The U.S. Department of the Treasury has released a final rule to implement Executive Order 14105, issued on August 9, 2023. This executive order is titled "Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern." The rule provides regulations and explanations concerning their intent and application.
President Biden directed the Secretary of the Treasury to issue regulations prohibiting U.S. persons from engaging in specific transactions with individuals from countries identified as concerns if they involve technologies posing significant national security threats. Additionally, it requires notification for other transactions involving technologies that may contribute to these threats. The President specifically identified the People’s Republic of China, Hong Kong, and Macau as countries of concern.
The technologies covered include semiconductors and microelectronics, quantum information technologies, and artificial intelligence. The new rule details subsets within these sectors and implements a program addressing advancements by countries of concern that could threaten U.S. national security.
Paul Rosen, Assistant Secretary for Investment Security, stated: “The Biden-Harris Administration is committed to protecting America’s national security... This Final Rule takes targeted and concrete measures to ensure that U.S. investment is not exploited.” He emphasized the importance of ensuring investments do not aid countries in developing military or cyber capabilities.
While maintaining an open investment environment remains a priority for the United States, this program targets outbound investments contributing capital or intangible benefits to those involved with sensitive technologies potentially risking U.S. national security. The rule was developed through dialogue with allies and stakeholders since its initiation in 2023.
This final regulation follows Treasury's previous notices regarding proposed rules issued earlier this year. Public comments were considered during its development process leading to technical edits and added specificity.
The rule outlines obligations for U.S. persons regarding covered transactions, defines categories of such transactions, specifies technical requirements for certain technologies, lists required notifications to Treasury, describes knowledge standards for conducting inquiries before transactions, and details violations along with penalties.
Administration will be handled by the newly established Office of Global Transactions within Treasury's Office of Investment Security starting January 2, 2025.
Further information on this topic can be found at the Outbound Investment Security Program section on the U.S. Department of the Treasury website.
