1
Bach, Christopher L., “U.S. International Transactions, 2004.” Survey of Current Business,
April 2005, p. 46.
Congressional Research Service ˜ The Library of Congress
CRS Report for Congress
Received through the CRS Web
Order Code RS22197
Updated February 23, 2006
The Exon-Florio National Security Test for
Foreign Investment
James K. Jackson
Specialist in International Trade and Finance
Foreign Affairs, Defense, and Trade Division
Summary
The proposed acquisition of six major U.S. ports by Dubai Ports World and Unocal
by the China National Offshore Oil Corporation (CNOOC) has sparked intense concerns
among some Members of Congress and the public and has reignited the debate over
what role foreign acquisitions play in U.S. national security. While the United States
actively promotes internationally the policy of relaxing rules concerning foreign
investment, including the national treatment of foreign firms, some in Congress and
others question some aspects of this policy as it relates to allowing foreign competitors
unlimited access to the Nation’s industrial base. Much of this debate focuses on the
activities of a relatively obscure committee, the Committee on Foreign Investment in the
United States (CFIUS) and the Exon-Florio provision, which gives the President broad
powers to block certain types of foreign investment. This report will be updated as
warranted by events.
Background
According to the Department of Commerce,
1
foreigners invested $113 billion in U.S.
businesses and real estate in 2004, which represents nearly a tripling in the amount
invested in 2003. This amount, however, is about half as much as U.S. firms invested
abroad and far below the record $300 billion foreigners invested in 2000. The lower
level of foreign direct investment flows, although particularly sharp for the United States,
is not unique. According to the United Nation’s World Investment Report, global foreign
direct investment flows dropped by 41% in 2001 and 21% in 2002 due to slow economic
growth in most of the parts of the world, falling stock market valuations, lower corporate
