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Deputy Treasury Secretary Nominee Stresses Importance of Multilateral Sanctions, CFIUS

Adewale Adeyemo, President Joe Biden’s nominee for deputy treasury secretary, said he is open to continuing unilateral sanctions against China but stressed that he prefers multilateral sanctions and closer coordination with allies. Adeyemo also said he plans to conduct a “top-to-bottom” review of the agency’s sanctions procedures (see 2101190060) and examine whether the U.S.’s foreign investment screening tools should be strengthened.

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“Treasury's tools must play a role in responding to authoritarian governments that seek to subvert our democratic institutions,” Adeyemo told the Senate Finance Committee Feb. 23, specifically mentioning China. “Where China is wanting to compete on a level playing field, I believe the American people, our companies and our firms will be more innovative and have the ability to be successful,” Adeyemo said. “Where China is not willing to play on a level playing field, it's important that we hold them accountable to the rules that they have agreed to in the international system.”

That will include unilateral sanctions in “some cases,” said Adeyemo, who served as deputy national security adviser for international economics during the Obama administration. But he made clear that sanctions are most effective when they are coordinated with allies. It’s “always best” to impose sanctions “multilaterally, working with other countries, especially our allies, to demonstrate to the Chinese that they're isolated when they violate the rules of the road,” he said. “That's going to be my approach to dealing with the issues that relate to China.” The Chinese embassy didn't comment.

If confirmed, Adeyemo said, his Treasury review will include an examination of current sanctions regimes and “how they are used, how we can make them more effective, how we can move them forward.” He also said he hopes to improve the “efficacy” of U.S. sanctions. Foreign policy experts were critical of the Trump administration's sanctions regimes against Venezuela, Iran and others, which they argued didn’t have a clear goal and failed to change the behavior of the governments of the targeted countries (see 1908010020).

“Sanctions are a tool, and they need to be in service of a foreign policy strategy,” Adeyemo said. “Our sanctions regimes are always best when we're able to do them multilaterally, not only for the economic impact, but also the political impact. That will require us to think through how we use these tools flexibly.”

Adeyemo also said he will place a high priority on the work of the Committee on Foreign Investment in the U.S., calling it a “useful tool,” particularly after CFIUS’s jurisdiction was expanded last year to cover transactions involving critical technologies (see 2001140060). Adeyemo didn’t directly answer a question from Sen. Chuck Grassley, R-Iowa, about whether “special investment rules” are needed to counter foreign investments from Chinese state-owned firms, but he said he will review the CFIUS process.

“I think it's going to be critical that as we do a holistic look at our policies within the U.S. government, we look at what we can do to make sure that we protect American technology and ensure that things made in America are protected as well,” he said. Adeyemo also said he will be “focused” on helping U.S. allies form their own investment screening regimes to counter Chinese technology theft, building on similar efforts made by officials during the Trump administration (see 2002260042).

“Those that seek to take advantage of our national security, if they're unable to gain access to the U.S. economy and to critical technologies here, they will look to other countries,” Adeyemo said. “So a big piece of running the CFIUS process through the Treasury Department, from my perspective, is making sure that we work with our allies to ensure that they have the same type of authorities in their countries to address these critical issues.”