Biden Restricts US Investments in China’s Tech
President Joe Biden signed an executive order Wednesday restricting American investments in certain technologies that China is developing in its military modernization efforts, a move that experts say is a measured approach to address a concern that has been "percolating for years."
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Anthony Rapa, co-chair of Blank Rome LLP's international trade practice, told Law360 on Wednesday that the Biden administration is "taking a measured approach" to a concern that has been "percolating for years."
The order "establishes a framework for the Treasury Department to issue regulations that put the meat on the bones when it comes to how the U.S. government is going to regulate outbound investment in areas that are sensitive for national security," Rapa said, noting that the Treasury Department has started the process by issuing an advance notice of proposed rulemaking.
"That's meaningful in the regulatory world because starting with that is the most preliminary step you can take when it comes to issuing regulations," he said.
The U.S. hasn't really taken an approach like this before and the Biden administration's intention is to include a consultative process with the public and industry groups, the attorney said. That's also likely why it has taken so long to get to this point in the process, he added.
"This is new and complex, and there are a ton of moving parts," Rapa said, adding that the Treasury Department will have its hands full interpreting a number of issues and defining various terms in the regulations. It's still not clear, for example, if the rules will apply to businesses owned by Chinese nationals outside of China or to U.S. investors who own businesses outside the U.S.
"There's a lot of wood to chop," Rapa said. "Already a lot of hard work has been done, but there's more to do yet. There are a lot of twists and turns from here, and I think the order will be built out and elaborated upon over the coming years."
And Congress is still in the picture, Rapa said, noting that just a couple of weeks ago the Senate voted 91-6 to pass a bill that would require U.S. businesses to notify the Treasury Department when they invest in Chinese technology that could impact U.S. national security concerns.
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"Biden Restricts Us Investments in China’s Tech," by Lauren Berg was published in Law360 on August 10, 2023.