Bush issues executive order to implement law on national security review



By Martin Crutsinger

WASHINGTON (AP) - President Bush signed an executive order Wednesday to
implement a law Congress passed last year to tighten national security
reviews of proposed foreign investments.

In a statement, Bush said the new process "reaffirms out commitment to
open economies and our policy of welcoming foreign investment and the
important economic benefits that such investment can bring."

The executive order reflects changes that Congress implemented following
the uproar in 2006 over a plan by Dubai-owned DP World to manage six of
the largest ports in the United States. The deal fell through after
lawmakers from both parties contended the administration and the agency
responsible for reviewing security issues had not fully considered all
of the security concerns that had been raised.

In July, Congress passed legislation that ensures that high-level
officials, including the director of national intelligence, participate
in decisions concerning the security implications of direct foreign
investment.

The new law, which took effect in October, extends the scope of national
security review to cover deals involving critical infrastructure and
energy and requires a second-stage review investigation of most proposed
acquisitions by state-owned companies.

The administration supported the changes, contending that they struck
the proper balance between protecting national security in a post-9/11
world and making sure that the U.S. economy remains open to foreign
investment.

Rep. Barney Frank, chairman of the House Financial Services Committee,
said the new law was especially important in light of the growing size
and importance of sovereign wealth funds owned by the governments of
such countries as China.

Frank, D-Mass., said in a statement that the executive order
implementing the new law "means that a process will now be in place to
give appropriate scrutiny to purchases by sovereign wealth funds and
should ensure that any national security issues raised by foreign
government investments in the United States will be fully addressed
before these investments can go forward."

Various business groups, including the Business Roundtable, the
Financial Services Forum, the Organization for International Investment
and the U.S. Chamber of Commerce, issued a statement expressing approval
of the procedures the administration is putting in place.

"We are pleased that the administration has taken this next step towards
finalizing the revised review process of foreign acquisitions of U.S.
companies that impact national security," the groups said.

Clay Lowery, assistant Treasury secretary for international affairs,
said the administration was working now to complete proposed regulations
to implement the new law, with the goal of having those rules in place
by April.

The new law gives legal status to the little-known Committee on Foreign
Investment in the United States, or CFIUS, a multiagency group formed in
1975 to monitor U.S. policy on foreign investment. A 1988 law gave the
president the authority to stop foreign acquisitions that pose a
security threat and the president delegated authority to investigate the
deals to CFIUS.