Study On The Scope Of U.S.Foreign Investment National Security Review

Foreign investment national security review aims to eliminate national security threats from international investments to the host country.The scope of review determines the range of foreign investments that the review agency can review,and determines whether the review process may begin.As a result,it is the most crucial part of foreign investment national security review.Traditionally,countries determine the scope of review by two criteria:the destination of the investment or the investor’s control over the invested enterprise.With the world’s economies integrate,external factors that may affect the national security of the host country have significantly increased.Some investments that happened outside the host country or investments that do not lead to control of the host country’s enterprises may also affect the national security of the host country,which raised the issue of the scope of foreign investment national security review under new circumstances.This paper aims to provide insight into how to adjust China’s current policies and rules regarding the scope of foreign investment national security review by analyzing those of the United States,which are the most complete of our time.In addition to the Preface and the Conclusion,this paper contains the following four sections:Section One is an overview of the scope of review.By sorting out basic concepts such as foreign investment national security review and the scope of review,this paper clarifies several pairs of relationships,which lays the foundation for subsequent analysis.For example,the connection between the foreign investment national security review and other foreign investment review regulations,the relationship between the scope of review and other components of foreign investment national security review,the relationship between the scope of review and the protection of national security,and the relationship between the scope of review and the extraterritorial application of laws.Section Two introduces the history and current situation of the scope of U.S.foreign investment national security review.Based on the evolution of U.S.historical practice on the scope of review,this paper summarizes its general characteristics reflected.National interests guide the foreign investment national security review practice in the United States.By separately stipulating the United States’jurisdiction over the acquisition of control-type investments and non-control-type investments in specific industries,the scope of review expanded continuously and applied extraterritorially.Section Three analyzes U.S.current regulations on the scope of review.By analyzing the specific rules on the scope of review in the United States,this paper studies its legislative model.By studying several recent cases,this paper explores U.S.practical application of the scope of review.The scope of review of the U.S.foreign investment national security review mainly includes three parts:the investor,the invested entity,and the investment behavior.The investment,which meets the three requirements,will fall into the review scope.Among them,the regulations on the invested entity and investment behaviors may lead to the extraterritorial application of foreign investment national security review.As for the invested entity,even if the investor invests in a foreign company,as long as the invested entity has business in the United States,the investment may meet the invested entity criterion,and the transaction may fall into the scope of the review.In terms of investment behavior,the United States divides investment behavior into two categories,control-type investments and non-control-type investments in specific industries.For investment behaviors that gain control,through a flexible interpretation of the word "control," the proportion of equity may not be the only determining factor.For example,if the investor can single-handedly decide on critical issues or the appointment and removal of key personnel,this investment also meets the investment behavior requirement.For non-controlling investment behaviors in specific industries,investors only need to obtain the right to know vital information to meet the investment behavior requirements,which may include in the scope of review those investments that mainly occur outside the United States but have"effects" on the United States.Section Four introduces China’s reference to the scope of review of U.S.foreign investment national security review.By analyzing China’s current regulations on the scope of review,this paper draws on the experience of the United States and puts forward specific suggestions for adjusting China’s rules on the scope of review.Firstly,China needs to balance the interests between the host country and investors when delineating the scope of review.Based on that,it is better to determine jurisdiction based on national interests rather than geographical location of the investment.Secondly,China should apply the concept of "control" flexibly and determine if an investment falls into the scope of review based on the status of foreign investment and concerns of investors.