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Highlights

Pursuant to a congressional request, GAO reviewed the process used by the Committee on Foreign Investment in the United States to identify foreign acquisitions of U.S. companies, focusing on current identification process used by the Committee and the effectiveness of the Committee's follow-up on acquisitions identified by its member agencies.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Commerce To improve the Committee's process for identifying foreign acquisitions with potential national security implications, the Secretaries of Commerce, Defense, Treasury, and State should establish procedures requiring agency officials to submit all known foreign acquisitions of companies with potential national security implications to the Committee on Foreign Investment.
Closed - Implemented
The Commerce Department has developed a form for use by Commerce personnel in providing information to the Department of Treasury regarding the acquisition of a U.S. company by a foreign entity with possible national security implications. Commerce will require employees to use this form to submit information on appropriate foreign acquisitions of U.S. companies.
Department of Defense To improve the Committee's process for identifying foreign acquisitions with potential national security implications, the Secretaries of Commerce, Defense, Treasury, and State should establish procedures requiring agency officials to submit all known foreign acquisitions of companies with potential national security implications to the Committee on Foreign Investment.
Closed - Implemented
The Department of Defense has begun informing CFIUS of foreign acquisitions that may not have been the subject of a filing. Industrial base officials in the Office of the Secretary of Defense have worked to notify CFIUS, and the Defense Security Service has put into effect guidelines to insure known acquisitions are submitted to CFIUS. The Defense Department is also working with CFIUS agencies to examine ways to identify pending and/or completed foreign acquisitions with potential national security implications that were not notified.
Department of the Treasury To improve the Committee's process for identifying foreign acquisitions with potential national security implications, the Secretaries of Commerce, Defense, Treasury, and State should establish procedures requiring agency officials to submit all known foreign acquisitions of companies with potential national security implications to the Committee on Foreign Investment.
Closed - Implemented
The Treasury Department has made modifications to improve the process of identifying foreign acquisitions of U.S. companies with potential national security implications. The staff chair of CFIUS has requested that, in the course of carrying out their regular responsibilities, Treasury officials be on the alert for foreign acquisitions of U.S. companies in the national security area and whether CFIUS received notice of the transactions. When a transaction in this category is detected, but CFIUS has not been notified, the staff chair will undertake the necessary background research to pinpoint the companies involved and the facts associated with the transaction.
Department of State To improve the Committee's process for identifying foreign acquisitions with potential national security implications, the Secretaries of Commerce, Defense, Treasury, and State should establish procedures requiring agency officials to submit all known foreign acquisitions of companies with potential national security implications to the Committee on Foreign Investment.
Closed - Implemented
The State Department's Office of Defense Trade Controls receives notifications of foreign acquisitions by organizations that are registered as munitions manufacturers. The State Department agreed with our recommendation and has begun forwarding these notifications to the Department of Treasury.
Department of the Treasury The Secretary of the Treasury, in his role as Chair of the Committee on Foreign Investment in the United States, should establish a process for sharing information on all foreign acquisitions submitted by one member agency with all of the Committee's member agencies, so that agencies can check their databases to determine whether any potential national security implications exist.
Closed - Implemented
The Department of Treasury has initiated a procedure to formalize the way in which CFIUS shares information about a non-notified transaction involving a foreign acquisition of a U.S. company that may affect national security. The staff chair has notified all CFIUS agencies to advise Treasury when an agency believes that a non-notifed transaction may be appropriate for CFIUS review. On receipt of this information, the staff chair will incorporate this transaction, along with whatever background information might be available from public sources about the transaction, into a list of non-notified transactions that is regularly circulated to all CFIUS agencies for their review. If CFIUS believes the parties to a particular transaction should file a notice, CFIUS will take appropriate action.

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