Treasury Lays Out Proposed Rules for Banned China Investments
President Biden’s new executive order prohibiting new US investments in China in semiconductors, quantum and AI represents a new chapter in US-China relations and a challenge to US companies that sell into China.
Anthony Rapa, an attorney at Blank Rome who is versed in export matters said the use of the proposed rulemaking by Treasury shows the Biden administration is “trying to create as much space as they can to make it a consultative process with industry.” Many of the proposed regulations in Treasury’s 46-page document also show that it is “not a fully baked set of proposed regulations.”
In fact, Rapa said, it contains much of what the US Senate recently passed by 91-6 in the bipartisan Outbound Investment Transparency Act of 2023, which was attached as an amendment to the Defense Authorization Act which must be finally passed by Congress in December.
Despite the complexity in the document, Rapa said Treasury is trying to make to clear that it favors a climate of open investment but “there is a subset of tech development in China that they do not want to benefit from investment. What they are trying to through rulemaking is they seem to be starting from a posture of a narrow focus and then later expanding.”
Rapa also predicted that the executive order and rulemaking “will play out over a period of years.”
What is being done is also somewhat historic.
“The US for the most part has never really regulated outgoing investment except in narrow categories,” Rapa added. “This is a new tool and now that the tool has been established, as time goes on, the usage of that tool could be expanded.”
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"Treasury Lays Out Proposed Rules for Banned China Investments," by Matt Hamblen was published in Fierce Electronics on August 10, 2023.