Treasury Says Canada, Australia Meet CFIUS Exemption Criteria, Extends Deadline
Australia and Canada have met certain investment screening requirements and will remain eligible for the Treasury Department’s foreign excepted state provision, the agency said Jan. 5. Treasury also extended for one year the deadline by which certain U.S. allies must prove that they have a robust foreign investment screening process, which will allow those countries to also qualify for the exemption.
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Treasury said Australia and Canada “have established and are effectively utilizing a robust process to analyze foreign investments for national security risks,” meaning they will continue to qualify for the excepted foreign state provision administered by the Committee on Foreign Investment in the U.S. The countries, which had been listed as excepted foreign states since 2020 (see 2001140060), had to prove by Feb. 12, 2022, that they were properly screening foreign investments to continue to be eligible for the exemption beyond the February deadline.
In a separate rule, which the agency has been considering since at least November (see 2111120017), Treasury extended the upcoming February deadline to Feb. 13, 2023, to give U.S. allies more time to meet the foreign investment criteria and cement their positions as excepted foreign states.
Although Australia and Canada have now met that criteria, Treasury didn’t specifically mention the United Kingdom, which was the only other country initially listed by the agency in 2020 as an excepted foreign state. The new extended deadline suggests that the U.K. now has until 2023 to meet the criteria and continue to qualify for the excepted foreign state provision, said Scott Flicker, a CFIUS lawyer with Paul Hastings.
“The bottom line is CFIUS is just giving itself more time to be able to designate the U.K. alongside Canada and Australia,” Flicker said. He added that Treasury likely won’t wait long to formally add the U.K., which activated its new foreign investment screening regime this week (see 2111160043). “I think it’s probably going to happen very, very quickly,” Flicker said. A Treasury and CFIUS spokesperson didn’t comment.
Treasury said it received just two comments on its November rule that proposed extending the February deadline, both of which supported the extension. One commenter said an extension was warranted because of the COVID-19 pandemic. The excepted state provision provides certain foreign countries exemptions to the CFIUS process, sometimes allowing them to skip CFIUS clearance altogether (see 2109030039).