The President's Decision to Order a Chinese Company's Divestiture of a Recently Acquired U.S. Aircraft Parts Manufacturer

Gao ID: T-NSIAD-90-21 March 19, 1990

GAO discussed the President's decision to order a corporation owned by the People's Republic of China to divest its recently acquired control of a U.S. firm, focusing on: (1) the interagency national security review process; (2) U.S. means for safeguarding information; and (3) sources of information needed to investigate the investment's national security implications. GAO noted that: (1) the firms completed the transaction before the Committee on Foreign Investments in the United States (CFIUS) completed its review process; and (2) at the time the firms completed the transaction, CFIUS had not completed the investigation that would have formed the President's basis for a decision that the transaction would impair national security; (3) export licenses were required for the release of controlled technical data to foreign nationals; and (4) federal agencies experienced difficulty in detecting illegal technology transfers and relied mainly on U.S. companies' good faith compliance.

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