How to safeguard national security without scaring off investment

IT WAS like “selling Mount Vernon to the redcoats”. That was the cry when Fujitsu, a Japanese technology giant, proposed a friendly takeover of Fairchild, a once-pioneering Californian semiconductor firm, in 1986. At stake, in the eyes of the deal’s critics, were America’s economic strength, military security and technological competitiveness. So emerged the first effort to screen foreign direct investment (FDI) into the United States on national-security grounds. Since then, things have become immeasurably more complicated.Now the main predator is China. The prey is all manner of technology and data, some with overlapping military and civilian uses. The security and surveillance concerns have gone global. President Donald Trump has a bill on his desk, approved in recent weeks with bipartisan support in Congress, that expands the scope of the Committee on Foreign Investment in the United States (CFIUS), an inter-agency body able to block deals that may threaten national security. This week Germany’s government indicated that it would increase its power to block FDI, for the second time in just over a year. Britain is doing likewise, and the European Union is developing an overarching screening framework for its members. Australia and Japan both expanded their scrutiny last year. China itself says that it is tightening up on foreign investors.