The United Kingdom, Canada, Australia and New Zealand all continue to be excluded from CFIUS’ investment review of certain real estate and noncontrolling-related transactions.
On the 10th local time, the U.S. Treasury Department announced that the Committee on Foreign Investment in the United States (CFIUS) will continue to exclude the United Kingdom and New Zealand from the U.S. foreign investment security review program.
According to the previously established schedule, the U.S. Treasury Department must make a decision on whether to continue the exclusion before the 13th. To this point, countries in the Five Eyes alliance continue to be excluded from CFIUS’s investment review of certain real estate and non-controlling transactions.
It is worth noting that, recently, regulatory legislation involving real estate transactions in the United States has become increasingly conservative.
On the 10th, at the regular press conference of the Ministry of Foreign Affairs, a reporter asked a question that many states in the United States, including Texas and Florida, are considering prohibiting Chinese citizens from buying local real estate, mainly out of national security concerns. What is China’s comment? Foreign Ministry spokesman Mao Ning said that the essence of Sino-US economic and trade cooperation is mutual benefit and win-win results. Words and deeds that generalize the concept of national security and politicize economic, trade and investment issues violate the principles of market economy and international economic and trade rules, and damage the confidence of the outside world in the US market environment.
‘Exempt’ UK and New Zealand
The U.S. Treasury Department said in a statement that because the U.K. and New Zealand have established robust foreign investment review procedures, they meet the relevant requirements under the CFIUS regulations. Under CFIUS regulations and the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA), these countries can continue to maintain their excepted foreign states (EFS) status without further action by CFIUS.
Accredited investors from all Five Eyes countries will continue to enjoy CFIUS exceptions to certain non-controlling transactions, real estate transactions and mandatory filing requirements imposed by law, the Treasury Department said.
“It is critical that the United States thoroughly vet foreign investment for national security risks, and that our allies identify and respond to the risks posed by malicious foreign investment. Today’s actions reflect our allies’ implementation of their own strong foreign policy Investment Review Program. We look forward to continuing to coordinate with them on matters related to investment security,” said Treasury Assistant Secretary for Investment Security Paul Rosen.
Previously, the United States passed FIRRMA in 2018. FIRRMA not only expanded the scope of covered transactions, but also newly covered two types of transactions, namely non-controlling transactions and specific real estate transactions. In terms of procedures, FIRRMA has also added a mandatory filing system based on the principle of voluntary declaration. At the same time, FIRRMA also stipulates the scope of jurisdiction and exemptions from reporting procedures.
To put it simply, take real estate transactions as an example. Although CFIUS had reviewed real estate transactions before the introduction of FIRRMA, these reviews were not institutionalized. Most of the famous cases were related to key infrastructure transactions, such as the acquisition of state-owned enterprises in Dubai. The six major ports on the east coast of the United States, etc
For the first time, FIRRMA regulated the review of real estate transactions, authorizing CFIUS to review the rights of foreign entities to purchase, lease or obtain franchise transactions in U.S. real estate. After undergoing some amendments, FIRRMA delineated the geographic scope of CFIUS’s review of real estate, such as airports or seaports.
At the same time, in terms of exemptions, FIRRMA has proposed the concepts of Exceptional Countries (FES) and Exceptional Investors (EI). Among the first batch of whitelisted countries are Australia, Canada and the United Kingdom.
The U.S. Treasury Department said at the time that such countries could maintain their exemptions as long as they can ensure that their domestic systems are adequate to prevent them from becoming a “back door” for risky foreign investment into the United States.
Britain, Canada and other countries tighten investment review
Earlier, nine members of the US House of Representatives had urged US President Joe Biden to reconsider Britain’s status on the white list unless Britain blocked certain deals. In fact, the FES exemption status of CFIUS is not permanent and can be granted or revoked.
Under the mechanism designed by the US, it can also be seen that after FIRRMA took effect, the above-mentioned countries have tightened their foreign investment review regulations in recent years.
For example, the UK’s National Security and Investment Act will come into effect in January 2022, giving the UK government greater powers to block overseas acquisitions that cause potential security concerns. The review mechanism covers 17 sensitive industries and applies retroactively to transactions as early as November 2020.
source: sina
