In 1988, the Congress enacted the Exon-Florio amendment to the Defense Production Act. The Committee Investigates in Only Limited Circumstances

The Committee has initiated investigations under only limited circumstances, namely, when it could not identify potential mitigation measures in the review period that would resolve national security issues arising from the acquisitions or when it needed more time than the 30-day review period to complete its work and the companies involved were not willing to request withdrawal of their notification. Provisions to assist agencies in monitoring agreements were also lacking. The objective of the case reviews was to understand and document the Committee’s process for reviewing foreign acquisitions of U.S. companies. Exon-Florio authorized the President to investigate the impact of foreign acquisitions of U.S. companies on national security and to suspend or prohibit an acquisition if credible evidence exists that a foreign controlling interest may threaten national security and no legislation, other than Exon-Florio and the International Emergency Economic Powers Act, can adequately protect national security. The President delegated the authority to conduct investigations under Exon-Florio to the Committee on Foreign Investment in the United States. 2. 3.
What GAO Found

The Exon-Florio amendment to the Defense Production Act authorizes the President to suspend or prohibit foreign acquisitions, mergers, or takeovers of U.S. companies if (1) there is credible evidence that a foreign controlling interest might threaten national security and (2) legislation, other than Exon-Florio and the International Emergency Economic Powers Act, does not adequately or appropriately protect national security. The President delegated the authority to review foreign acquisitions of U.S. companies to an interagency group, the Committee on Foreign Investment in the United States. The Committee initiates investigations only when it cannot identify potential mitigation measures in the review period to resolve national security issues arising from the acquisitions or when it needs time beyond the 30-day review to negotiate potential mitigation measures and the companies involved are not willing to request withdrawal of their notification. The Committee's process for implementing Exon-Florio contains the following weaknesses that may have limited effectiveness: (1) the Committee has not established interim protections before allowing withdrawal when concerns were raised and the acquisition had already been completed (2) agreements between the Committee and companies contained nonspecific language that may make them difficult to implement and (3) agreements did not specify responsibility for overseeing implementation and contained few provisions to assist in monitoring compliance.