U.S. bill to reform foreign investment review wins business group's support

WASHINGTON (Reuters) - A lobbying group representing major foreign companies doing business in the United States including Anheuser Busch Inbev ABI.BR and Siemens SIEGn.DE said on Friday it had dropped its opposition to bills that would tighten oversight of foreign investment.

The U.S. Senate and U.S. House of Representatives are considering bills introduced in November that would expand the powers of the inter-agency Committee on Foreign Investment in the United States, or CFIUS, which reviews investments to ensure they do not harm national security. Chinese investment in the United States has been of particular concern.

Nancy McLernon, head of the Organization for International Investment, said that proposed changes to bills released last week in the Senate and this week in the House removed what she called “overreach.”

McLernon, whose members have operations in all 435 congressional districts, said the changes would prevent harm to U.S. foreign investment without endangering national security. “We are supportive. We believe that updating the CFIUS process makes sense,” she said.

OFII had been among a small number of holdouts pushing against the previous drafts, and its acceptance removes an obstacle to the bill moving forward. Supporters hope to have it through Congress by the end of the summer.

Draft changes to the CFIUS measure in the Senate and House are different but address business concerns. Both remove a measure that the technology and investor sectors disliked because it would have allowed CFIUS to review joint ventures that could lead to technology transfer, delaying completion of proposed transactions.

The Senate Banking Committee will vote on proposed changes to the measure next week while the House Committee on Financial Services is expected to vote soon. No date has been set.

The goal of the bills is to address Defense Department concerns that leakage of high tech know-how to foreign adversaries would lead to U.S. soldiers facing U.S. technology in a future battlefield.

There is a good chance that the CFIUS measure will end up being included in the must-pass National Defense Authorization Act (NDAA), which authorizes defence spending and sets policies controlling how the funding is used.

CFIUS, which is led by the Treasury Department, has killed a long list of deals, including attempts to purchase semiconductor companies such as Qualcomm Inc QCOM.O and the proposed acquisition of U.S. semiconductor testing company Xcerra Corp XCRA.O to a Chinese state-backed investment fund.

Reporting by Diane Bartz; Editing by Cynthia Osterman