Bill to Create Federal Review Board for Foreign Investment Introduced

Sen. Tammy Baldwin and Rep. Ro Khanna are introducing a bill Thursday to establish a federal review board for direct foreign investment in the U.S., as President Donald Trump courts global ventures as part of trade deals he makes with nations around the globe.

The bill, shared exclusively with CNBC before it is introduced, would create the "Foreign Investment Review Authority" as an independent executive branch authority. The panel would be responsible for reviewing direct foreign investments and determining whether they are permissible.

It would function as a board, with a chair appointed by the president, subject to Senate confirmation; designees of the secretaries of Commerce and Labor and the attorney general; along with four presidentially appointed and Senate-confirmed board members from a political party that is not the same as the president's. It would also create an Office of the Chief Ethics Officer and a Public Oversight Board to receive complaints.

Baldwin, D-Wis., and Khanna, D-Calif., say the board is necessary to ensure foreign direct investments aren't undercutting U.S. workers. They also say it would potentially stop corrupt deals, with the lawmakers pointing to investments Trump has secured in his negotiations of trade deals around the globe.

Trump has inked numerous investment deals with other nations that were seeking relief from sweeping U.S. tariffs he imposed at the beginning of his second term.

"While foreign investments can create jobs and support our local economies, they also can open the door to adversaries undercutting American workers and the President lining his pockets," Baldwin said in a statement.

"If foreign countries are going to invest in the United States like the President says they are, we need some basic oversight and transparency to make sure its American workers and American communities seeing a return, not our adversaries, the President's family, or the well-connected," she said.

The board's first investments to review would be any investment commitments by China under the direction of the U.S.-China Board of Trade, Board of Investment or any comparable institution, the investment commitment made by Japan of $550 billion, the investment commitment made by South Korea of $350 billion and the investment commitment made by Taiwan of $500 billion, according to a summary of the legislation provided by the lawmakers' offices.

A covered investment for review by the board, however, could be any "commitment by a foreign country to invest in the United States" made as part of a trade agreement, in response to tariffs, embargoes or any other U.S. trade or economic authority.

The review would assess each covered investment for its economic benefit, jobs, content sourcing, competition, and ethics. An investment would be allowed if the chief ethics officer confirms the parties have complied with applicable ethics and transparency rules created by the bill, if the board determines the investment provides a net economic benefit to the United States and the investment is not otherwise prohibited by the bill.

A heightened review would be required if the investment comes from an adversarial nation.

Investments would be barred if parties are a subsidiary or parent company of, otherwise controlled by entities on the Uyghur Forced Labor Prevention Act list, or if the entity is subject to a withhold release order. Investments that violate ethics laws, or deals that were more likely than not entered into based on a foreign government's or foreign official's desire to confer a personal financial benefit on a government official in the U.S., would also be disallowed.

The board would be able to suspend or prohibit any investment found to be impermissible.

Khanna said the bill would equip the government "with the tools it needs to ensure investment commitments negotiated by the President benefit working Americans and never our economic adversaries, such as the People's Republic of China."

"Our bill would ensure foreign countries are unable to leverage FDI to gain unfair access to the U.S. market or make corrupt deals that lack Congressional oversight," he said.