Video of Senator Collins’s floor statement will be available today at 3:45 p.m.
on AMC 1, Transponder 20-V, Downlink 4100, Audio 6.2, 6.8
***
**Radio actuality available after 3:45pm today at 1-800-545-1267 x305**
or through the Radio link at: http://collins.senate.gov/public/continue.cfm?FuseAction=PressRoom.AudioNewsClips
WASHINGTON, D.C.—Senator Susan Collins today spoke on the floor of the U.S. Senate to introduce a bill to reform and strengthen the national security review process for foreign investments in the United States (CFIUS) following the controversy over the Dubai ports transaction.
Following is the full text of Senator Collins’ statement.
Mr. President, I rise to introduce a bill to reform and strengthen the national security review process for foreign investments in the United States . I am pleased to be joined by Senators Lieberman, Coleman, and Akaka.
In a global economy, foreign investment is becoming increasingly common in this country. The national security and homeland security implications of those investments must be scrutinized by the departments with responsibility for those critical matters.
The controversy over the Dubai ports transaction exposed serious flaws in the current law. In 1988, Congress passed the Exon-Florio provision of the Defense Production Act to give the President the authority to suspend or prohibit any foreign acquisition, merger or takeover of a U.S. corporation that is determined to threaten our national security. Through an Executive Order, the President gave the Committee on Foreign Investment in the United States (CFIUS) responsibility to review transactions pursuant to Exon-Florio and to make recommendations to the President.
The statute is something of an anachronism because of what it doesn’t say. It focuses on acquisitions of U.S. companies that – (1) are important to our military industrial base; or (2) have technology that could help a terrorist state develop weapons of mass destruction. Both of these issues are important, but neither addresses transactions that could help terrorists threaten our security right here at home. In other words, the CFIUS process is not designed to analyze transactions that involve a port terminal or other critical infrastructure within our borders.
The Government Accountability Office (GAO), in a report issued September 2005, found that “Exon-Florio’s effectiveness in protecting U.S. national security may be limited” – limited “because the Department of the Treasury, as Chair of the Committee on Foreign Investment in the United States,...narrowly defines what constitutes a threat to national security.” The Committee on Foreign Investment in the United States focuses too much on the financial component and not enough on security.
The Committee is supposed to identify transactions that could affect our national security. So, who chairs this Committee? Not the Department of Homeland Security. Not the Department of Defense. Not the Department of Justice. The Treasury Department. And chairing the committee is meaningful, because the chairman’s interpretations of the statute – including the provision that makes a 45-day investigation mandatory in the case of foreign-government controlled entities that could affect national security – tends to govern.
GAO also found that Treasury is “reluctant to initiate investigations to determine whether national security concerns require a recommendation for possible presidential action.”
Another serious shortcoming is that the intelligence community is not represented on the committee.
Mr. President, these are concerns that we just cannot tolerate given today’s threat environment. And that is why I am introducing legislation to abolish the CFIUS process and to create a new, inter-departmental mechanism, chaired by the Department of Homeland security, to analyze transactions for both homeland security and national security implications. Our bill is designed to fix the process through the following changes:
First, the bill would establish a new committee - the Committee for Secure Commerce (CSC) - to replace the CFIUS. The CSC would be chaired by the Secretary of Homeland Security. The Secretaries of Defense and Treasury would serve as Vice Chairs. The Director of National Intelligence is specifically designated as a standing member, in order to ensure that important intelligence information is part of the deliberative process. With respect to other members, the President shall name appropriate agencies and offices to the committee.
Second, the bill would explicitly include homeland security among the factors the Committee would consider in deciding whether to review or investigate a transaction.
Third, the Secretary of Homeland Security would establish the process by which the committee reviews transactions, including the role and responsibilities of each member. In addition, each member would establish the process and procedure by which each respective agency would conduct its review, sharing that with the other committee members. It is important that committee members each have a general understanding of the scrutiny being applied to a transaction both within their own agencies and across the government. Such understanding was not apparent in the current CFIUS process.
Should a transaction warrant an investigation, the bill would require the Director of National Intelligence to consolidate intelligence assessments.
Lastly, this legislation would strengthen the reporting requirements to Congress. The existing process lacks transparency and does not allow sufficient oversight. It may be appropriate for the reviews, which may involve proprietary data and classified information, to be conducted confidentially. However, it is wholly appropriate that Members of Congress be briefed in a timely manner.
The bill would also address the so-called “Byrd amendment loophole,” requiring an investigation where the entity would be controlled by a foreign-government. In looking at the plain language of the existing statute, a 45-day investigation should have taken place in the Dubai Ports World purchase of Peninsular & Oriental Steam Navigation Company. However, the Treasury Department interpretation of the statute for nearly 15 years has been contrary to congressional intent, and thus, Treasury found there was no need for the 45-day investigation. That so-called ambiguity has been clarified in our bill. The bill would require a 45-day investigation in cases where an acquirer is controlled by a foreign government, as in the case of DP World.
Mr. President, it is important that Congress take action to reform the review process for foreign investment in the United States . This bill provides a new structure, appropriately focused on national security and homeland security. I seek my colleagues support in moving this legislation forward. Thank you.