Mnuchin: Strengthen Investment Controls To Protect US Tech

Amid the trade war that is still taking shape between the United States and China and the United States and several other countries, Treasury Secretary Steve Mnuchin has stated that investment controls are needed with the aim of protecting U.S. technology interests.

Against that backdrop, as reported by outlets such as Bloomberg, President Donald Trump has taken what is being deemed as a “less confrontational approach” toward China’s investments here, with an eye on boosting the review process that is already in place, and has chosen not to implement a law that tends to be used as a measure of (economic) defense in emergencies.

That law, which is titled the International Emergency Economic Powers Act of 1977, would let the President stop direct Chinese investments here.

Instead, the President would prefer to see Congress pass legislation that would give further strength to the Committee on Foreign Investment in the U.S., known by the acronym CFIUS.

CFIUS focused legislation, the Foreign Investment Risk Review Modernization Act (FIRRMA), would expand the investigative powers of the committee to embrace minority investments in critical tech.

The committee, said two administration officials speaking anonymously to Bloomberg, could use those heightened powers to keep Chinese firms from violating intellectual property rights.

Mnuchin, as reported by CNBC, has said that such protection should be put in place with legislation, which would boost the review process tied to certain countries, and said the changes would not target China. During the CNBC interview, Mnuchin stated that there would not be, as the newswire termed it, “significant economic effect” from that enhanced review process. Mnuchin said advisers in the administration were unanimous in their support of Trump’s approach.

Said Mnuchin, “This doesn’t create more uncertainty” across the economic landscape.

The administration said that it will not block companies with at least 25 percent Chinese ownership from buying some tech firms here. Mnuchin also said the U.S. can block firms from forming joint ventures overseas depending on the technology at stake — an approach that he said is “not just China. That’s anywhere.”

Those policies are less restrictive than some observers had anticipated.

“Should Congress fail to pass strong FIRRMA legislation that better protects the crown jewels of American technology and intellectual property from transfers and acquisitions that threaten our national security — and future economic prosperity — I will direct my administration to deploy new tools, developed under existing authorities, that will do so globally,” Trump said via a statement.

As noted by CNBC and other news outlets, Chinese investments (as measured by Rhodium Group, a research and consulting firm) in the U.S. were off 92 percent year over year through the first five months of 2018 to $1.8 billion.