The U.S. Department of the Treasury issued a Notice of Proposed Rulemaking (NPRM) today to implement Executive Order 14105, titled “Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern.” This NPRM follows an Advance Notice of Proposed Rulemaking (ANPRM) from last August and includes draft regulations and explanatory discussions, inviting public comment.
President Biden aims to prevent the exploitation of U.S. outbound investments by countries seeking to develop sensitive technologies that pose national security risks. The Executive Order identifies the People’s Republic of China, Hong Kong, and Macau as countries of concern.
The Outbound Order instructs the Secretary of the Treasury to issue regulations prohibiting U.S. persons from engaging in certain transactions involving specific technologies and products deemed a national security threat. It also requires notifications for other transactions that may contribute to such threats. The targeted technologies include semiconductors, microelectronics, quantum information technologies, and artificial intelligence.
“This proposed rule advances our national security by preventing the many benefits certain U.S. investments provide—beyond just capital—from supporting the development of sensitive technologies in countries that may use them to threaten our national security,” said Assistant Secretary of the Treasury for Investment Security Paul Rosen.
The program aims to be narrow and targeted, focusing on U.S. outbound investments contributing both capital and intangible benefits to entities engaged in sensitive technology development in countries of concern. Treasury seeks ongoing dialogue with allies and stakeholders who provided input during the ANPRM process.
The NPRM details key concepts for implementation:
- Obligations regarding covered transactions
- Categories of covered and excepted transactions
- Technical specifications for covered transactions based on specific technologies
- Information required for notification
- Knowledge standards for due diligence before undertaking a transaction
- Conduct violations and applicable penalties
Treasury invites comments on all aspects of the NPRM until August 4, 2024, at https://www.regulations.gov. Final implementing regulations will follow at a later date.
Additional information is available on Treasury's website.
