Biden issues executive order on foreign investment risks

President Joe Biden will sign an executive order on Thursday sharpening US guidance on national security risks from foreign investors.

“The United States has long recognised that certain investments … from foreign persons, particularly those from competitor or adversarial nations, can present risks to US national security,” the administration said in a statement.

The executive order elaborates and expands on the existing list of factors that the Committee on Foreign Investment in the US, or Cfius, considers when reviewing transactions for national security risks and describes potential national security implications in key areas.

These include a transaction’s effect on the resilience of US supply chains that may have national security implications, US technological leadership including artificial intelligence and climate tech, and risks to Americans' data.

A senior administration official spoke to reporters on background in a Wednesday phone call and said they were “not sure” if the refined measures would increase filings.

“Cfius is largely a voluntary process,” the official said.

“The messaging to the business community is going to be important about the kinds of things that Cfius is going to consider.”

The White House statement added: “As the national security environment, including the behaviour of countries and individuals that seek to impair US national security, evolves, the review process of [Cfius] also must evolve.”

When asked if the move was directed at China, a senior administration official told reporters that “there's nothing China-specific about this order”.

This is the first ever presidential directive defining additional national security factors for Cfius to consider in evaluating transactions, though it does not expand or restrict the body's authority, operations or process.

“Strengthening our supply chains and protecting against foreign threats enhances our national security, and this executive order highlights Cfius’s important role in that work,” Treasury Secretary Janet Yellen said in a statement.

“It also reaffirms Cfius’s mission to protect America’s technological leadership and the security of our citizens’ sensitive data from emerging threats.”