WASHINGTON: The US government on Wednesday announced a plan for tougher oversight of foreign investment in key technology industries, a move seen as largely targeted at China.

President Donald Trump has accused China of rampant theft of American technology and used that as justification for imposing punitive tariffs on thousands of products amounting to more than $250 billion in annual imports.

The new rules, which take effect November 10, updated 30-year-old statutes giving the president broad powers to block foreign investments in sensitive industries or those deemed harmful to US national security.

The reform allows the Committee on Foreign Investment in the United States (CFIUS) to review any investment, not just company takeovers, in an American firm in one of 27 key sectors.

“These temporary regulations address specific risks to US critical technology,” Treasury Secretary Steven Mnuchin said in a statement on Wednesday.

Those include aeronautics, telecommunications, computers, semiconductors and batteries, a senior US Treasury official told reporters.

The industries were selected because they are ones where “the threat of erosion of technological superiority from foreign direct investment...requires immediate attention,” the official said. But the products subject to higher scrutiny only account for 2.5 per cent of the total.

The official said the rules did not target a particular country, but CFIUS, an intergovernmental panel overseen by the Treasury, has blocked takeovers by Chinese investors. In some cases just the prospect of a review has discouraged deals.

In announcing the reform in August, Trump made it clear the focus would be on Beijing and the threats to national security. He said China “won’t be stealing our companies anymore, especially companies that are quite complex.”

Congress approved the law known as FIRRMA with bipartisan support, and Treasury is implementing new rules under a pilot program until the final version takes effect in 15 months.

Published in Dawn, October 11th, 2018