U.S. Financial Services Committee national security subcommittee holds hearing highlighting CFIUS role and concerns over outbound investment rules

The U.S. Financial Services Committee’s Subcommittee on National Security, Illicit Finance, and International Financial Institutions held a hearing on the Committee on Foreign Investment in the United States (CFIUS), focusing on how the inbound investment screening regime can safeguard national security while maintaining an open investment environment. Subcommittee Chair Warren Davidson framed CFIUS as a critical tool for scrutinising potentially risky foreign investments without deterring beneficial capital and innovation. Members pointed to the economic contribution of foreign direct investment, with Rep. Young Kim citing California as having the highest share of employment related to foreign direct investment at 15%. Rep. Andy Barr characterised the re-review of the Nippon Steel decision as a corrective process that produced a less politicised recommendation, while Rep. Roger Williams criticised the Biden-era Outbound Investment Rule for requiring firms to self-assess national security risk without clear guidance or a published list of restricted entities, arguing this increases legal uncertainty and compliance risk. Witnesses reinforced support for a security-focused, evidence-based process, with the Global Business Alliance citing over USD 5 trillion of international-company investment in the United States, 8.4 million U.S. workers directly employed, average compensation of USD 89,300 and pay seven percent above the U.S. private-sector average; legal and national security experts also called for clearer definitions for “covered transactions” in the Outbound Investment Security Program and referenced the stakeholder-intensive approach used for the Foreign Investment Risk Review Modernization Act (FIRRMA).