Senator Tammy Baldwin (D-Wisconsin) and Representative Ro Khanna (D-California).
Eric Lee | Bloomberg | Alex Wong | Getty Images
Sen. Tammy Baldwin and Rep. Ro Khanna will introduce legislation Thursday that would create a federal review board for direct investment in the United States, as President Donald Trump seeks to attract global venture companies as part of trade deals with countries around the world.
The bill, shared exclusively with CNBC before it was introduced, would create an independent executive branch agency, the Office of Foreign Investment Review. The committee is responsible for reviewing foreign direct investment and determining whether it is permissible.
It functions as a board of directors, and the chairperson is appointed by the president after approval by the Senate. Designates of the Secretaries of Commerce and Labor and the Attorney General. The board also includes four members appointed by the president and confirmed by the Senate who are from a different party than the president. It will also establish an office of chief ethics officer to handle complaints and a public oversight committee.
Mr. Baldwin, D-Wis., and Mr. Khanna, D-Calif., argue that the board is needed to ensure that foreign direct investment does not overwhelm American workers. Lawmakers also cited investments Trump has secured in negotiating trade deals around the world and said they could block corrupt deals.
President Trump has signed numerous investment deals with other countries that sought relief from the sweeping U.S. tariffs he imposed at the beginning of his second term.
“While foreign investment can create jobs and support local economies, it can also open the door to adversaries who line the pockets of American workers and the president,” Baldwin said in a statement.
“If foreign countries are investing in the United States, as the president has said, there needs to be basic oversight and transparency to ensure that American workers and American society benefit, not his adversaries or his family or cronies,” she said.
The bill has a strong chance of passing this Congress, given that Republicans control both chambers and have so far shown little interest in investigating or pushing back against the president’s trade deal bounties. President Trump is also likely to veto any legislation critical of his trade deals.
But the measure hints at what Democrats might target if they win the House, Senate, or both in this year’s midterm elections. Oversight of the Trump administration, or proposed guardrails, is expected to be a key topic for Democrats.
According to a summary of the bill provided by the lawmaker’s office, the first investments the board will consider will be investment commitments by China under the direction of the U.S.-China Trade Commission, Committee on Investment, or equivalent agency, a $550 billion investment commitment by Japan, a $350 billion investment commitment by South Korea, and a $500 billion investment commitment by Taiwan.
However, investments subject to review by the Board may be “commitments by foreign countries to invest in the United States” made as part of trade agreements, subject to tariffs, embargoes, and other U.S. trade and economic authorities.
The review evaluates each covered investment with respect to economic returns, employment, content sourcing, competition, and ethics. An investment would be permitted if the Chief Ethics Officer certifies that the parties comply with the applicable ethics and transparency rules set forth in the bill, if the Board determines that the investment would provide a net economic benefit to the United States, and is not otherwise prohibited by the bill.
If the investment comes from a hostile country, stricter scrutiny will be required.
Investments are prohibited if the party is a subsidiary or parent company of an entity on the Uyghur Forced Labor Prevention Law List, is otherwise controlled by an entity on the Uyghur Forced Labor Prevention Law List, or if the entity is subject to a suspension release order. Investments that violate ethics laws or transactions that are likely to be entered into with the intent of a foreign government or foreign official to provide a personal financial benefit to a U.S. government employee are also prohibited.
The Board of Directors may suspend or prohibit investments that are determined to be impermissible.
This bill differs from the existing committee, the Committee on Foreign Investment in the United States (CFIUS), in several ways. Although the CFIUS Board is comprised of cabinet-level members from each presidential administration, the bill’s proposed board would require a bipartisan committee.
It also has the potential to have more teeth since it can block transactions unilaterally. CFIUS consults the president on whether to block potentially problematic transactions. The new board, like CFIUS, will also prioritize the potential economic benefits of investment agreements over national security concerns.
Lawmakers say there is currently no mechanism in place that would allow them to review President Trump’s investments in trade deals.
Khanna said the bill provides the government with “the tools necessary to ensure that the investment commitments the president negotiates benefit working Americans and not economic adversaries such as the People’s Republic of China.”
“Our bill will ensure that foreign countries cannot use FDI to gain unfair access to U.S. markets or engage in fraudulent transactions lacking Congressional oversight,” he said.
The White House did not respond to requests for comment.
