As part of a number of actions targeting China, President Trump recently directed Treasury Secretary Steve Mnuchin to recommend restrictions regarding Chinese investment in “industries or technologies deemed important to the United States.” This Simpson Thacher memo provides some background on the president’s directive. It also discusses possible statutory bases for executive branch action, and potential implications for Chinese investment in the U.S.
This excerpt says that the president may be trying to establish a mechanism for challenging foreign investments outside of the CFIUS process:
Neither President Trump’s directive nor Secretary Mnuchin’s public remarks on the subject clarify whether any investment restrictions will exist within the current CFIUS framework. To the contrary, the President’s directive for Secretary Mnuchin to “propose executive branch action [ ] using any available statutory authority” suggests that President and Secretary Mnuchin may be exploring whether they can open up a new front, outside of the CFIUS process, to review and prohibit Chinese investments.
The memo also says that the president’s action could be seen as a way to accomplish by Executive Branch action some of what the pending bipartisan CFIUS reform bill would achieve – and Congress appears to be on track to pass that legislation before the August recess.
– John Jenkins