As many CFIUS-watchers were expecting, the President has just blocked the Lattice Semiconductor/Canyon Bridge deal.  CFIUS recommended that the President take this action because of national security concerns, and no President has refused to follow such a blocking recommendation by CFIUS.

In most cases, where CFIUS has made such a recommendation, the parties have abandoned the deal rather than waiting for the President to act.  This is only the fourth time that parties to a deal have forced presidential action:  at the recommendation of CFIUS, President George HW Bush ordered a divestment in 1990, President Obama ordered a divestment in 2012 and blocked a deal in 2016, and President Trump now has blocked this Lattice Semiconductor/Canyon Bridge deal.  All cases have involved Chinese companies.  (Steptoe has previously written on the 2012 and 2016 actions.)

A statement issued in conjunction with President Trump’s blocking order asserts that “Consistent with the longstanding, bi-partisan US commitment to open investment, the CFIUS process focuses exclusively on identifying and addressing national security concerns.  This focused mandate reinforces our commitment to welcoming foreign investment, while at the same time reinforcing our commitment to protecting national security.”  Recent CFIUS challenges faced by many foreign investors – not limited to Chinese investors – raise questions about the current strength of the open investment commitment, previously affirmed by presidents of both parties.  In particular, while CFIUS has continued to clear some Chinese investments, Chinese investors may be skeptical.  No doubt CFIUS will have ample opportunity to demonstrate continued commitment to an open investment policy.