‘They want our tech’: CFIUS report to Congress

‘Foreign [non-US] governments are extremely likely to use a range of collection methods to obtain critical U.S. technologies.’ So says the US Committee on Foreign Investment into the United States (‘CFIUS’) in its annual report for 2020 to Congress, adding,

‘Foreign intelligence services and threat actors working on their behalf continue to represent the most persistent and pervasive cyber intelligence threat tied to economic espionage and the potential theft of U.S. trade secrets and proprietary information. Countries with closer ties to the United States have also conducted cyber espionage and other forms of intelligence collection to obtain U.S. technology.’

Amongst its findings, it says that ‘from 2011 through 2020, companies filed 1,668 notices of transactions that CFIUS determined to be subject to CFIUS jurisdiction under Section 721. Of these 1,668 notices, approximately 1.5 percent (25 notices) were withdrawn during the review stage. Approximately 52 percent (863 notices) resulted in an investigation, and of these approximately 16 percent (262 notices) were withdrawn during the investigation stage.’

Other headline figures from the report are that:

• ‘CFIUS conducted a “review” with respect to the 187 notices of covered transactions that were filed in 2020.
• CFIUS conducted a subsequent “investigation” with respect to 88 of those 187 notices.
• CFIUS concluded action on 16 of the 187 notices after adopting mitigation measures pursuant to Section 721 to resolve national security concerns.
• CFIUS adopted mitigation measures to address residual national security concerns with respect to three notices that were voluntarily withdrawn and the transactions were abandoned. Separately, in letters issued by Treasury granting the withdrawal and abandonment for three notices, conditions were imposed. However, these did not involve National Security Agreements (NSAs). Measures were imposed to mitigate interim risk with respect to one notice filed in 2020.’

As regards industries, it says: ‘In 2020, the Manufacturing sector accounted for 36 percent or 67 of the 187 CFIUS notices. Within Manufacturing, the subsector with the most notices remained Computer and Electronic Product Manufacturing, accounting for 42 percent (28 notices). The other significant subsector was Chemical Manufacturing, accounting for 13 percent (9 notices).’

See the report in full at: https://home.treasury.gov/system/files/206/CFIUS-Public-Annual-Report-CY-2020.pdf