A sign marks the U.S Treasury Department in Washington, U.S., August 6, 2018.
Treasury Secretary Steven Mnuchin said the new interim rules will "address specific risks to US critical technology" while also giving officials critical information they can use in developing the final rules. Before the law was strengthened, the committee could only review foreign investments that were big enough to give the foreign group control of the US company.
CFIUS previously had authority only over deals that gave foreign investors a controlling stake. This would include investments in companies involved in aircraft development and computer manufacturing, as well as chemical and weapons systems.
The federal government will tighten rules on foreign investment in sensitive industries like technology and telecommunications next month, the Treasury Department said on Wednesday, as it starts to enforce a law aimed at curbing Chinese investment in 27 sensitive sectors. According to the rules, foreign investments that result in a US company sharing nonpublic information are subject to federal review, a provision that all but guarantees every overseas biotech deal will undergo scrutiny.
The interim regulations would likely lead to more filings with the committee, said Sylwia Lis, of the law firm Baker McKenzie.
The Treasury Department is expected to launch other pilot programs as it moves to fully implement the law, though all the programs are slated to become permanent by 2020.
Democrats and Republicans in Congress, as well as Trump, have alleged the Chinese government uses Chinese entities to seek footholds in USA technology through investments and other partnerships, and the pilot program could put stricter boundaries around future deals.
Trump has launched a series of economic attacks at Beijing this year, arguing that major changes need to be made to the trade relationship between the two countries. He has imposed tariffs on $250 billion in Chinese imports and threatened to go even further. But in June, Trump chose to back Congress' effort to tighten existing investment restrictions by increasing the powers of the existing Committee on Foreign Investment in the United States, or CFIUS. The White House and Chinese leaders have had off-and-on talks about resolving differences, but those efforts have not led to an agreement.