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The White House released its long-anticipated Executive Order (EO) to require notification of, and in some cases prohibit, outbound investments from the United States into certain sectors in China. Unlike the Senate-passed amendment to the NDAA, the EO prohibits a limited number of investments and covers a somewhat narrower scope of industries.
The EO delegates authority to the Departments of Treasury, in consultation with Commerce and other relevant agencies, to identify categories of prohibited investments based on a determination that they pose a particularly acute national security threat because of their potential to significantly advance the military, intelligence, surveillance, or cyber-enabled capabilities of countries of concern. Treasury also has the authority to further define the covered sectors for the purposes of the prohibitions and notification requirements, which are:
- Semiconductors
- Artificial Intelligence
- Quantum Computing
The administration continues to consult with allied countries, including the European Union and G-7, to encourage coordinated action. Currently, a limited number of countries have the authority to screen outbound investment, including Taiwan, which has broad authority with respect to investments in China, and South Korea, which has authority more narrowly focused on sensitive technology.
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