a fair statement?
    Mr. Rosen. I may not want to get into the separation of 
powers issue, but I will say that I think there is a very 
robust, objective analysis that goes into any referral to the 
President.
    Mr. Rose. In what ways has CFIUS improved coordination with 
our allies and partners in information sharing and in 
investment screening efforts as mandated by FIRRMA?
    Mr. Rosen. The short answer is, a lot and very closely. We 
have helped our allies and partners stand up more than a dozen 
of their own inbound screen regimes since FIRRMA has come into 
place. We have regularly engaged with them. We provide 
feedback, we provide technical assistance, and when 
appropriate, we do share information as permitted through the 
intelligence process. We also engage in informal discussions 
with them. And we have a whole team within the Office of 
Investment Security that is charged with not just maintaining 
those relationships, but growing them and making sure that our 
allies and partners not just have tools and laws on the books, 
but that they are executing against those laws. We want to see 
action and activity associated with those laws to protect the 
national security of not just the United States, but our allies 
and partners as well.
    Mr. Rose. FIRRMA authorizes CFIUS to impose filing fees on 
transactions to cover the Committee's funding needs. Have these 
fees been sufficient to cover your actual costs? I have 8 
seconds left.
    Mr. Rosen. I don't have that particular analysis in front 
of me, but I would be happy to look at that, Congressman.
    Mr. Rose. Thanks. If you could respond for the record, I 
would appreciate it. I yield back.
    Mr. Timmons. [presiding]. Thank you. The gentleman from 
North Carolina, Mr. Nickel, is now recognized for 5 minutes.
    Mr. Nickel. Thank you so much. Thanks for being here, Mr. 
Rosen. Safeguarding our nation's interests and preserving the 
integrity of our democratic principles are among my top 
priorities in Congress. I understand the need to address the 
potential implications of foreign entities acquiring farmland, 
particularly those from countries like China. While it is 
essential to inspect foreign land purchases to ensure they pose 
no threats to our national security, it is equally important to 
approach any potential legislation with care and consideration.
    Before I begin, I want to just draw a clear distinction 
that I think is important for my role and my approach to this 
issue. While we discuss our concerns about the actions of the 
Chinese Government and the Chinese Communist Party and specific 
corporations, these concerns should in no way reflect upon the 
hardworking, dedicated, and patriotic Chinese-American citizens 
who contribute daily to the fabric of our country. Our dialogue 
here today and every day should be guided by facts, by the 
desire to secure our national interests, and by a deep respect 
for every individual, regardless of their national origin.
    The rising tide of anti-Asian discrimination is very 
troubling for me, and touches many of the people that I 
represent in North Carolina's 13th District, and we owe it to 
the Chinese-American community in the United States to be very 
precise in our language, fair in our judgments, and unyielding 
in our commitment against any form of racial discrimination or 
ethnic discrimination. But we certainly have some concerns 
about farmland, and I want to get into that. I have a few 
questions. But first, I saw on your bio that you went to the 
University of Colorado?
    Mr. Rosen. Undergraduate at the University of Colorado, 
yes.
    Mr. Nickel. Have you been following the football team?
    Mr. Rosen. It's hard not to.
    Mr. Nickel. Did you think at the beginning of the season 
they would be 2-0 right now?
    Mr. Rosen. We are all very excited about the progress 
there.
    Mr. Nickel. It has been a real story, but back to the 
questions. Given the rising trend of foreign entities, 
particularly from China, investing in U.S. farmland, can you 
tell me more about the measures the Treasury is considering to 
ensure that these investments don't compromise our food 
security and our national interests?
    Mr. Rosen. Congressman, thank you for raising this issue, 
which is quite important, particularly this issue of food 
security, agricultural businesses, when they have national 
security impacts. And the Committee has various tools to be 
able to address these issues, as prescribed by Congress. Of 
course, our jurisdiction is not unlimited, as prescribed by 
Congress, but the ways that we get at these issues are through 
our controlled jurisdiction, and a foreign person acquiring 
control of a U.S. business, like an agricultural business, 
would give us jurisdiction to review a particular transaction.
    As we have talked about here today, the jurisdiction that 
Congress provided in FIRRMA to give us enhanced or new real 
estate jurisdiction over pure real estate transactions in close 
proximity to a sensitive facility--close proximity can mean 
upwards of about 100 miles--so we have jurisdiction, in that 
regard, over some 875,000 square miles of coverage in the 
United States. And what we do, in either case, is look at the 
nature and facts of the transaction because we need to address 
specific national security risks. So, we look at what entity or 
individual is doing the purchasing, and then what is being 
purchased and what is the potential exposure from a national 
security perspective. For example, food security, critical food 
supply chains, and the like would be things that we would look 
very closely at and circumstances where we have jurisdiction to 
do so, and it is an issue that we take seriously. I know it is 
an issue that this Congress and this committee is spending a 
lot of time on, and it is an important one.
    Mr. Nickel. Thanks. Users of the USDA's Agricultural 
Foreign Investment Disclosure Act data have noticed 
inaccuracies and underreporting under current disclosure 
requirements, and limited information is available on data 
covering land held by certain countries that provide tax-
neutral jurisdictions for private equity firms like the Cayman 
Islands and the British Virgin Islands. Why is this data 
limited or incomplete, and how is this impacting our national 
security?
    Mr. Rosen. Congressman, it is an important question. I 
think for some of it, I would refer you to USDA. But what I 
would say is ensuring that we have a robust information 
collection process to understand what the scope is of these 
transactions that are occurring. What is the nature of these 
transactions? What is being purchased? And I understand there 
is some discussion about reporting requirements and making sure 
that businesses are reporting transactions. The more 
information that we can get to assess whether it is a 
transaction that is covered by CFIUS and whether there is a 
potential national security risk, is very important to our 
mission.
    Mr. Nickel. Thank you so much. I yield back.
    Mr. Timmons. Thank you. I now recognize myself for 5 
minutes.
    Assistant Secretary Rosen, thank you for being here. On 
September 15, 2022, Executive Order 14083, aimed at 
strengthening CFIUS's ability to assess and respond to evolving 
national security risks and foreign investment, explicitly 
acknowledged that certain countries employ foreign investments 
as a means to gain access to sensitive data and advanced 
technologies, which poses a national security threat to the 
United States. Furthermore, this Executive Order established a 
clear link between the roles, activities, and capabilities of 
CFIUS and broader national security priorities such as 
safeguarding U.S. technological leadership and sharing the 
protection of American sensitive data and bolstering the 
resilience of the U.S. supply chain.
    One of the Executive Order's goals is to harmonize and 
reinforce the various tools and objectives within the United 
States' cybersecurity strategy, thereby fortifying the nation's 
ability to respond effectively to evolving threats. More so 
than ever, and I think everyone agrees, it is clear that 
cybersecurity is indeed national security. Mr. Rosen, along 
those lines, how has that directive affected CFIUS's work and 
protocols, specifically in relation to cybersecurity efforts?
    Mr. Rosen. Congressman, thank you. Issues around 
cybersecurity and data security and the like are very important 
and issues that we see emanate more and more, particularly in 
today's age where we have technology and data flowing back and 
forth between businesses. And the President's Executive Order 
was important for a number of reasons, but chief among them was 
highlighting these issues like cybersecurity. And while CFIUS 
has the authority to look at all sorts of factors, ensuring 
that CFIUS is laser-focused on cybersecurity and data has been 
critical.
    What does that mean in our day-to-day work? What that means 
is what we are looking at is access to sensitive personal data 
that an adversary or concerning foreign acquirer may get, and 
making sure that we are addressing that either through 
mitigation or blocking a transaction. But we are also worried 
about broader cybersecurity issues like a foreign adversary 
getting access to offensive cyber capabilities that a U.S. 
business may have. And so, we are thinking about this issue of 
cybersecurity and data quite broadly, as I know, this committee 
and Congress have been doing.
    Mr. Timmons. Thank you for that. How does the Executive 
Order interact with congressional forums such as FIRRMA and 
ECRA?
    Mr. Rosen. The Executive Order is guidance to the Committee 
on Foreign Investment in the United States, and, importantly, 
it is the first time that there has been such guidance issued 
to CFIUS. Of course, we operate under our statutory mandate of 
FIRRMA. That is what determines what our jurisdiction is, that 
is what determines what analysis we go through, and that is 
what determines what our sort of broader authorities are, and 
so they interplay together in an important way.
    Mr. Timmons. And after the Executive Order, has CFIUS 
placed an increased emphasis on cybersecurity?
    Mr. Rosen. What I would say is, it has sharpened our focus 
on these kinds of issues like cybersecurity. We had been 
looking for a long time at issues like cybersecurity and data 
but not just as it sort of sharpened CFIUS's focus, but also 
plan outward-facing role to the investment community, to 
transaction parties to understand that if they are engaged in a 
transaction, they should be looking at these issues as well. 
Cybersecurity, data security, what are the capabilities of the 
U.S. business? So, it was important from both directions.
    Mr. Timmons. In the time after the Executive Order, or just 
in the last few years in general, what cyber risks has CFIUS 
found to be most prevalent during your reviews?
    Mr. Rosen. Congressman, again, it is a good question and it 
is an evolving one. It is part of our effort to be nimble and 
stay on offense and stay attuned to emerging threats as they 
present themselves. And the kinds of cybersecurity issues that 
we are focused on, I mentioned a moment ago, but they include 
cybersecurity tools, offensive tools as well as defensive 
tools. Understanding how our adversaries could acquire those 
tools and use them against us is part of our analysis.
    Now, of course, we are also focused on third-party risk as 
it relates to cybersecurity, so we may have an acquirer that is 
buying something and we may not have a particular concern about 
the acquirer, but we may have information that there is third-
party risk because the acquirer has been hacked multiple times, 
they don't have an adequate cybersecurity program in place, and 
that is one of the issues that we focus on sometimes in 
mitigation. So, this issue around cybersecurity has a whole 
host of implications, and there are various ways that the 
Committee can get at that.
    Mr. Timmons. Sure. Thank you for that. The gentleman from 
Wisconsin, Mr. Steil, is now recognized for 5 minutes.
    Mr. Steil. Thank you very much, Mr. Chairman. And thank you 
very much for being here, Assistant Secretary Rosen. When we 
think about CFIUS, in many ways, we are making sure that we are 
safeguarding the United States and balancing that with not 
being overburdening in an unnecessary way on the economy. There 
are a couple of things I want to dig into here on the 
homestretch of this first part of the panel. The number of 
cases requiring mitigation has jumped nearly 70 percent, even 
in the past 2 years or so. Why are we seeing such an increase 
in the number of transactions requiring mitigation, in your 
opinion?
    Mr. Rosen. Thank you, Congressman, and thank you for 
highlighting this issue. There are a number of reasons we are 
seeing more mitigation. We are seeing a range of threats that 
are evolving. We are seeing a range of vulnerabilities that are 
evolving. Data and cybersecurity, as we just talked about, is 
an increasing challenge. When we think about the types of 
transactions that occur that don't involve sensitive personal 
data, those are a meaningful number, for example, and 
oftentimes, we believe that we need to mitigate those types of 
transactions, and the nature of the transactions are evolving. 
And the other aspect is we are refining our approach. We are 
taking a very, very close look at these transactions, and we 
are not clearing them without mitigation or referral when 
necessary.
    Mr. Steil. How do you monitor that mitigation? Are people 
in compliance with the mitigation agreements you strike?
    Mr. Rosen. We have a good solid track record of compliance, 
but we also have a growing amount of enforcement and compliance 
personnel. One of the first things I did when I came into this 
job is put out the first-ever penalty and enforcement 
guidelines from CFIUS, both to establish a framework for how we 
would look at breaches to national security agreements, but 
also to send the message that we are going to actively be 
looking at this. So, any time there is a breach of a national 
security agreement or a violation of our authorities, we 
conduct an analysis to assess what, if any, enforcement action 
we should take.
    Mr. Steil. And do you believe you have the resources 
necessary to conduct that review and enforcement?
    Mr. Rosen. We are fortunate to have bipartisan support from 
a resource perspective. It is a resource-intensive issue, and 
we want to make sure that we maintain robust resources to do 
that, and it is an area that we are growing in right now.
    Mr. Steil. I appreciate that. Let me shift gears slightly 
here, and, in particular, talking about the jurisdictions where 
we are seeing these filings, we have seen pretty significant 
increases from places like Singapore, the Cayman Islands, the 
British Virgin Islands, et cetera. And obviously, those are 
small-populated countries but significant in business filings. 
To what extent is CFIUS concerned about the use of third-party 
countries to evade intensive scrutiny, and how do you approach 
that?
    Mr. Rosen. It is a good question. Ultimate beneficial 
ownership is the key to much of our work in assessing and 
getting behind the veil of who is doing the purchasing. And in 
each transaction, we will peel that onion as far as we need to 
go to make sure we understand who is behind each transaction. 
For a Cayman Islands entity, we are often looking at beneficial 
ownership that is not the Cayman Islands, right? So before we 
make a decision, before we finalize our risk assessment, before 
we figure out where we are going to take a transaction, peeling 
that onion is critical to our work, and we won't do anything 
until we do it.
    Mr. Steil. As you are looking at that beneficial ownership 
structure, you are peeling the onion, as you say, and I assume 
you are working with our allies to conduct that review? Can you 
comment on how that coordination with our allies operates, in 
your opinion?
    Mr. Rosen. In terms of the ultimate beneficial ownership, 
we are relying on multiple databases, commercial and private. 
We are relying on certifications under penalty of perjury from 
the parties, and when necessary, yes, we are engaging with our 
allies, as appropriate, to share intelligence and to consult 
them, consistent with our confidentiality obligations and 
otherwise. But engagement with our allies in this aspect of our 
work and, more broadly, is also a key piece of what we do.
    Mr. Steil. But is that a substantial piece of the work 
engagement with our allies? Is that an area where we think 
there should be additional effort put forth by policymakers?
    Mr. Rosen. Absolutely. One of the things that Congress 
wanted us rightfully to do is help stand up other regimes so 
that as we get tougher, our adversaries just don't go to our 
allies and partners to get the same critical technology.
    Mr. Steil. Thank you very much. Thanks for being here 
today. I yield back.
    Mr. Timmons. The gentleman yields back. I would like to 
thank our witness for his testimony today.
    The Chair notes that some Members may have additional 
questions for this witness, 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 this witness and to place his 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.
    Pursuant to our earlier vote, we will close the remaining 
portion of this hearing to Members and designated staff 
identified earlier. The second panel will be conducted at HVC 
301 of the Capitol Visitor Center immediately following the 
first series of Floor votes.
    The committee stands in recess.
    [Whereupon, at 12:46 p.m., the committee proceeded in 
closed session.]

                            A P P E N D I X

                           September 13, 2023
                           
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