Recently, President Biden released an executive order preventing certain businesses from investing in United States firms. This ban will be effective if the investment provides investors access to certain digital technologies and the United States data.
US CFIUS To Evaluate All Foreign Investments
The order mandated the Committee on Foreign Investment in the United States (CFIUS) to evaluate all investments. It will ascertain if they are from a country “with a proven plan to procure any form of innovation or infrastructure that would jeopardize United States governance and national security.”
Some investments that could lose threats include AI, biomanufacturing and biotechnology, climate change technologies, and advanced renewable power. The order said these investments must not represent a risk to national security.
Additionally, it stipulates that agencies must ascertain whether investors have access to info that could be used for destructive cyber-enabled activities.”
“Therefore, the agency must determine if an investment provides direct or indirect exposure to technologies or intelligence resources. Also, it should monitor the operations of a foreigner who may engage in acts that undermine national security,” the report added.
Further, CFIUS will evaluate whether a foreign investor can engage in actions meant to undermine the nation’s security. Foreign investors no longer have access to databases or systems storing sensitive data.
Is China The Target Of The Recent Order?
Another addition is that agencies must validate if international firms will meddle with certain activities. They include the military-industrial base, United States elections, and national cyberspace security.
Security is virtually always a consideration in the screening of foreign investments by most states. However, the US has raised that bar very high in recent months.
The CFIUS now has a robust directive to concentrate on nascent technologies. In addition, it also has the power to evaluate the impact of investments on information security and data access.
The EO does not specify a specific country that merits a special CFIUS investigation. Meanwhile, the agency had a secret briefing with the press where it answered some questions. For example, one of the attendees asked if China was the order’s primary target.
Besides, China fits the description of a country that would fall on the US blacklist. It views quantum computing as a technology that might surpass US facilities.
Also, the country has made artificial intelligence a cornerstone of its monetary policy. In addition, it wants to enhance its local semiconductor production capabilities.
However, a prominent official in the Biden administration said this rule is not specifically for China. Instead, it applies to all entities.