“The Elephant in the Room”
This Stroock Special Bulletin discusses legislation introduced in the Senate by Sherrod Brown (D-OH) and Chuck Grassley (R-IA) that would give the U.S. Secretary of Commerce the power to review foreign investments in the United States to determine their “economic effect.” Following that review, the Secretary could order modification of the investment – or prohibit it outright.
The Brown-Grassley bill was introduced shortly before the comprehensive CFIUS reform bill introduced by Senator John Cornyn and others on November 8th. The Cornyn bill (which has already attracted some business critics) does not direct CFIUS to consider the economic impact of foreign investments. The broad reach of the Brown/Grassley bill makes it an easy target, given the extraordinary power it would vest in the Commerce Secretary. It is not likely to pass. Nevertheless, Brown and Grassley are senior lawmakers. Chances are very good that Congress will enact CFIUS reform legislation in 2018, and there will be pressure to write some measure of economic protection into the bill. All of this argues for taking a hard look at the Brown-Grassley proposal.