Agency unveils rules for foreign investors of U.S. companies

WASHINGTON — The Treasury Department issued new rules Wednesday on foreign investments into American companies, giving the government more power to block foreign transactions on national security grounds.

The rules, which represent the latest escalation in the economic conflict between the United States and China, are intended to implement a program for tougher reviews of foreign acquisitions. Congress approved legislation for the program earlier this year.

The legislation, which is expected to take another 16 months of regulation-writing, widens the scope of the Committee on Foreign Investment in the U.S. to review investments related to real estate and joint ventures and those from state-owned enterprises.

The Treasury Department’s announcement Wednesday begins a pilot program through which the agency said it can “implement provisions of the legislation that did not become effective immediately upon enactment.”

The regulations will require foreign investors to alert the Treasury Department-led, interagency committee to all deals that would give the foreign investors access to critical technology covering 27 industries, including defense, semiconductors, telecommunications, aircraft and batteries.

The Committee on Foreign Investment will begin subjecting any foreign in-

vestment, including noncontrolling ones, to the stricter review process beginning Nov. 10. The rules will apply if the investment would result in a board seat, any decisionmaking power or the disclosure of nonpublic information about a company, according to one official, who was granted anonymity to discuss the policy. Before the law was strengthened, the committee could review only foreign investments that were big enough to give a foreign group control of a U.S. company. Treasury Secretary Steven Mnuchin said the interim rules will “address specific risks to U.S. critical technology” while also giving officials critical information they can use in developing the final rules. The legislation that passed in August did not single out China, but it was clear that lawmakers and President Donald Trump’s administration had Beijing in mind. The administration has accused China of using predatory tactics to steal American technology. The administration has imposed tariffs on hundreds of billions of dollars of Chinese imports, triggering retaliation by China. As part of the trade battle, Trump initially ordered the Treasury Department to draft investment restrictions aimed specifically at China. But in June, Trump decided to back Congress’ effort to tighten existing investment restrictions by increasing the powers of the Committee on Foreign Investment. The legislation received strong bipartisan support in Congress, with lawmakers from both parties expressing concerns about the need to prevent China from obtaining American technology by buying or investing in U.S. companies.