Pentagon Pushes Trade Restrictions

The Pentagon wants to limit foreign access to sensitive technology with a controversial policy that would make the foreign acquisition of many U.S. companies subject to a national security review and approval.

The proposal, a draft of which is being circulated around the Bush Administration for inclusion in the Defense Authorization bill for next year, says foreign acquisitions of U.S. firms would require approval by the U.S. Committee on Foreign Investment if they meet certain criteria.

U.S. companies that would be affected are those which have done $1 million worth of business with the Defense Department in the preceding year, are valued at over $100 million, and are being bought by a foreign firm that is owned or controlled by a national government.

CFI is made up of officials from various agencies including the Departments of State, Defense, Justice, Treasury, and Commerce, and is tasked, among other things, with ensuring that foreign acquisitions of U.S. interests do not compromise national security.

If the proposal were made law, CFI would be able to demand information from companies about their activities and could refuse to allow an acquisition from suspect companies.

Currently, CFI's review process is entirely voluntary and the group has no enforcement powers to prevent an acquisition.

Sources say some officials at Treasury and Commerce Departments, which oversee most of the trade negotiations overseas, are furious about the decision because they were not consulted about the Pentagon proposal before it was distributed.