Some US investments in other countries under scrutiny

The U.S. Department of Treasury and the International Trade Administration within the U.S. Department of Commerce have issued reports considering a program to address national security concerns “arising from outbound investments from the United States into sensitive technologies that could enhance the technological capabilities of countries of concern in ways that threaten U.S. national security.” The reports were required by Congress as part of the most recent appropriations bill and come amid growing concern about China’s technological capacity and if American venture capital funds are helping fuel it.

Reports from the two departments to Congress focus on outbound investments from the U.S. into sensitive technologies that could enhance technological capabilities of “countries of concern” in ways that could threaten the U.S. Those investments that would be under consideration are not currently captured by export controls, sanctions, or other related authorities.

The two-page Commerce report noted that the approach currently under consideration would focus on a sub-set of certain key advanced technologies and action might include “prohibiting certain investments and/or collecting information about other investments to inform potential future action.” It also said that work is ongoing to ensure clear definitions and scoping as necessary to “facilitate swift implementation and achieve the objective of preventing U.S. capital and expertise from being exploited in ways that threaten our national security while not placing an undue burden on U.S. investors and businesses.”

Such a program would require $10 million in funding in FY 2023, and the president’s proposed FY 2024 budget includes $5 million to enable the International Trade Administration to assist Treasury in scoping and implementing the program.