11.20.23
Senators, Congressmen Seek Improved Screening of Outbound Investments
WASHINGTON—U.S. Senator Dan Sullivan (R-Alaska) and Congressman Mike Gallagher (R-Wisc.) urged strong language in the 2024 National Defense Authorization Act (NDAA) to address the national security threat posed by sensitive technologies with dual-use applications being acquired by America’s adversaries, particularly the People’s Republic of China (PRC), through American businesses’ outbound investments. Sullivan and Gallagher led a letter today with 41 of their congressional colleagues to the chairmen and ranking members of both the Senate and House Armed Services Committees.
“There is strong bipartisan consensus in both the U.S. Senate and U.S. House of Representatives that Congress must act to address the national security threat posed by these outbound investments,” the senators wrote. “We have known for some time that U.S. companies are sending capital, intellectual property, and innovation to the PRC, fueling its advance in dual-use critical technology areas. To safeguard our national security, the U.S. needs visibility into our vulnerabilities by requiring, at a minimum, notification of sensitive investments by U.S. firms in these countries.”
“None of the tools currently at the government’s disposal, however, fully address the specific risk posed by the transfer of U.S. capital and know-how to our adversaries,” the senators added. “In order to protect our interests, we need to evaluate the full scope of our vulnerabilities and use the data and insight provided by outbound investment screening to implement tools that ensure sensitive technologies with dual-use applications are not further ceded to adversaries.”
On the Senate side, the letter is signed by Senators Jacky Rosen (D-Nev.), Marco Rubio (R-Fla.), Rick Scott (R-Fla.), Joni Ernst (R-Iowa), Kevin Cramer (R-N.D.), Debbie Stabenow (D-Mich.), John Fetterman (D-Penn.), Tommy Tuberville (R-Ala.), Tammy Baldwin (D-Wisc.), Gary Peters (D-Mich.), Michael Bennet (D-Colo.), Bob Casey (D-Penn.), John Cornyn (R-Texas), Pete Ricketts (R-Neb.), Jeanne Shaheen (D-N.H.), Chris Van Hollen (D-M.D.), Angus King (I-Maine), and Mark Kelly (D-Ariz.).
Below is the full text of the letter.
Dear Chairman Reed, Ranking Member Wicker, Chairman Rogers, and Ranking Member Smith:
We are deeply concerned about the potential national security threats posed by outbound capital flows and knowledge transfer to the United States’ adversaries, particularly the People’s Republic of China (PRC). To this end, we write urging you to ensure that language addressing outbound investments in certain sectors of foreign countries of concern is included in the National Defense Authorization Act (NDAA) of 2024, and ideally strengthen the language.
On July 25, 2023, the Senate voted overwhelmingly (91-6) to include Amendment No. 931 in the NDAA, which would establish an outbound investment screening program led by the U.S. Department of the Treasury in coordination with the U.S. Department of Commerce. It requires United States entities to notify the U.S. government of investments and activities in specific technology sectors in countries of concern.
There is strong bipartisan consensus in both the U.S. Senate and U.S. House of Representatives that Congress must act to address the national security threat posed by these outbound investments. The Administration is also focused on the issue. On August 9, 2023, the President issued an Executive Order (E.O. 14105) titled Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern, seeking to deal with this same issue set. In fact, the E.O. goes beyond notification to consider prohibition of investment in some sectors.
We have known for some time that U.S. companies are sending capital, intellectual property, and innovation to the PRC, fueling its advance in dual-use critical technology areas. To safeguard our national security, the U.S. needs visibility into our vulnerabilities by requiring, at a minimum, notification of sensitive investments by U.S. firms in these countries.
Outbound investment screening will fill a gap in our ability to combat this growing national security threat. This is not novel, nor a threat to America’s outwardly facing economy. The United States has deployed a number of tools to protect against technology theft by our adversaries, including export controls, sanctions, and inbound foreign investment screening, even as it remains one of the most open economies in the world.
None of the tools currently at the government’s disposal, however, fully address the specific risk posed by the transfer of U.S. capital and know-how to our adversaries. In order to protect our interests, we need to evaluate the full scope of our vulnerabilities and use the data and insight provided by outbound investment screening to implement tools that ensure sensitive technologies with dual-use applications are not further ceded to adversaries.
The last thing we should be doing is facilitating technology that could one day be used against us, whether through espionage at home or against our servicemen and women deployed to fight for their nation.
In the interest of U.S. national security, we urge you to ensure that robust language addressing the threat posed by outbound investments in countries like the PRC is included in the 2024 NDAA that goes to the President for his signature.
Sincerely,
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