| National security review system is the product of cross-border investment and national security. Although the United States is not the first country to establish national security review system, the United States as the global economic power, it provides an excellent soil for the development of the national security review system. Indeed, the development of US national security review system is unprecedented and far-reaching.The full text is divided into three chapters. Legislative change is the key point of the full text. In the course of this article, the legislative change is the logical clue that the author studies US national security review system. Each legislative change is a reflection of the reality of the situation. Through analysis of legislative changes, the author strives to show readers change and the status quo of US national security review objectively and comprehensively, and reveal the fundamental laws beneath the changes; analysis the impact the changes impose to foreign investment, dialectically study the positive and negative factors of each change; and finally give some suggestion to the establishment of relevant system in China.The first chapter introduces the origin of US national security review system, namely "Exon- Florio Amendment" system. The United States is a typical capital free country, after Fujitsu acquired the United States Fairchild, United States changed its absolute freedom to pursue the argument. Finally, Fujitsu involuntarily gave up the acquisition plan. However, this acquisition made the US government realize that its existing legal system is not sufficient to protect domestic industry from the threat of sensitive foreign competitors. United States enacted the "Exon- Florio Amendment." To cope with "Exon- Florio Amendment" implementation, the Foreign Investment Committee(hereinafter referred to as "CFIUS") announced the implementation details of the amendment in 1991 "Regulations Pertaining to Merges, Acquisitions and Takeovers by Foreign Persons"(hereinafter referred to as "1991 Regulation").CFIUS determines the scope of the review by identifying several types of transactions. Any deal which could lead to a foreigner to control the commercial entities in the United States, will be put into the review process. President has the power to process US national security review, but president delegated this authority to CFIUS. Since then, CFIUS began to accept the notice of foreign mergers and acquisitions, and the right to a preliminary review of mergers and acquisitions, investigate acquisitions and submit recommendations to president. Due to mergers and acquisitions practice involves a wide variety of industries, the lead agency responsible for the review of specific cases. This approach clearly divided the responsibilities and enhanced the credibility and efficiency of the review. At that time, "Exon- Florio Amendment" did not define the concept of "national security". It only gave three factors for investigation, from the practice of view, giving non-clear definition of "national security" is intentional so that the system can protect national interests.The second chapter describes the background of each legislative change, the next section analysis of the nature of the cause of the two legislative changes. The specific content of the two legislative changes and their impact on trade have a top priority in this article. "Byrd Amendment" was triggered in the case of Thomson-CSF’s acquisition of American Airlines LTV defense system. The amendment required that any transaction caused a foreign government control must be reviewed, in addition, it also increased several factors to considering in the processing. Besides, according to "Byrd Amendment", the president has obligation to report to Congress. FINSA was triggered by CNOOC acquisition of Unocal in 2005, and Dubai DPW acquired P&O Ports case in 2006. The changes of FINSA was unprecedented. Firstly, FINSA expanded the scope of the review, added six kinds of national security inspection factors, but also to establish a legal form of informal consultation process, slowing the system and restart the review process, strengthen the reporting obligations to Congress. In order to support the implementation of FINSA, the US Treasury Department has developed a "Regulations Pertaining to Merges, Acquisitions and Takeovers by Foreign Persons" in 2008(hereinafter referred to as "2008 Regulation"). In short, the existing legal deficiencies and vulnerabilities is the fundamental reason why legal changes occurs.The concept of "National security" is changing which is another major cause of national security review of legislative changes. The meaning of "National security" itself has changed, making the original legislation unable to solve the new national security issues, so legislative change is an inevitable choice. Besides, the attitude of the host country towards to foreign investment determines the rules of national security review. This chapter also focuses on the main content of the two legislative changes, such as the declaration of the freedom. First, it increased regulatory review, strengthens congressional oversight authority, and added more factors to consider in processing.In third chapter, the author tries to study the general laws of the United States national review system by analyzing the legislative changes. The author found that that the threshold of the national security review was getting higher. Of course, the United States has also developed a number of provisions in favor of the transaction to pass the review. Such as the informal consultations, mitigation agreement, etc., but I think these two systems are not created by FINSA, while they already have been practiced before FINSA. So the effect to help the transaction to pass a review is limited. The trend of legislative changes is still growing harsh. "Exon Florio Amendment" established with a large degree of freedom, the freedom is not only reflected in the discretion of the CFIUS review transactions, but also the performance of the investor’s right to choose whether to initiate notice to review the transaction. Although FINSA made no mandatory requirement to urge parties to notice, but the censorship initiative implies encouragement to notice and deterrence. 1993 "Byrd Amendment" requires foreign government-controlled transaction must accept the CFIUS review, and FINSA further urges foreign government-controlled transaction to be investigated, FINSA also requires any transactions which cause critical infrastructure may be controlled by a foreigner subject to mandatory investigation. Strengthening congressional oversight authority is perhaps the most crucial modification of the "Byrd Amendment", because this provision makes the Congress an opportunity to exert political pressure and counteract their concerns of foreign acquisitions. The FINSA requires CFIUS to submit the certification documents and annual reports to Congress, which also strengthens the oversight of Congress. National Security Review has not defined national security, but the standard to consider is constantly enriched. FINSA provides the Director of National Intelligence with independent authority in the review. In addition, FINSA also introduced the "Ivy clause". Of course, the legislation of America’s national security review not only raise the threshold for review, in which there are still many provisions to support transaction to pass the review. "2008 regulation" added the informal consultation system, also established the mitigation agreement system. And this chapter also focuses on the "hidden rules" of the US national security review system, a large number of cases showed that the US national security review system has become a stumbling block to foreign acquisitions, this chapter will try efforts to explore the ultimate source of risk. Through analysis of the case and the statute itself, I believe that Congress and the CFIUS review is the control valve. As we all know, the national security review has three main power subject--CFIUS, Congress, the president. There is no doubt CFIUS is the control valve because it has the discretion during the review in each case. Congress or the president can put pressure on the CFIUS, but Congress can influence the review or even suspend the review through its legislative power. In fact, there is very few case that was submitted to the president, but the role played by the president could not be ignored in the review. In all cases, the President vetoed twice, coincidentally, the two vetoed transactions are raised by Chinese enterprises. So I guess the review processing of acquisition caused by Chinese companies is unfair. I believe that the parliamentary oversight is the biggest the "hidden rules" of national security review. Congress has unlimited jurisdiction to supervise, so called the oversight of Congress, in fact, is a lawful right to block transaction with no limits or rules. Another risk to US national security review is from the "national security" itself. Because its meaning and bound is vague. Standard of national security is constantly being given new meaning. This makes it more difficult to predict the outcome of the review, which is extremely unfavorable for investors. I believe that the acquisition of Chinese enterprises in the United States suffer from unfair treatment. Most acquisitions of Chinese enterprises were forced into mandatory investigations. The injustice can also be reflected in the relevant review practice. The president banned two cases, which coincidentally are raised by Chinese enterprises. The first was in 1990 China National Aero-Technology Import and Export Corporation(CATIC) acquisition of US Mamu Ke Company(MAMCO) companies. The other was China Sanyi Group affiliates Ralls company acquired US wind power projects in 2012.The fourth chapter is the last chapter of this paper, it some pieces of advice from two aspects, one is for Chinese companies, the other is for Chinese legalization. It combines all analysis above, a comprehensive comparison of the Sino-US differences in legislation related to related systems to seek and offer suggestions to establish better system for China. There are only two administrative regulations on the national security review is valid in China. January 19, 2015, the Ministry of Commerce was collecting public comments on the "People’s Republic of China Foreign Investment Law(Draft draft)". Once the law pass, it will improve the level of legislation.China’s national security review in determining the object is not as same as the United States. It depends on three aspects, first of all, according to the areas the transaction may be involved in. Secondly, identifying the type of transaction, as long as foreign investors get a higher proportion of its stake in Chinese enterprises, this transaction belongs to the acquisition to be reviewed; final review administrative department also needs to determine whether the cause of the foreigner to obtain actual control. China’s national security review system has great similarities with the one of US: the review can be divided into two stages, the country’s highest executive administration takes the responsibility to settle the disagreement, there is a little difference between the two review systems. However, the Chinese review system is not clear enough. For instance, I am confusing about the composition of the joint meeting. In addition, I believe the provision that "interbank business " can make review recommended to the competent authorities is extremely unreasonable, which happens to provide an opportunity to make the rules abused. I strongly recommend this provision should be deleted. |
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