Intelligence Committee Calls for Expansion of CFIUS Jurisdiction

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On October 8, 2012, the House Intelligence Committee issued a damning bi-partisan report on what it perceived to be national security risks posed by two Chinese telecommunications companies: Huawei and ZTE. The committee strongly recommended that U.S. government and government contractor systems, “particularly sensitive systems, should not include Huawei or ZTE equipment, including component parts.”

It further stated that “the Committee on Foreign Investment in the United States (CFIUS) must block acquisitions, takeovers, or mergers involving Huawei and ZTE given the threat to U.S. national security interests.” Moreover, “U.S. network providers and systems developers are strongly encouraged to seek other vendors for their projects.” Of greatest significance, it called for legislation to authorize CFIUS to review purchasing agreements.

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