USA crackdown on foreign investments could cool Asia's desire for United States biotech

Cornelia Mascio
Ottobre 12, 2018

The Treasury building in Washington.

The Trump administration on Wednesday issued new rules that will put some foreign investment in USA biotech under heightened scrutiny, a sweeping measure that comes as Asian investors pour billions into stateside drug developers.

The new provisions are part of a pilot program authorized by a bipartisan bill, signed in August, created to strengthen CFIUS's ability to block deals that might threaten national security.

The new limitations could be interpreted broadly, as they also apply to battery manufacturing and wireless equipment.

Biotech is among 27 industries subject to Treasury Department rules, which mandate that foreign investments in "critical technologies" undergo review by the Committee on Foreign Investment in the U.S.

The U.S. government has long had the power to block foreign investments in certain American companies if it deemed the investments could pose a national security threat, but the new powers would expand the government's reach to minority, non-controlling stakes. The administration's move comes amid an escalating trade war with China and follows President Trump's oft-stated concerns about Chinese companies stealing USA technology.

U.S. Treasury staff has not labeled China as a currency manipulator in its recommendation for the department's semiannual report on foreign exchange rate practices, according to media reports on Thursday.

The Treasury's move would introduce a process that could significantly slow that pace.

The administration has imposed penalty tariffs on about $250 billion of Chinese imports, triggering retaliation by China, as a trade war between the world's two biggest economies has widened. But in June, Trump chose to back Congress' effort to tighten existing investment restrictions by increasing the powers of the existing Committee on Foreign Investment in the United States, or CFIUS.

During his campaign for the White House, U.S. President Donald Trump promised to label China as a currency manipulator, which would trigger special negotiations and could lead to punitive duties and other actions.

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