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Clifford Chance

Clifford Chance

Antitrust/FDI Insights

Fortifying Existing Measures: A New Executive Order for CFIUS Reviews

President Biden's new Executive Order strengthens existing CFIUS review standards and highlights the focus on US national security. 

On September 15, 2022, President Biden signed the first-ever CFIUS Executive Order ("EO 14083"), Ensuring Robust Consideration of Evolving National Security Risks by the Committee on Foreign Investment in the United States, defining additional national security factors for the Committee on Foreign Investment in the United States ("CFIUS") to consider when reviewing covered transactions. The issuance of EO 14083 speaks to an evolution in the US government's role in addressing national security concerns, while also calls attention to newly-heightened areas of concern for national security purposes.

Notably, EO 14083 does not create any new legal requirements or change the CFIUS process. Instead, it identifies specific "new" factors for CFIUS to consider during its review process.

Specifically, EO 14083 identifies the following five factors:

(1) CFIUS shall consider, as appropriate, a covered transaction's effect on the supply chain and the security implications, both within and outside of the defense industrial base;

(2) CFIUS shall consider whether a covered transaction could reasonably undermine future advancements or applications of technology, whether any parties to the transaction, including third parties, may pose a threat to US national security, or involves manufacturing capabilities, services, critical mineral resources, or technologies in the following fields:

  • microelectronics;
  • artificial intelligence;
  • biotechnology and biomanufacturing;
  • quantum computing;
  • advanced clean energy;
  • climate adaptation technologies; and
  • elements of the agricultural industrial base that would impact food security.

(3) CFIUS shall consider the risks associated with the covered transaction in the context of multiple investments or acquisitions;

(4) CFIUS shall consider whether the covered transaction may result in cybersecurity risks by providing foreign persons, including any third party affiliates, with the capability or intent to impair US national security; and

(5) CFIUS shall consider whether a covered transaction involves US persons' sensitive data and whether the foreign investor seeks to, or has ties to, exploit such information to the detriment of US national security.

While EO 14083 elaborates and establishes additional considerations for CFIUS, it also emphasizes the Biden-Harris Administration's broader strategy with respect to US national security. The Biden Administration has focused heavily on strengthening its domestic toolkit in order to protect US competitiveness and domestic investment, including outbound investment, as discussed here. US businesses and investors should carefully review the additional risk factors identified in EO 14083 and be prepared to exercise greater due diligence in future transactions.