A Bigger Backyard For CFIUS? Part II: From "National Security" To "Economic Security"

What is the proper scope for a "national security" review? Throughout CFIUS's history, commentators and practitioners have debated the shifting and unclear limits of what the term means, between those who argued for a narrow conception tied largely to defense production, and a broader conception that further considers "economic security." The recently proposed Protecting Against Foreign Adversary Investments Act of 2024 (PAFAIA) sides firmly with the latter. In the first post of this two-part series, we discussed PAFAIA and its effects on CFIUS's real estate jurisdiction. Here, we examine how PAFAIA would formally charge CFIUS with reviewing economic effects, reversing how CFIUS analysis has traditionally been understood. We also comment on PAFAIA's foray into the interplay between CFIUS and burgeoning state-level foreign investment laws and PAFAIA's prospects in Congress.