USCBC Comments Regarding the Proposed Rule Pertaining to US Investments in Certain National Security Technologies and Products in Countries of Concern

USCBC Comments Regarding the Proposed Rule Pertaining to US Investments in Certain National Security Technologies and Products in Countries of Concern

Department of the Treasury, Office of Investment Security

August 2, 2024

The US-China Business Council (USCBC) welcomes the opportunity to submit comments to the Department of the Treasury (Treasury) regarding the notice of proposed rulemaking (NPRM) preceding the implementation of regulations contemplated by the executive order (EO) of August 9, 2023, “Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern.”

USCBC represents more than 270 American companies that do business with China. Our membership includes some of the largest and most iconic American brands, in addition to small- and medium-sized enterprises. Our members represent a wide range of industries and sectors, including manufacturers, professional services firms, high-tech companies, investment funds, and others.

We greatly appreciate the administration’s consultations with our organization and our member companies throughout the development of the Outbound Investment Security Program. Because of these discussions, many US companies have already created sophisticated due diligence mechanisms to ensure that their investments do not facilitate the development of national security technologies and products in countries of concern.

As a general matter, USCBC supports the Biden administration’s efforts to protect US national security and promote a robust bilateral commercial relationship with China. However, USCBC has serious concerns about this proposed rule. If implemented as written, it will impose undue impediments on companies’ ability to conduct global business.

Controls on outbound investments to a major trading partner are completely novel, and we believe certain elements of the proposed rule represent a departure from the United States’ traditional support for free and open capital flows that undergird US companies’ operations. USCBC did not reach this position with haste and only after determining that concerns raised in our ANPRM submission were not addressed. Urgent revisions, detailed below, are needed to ensure that the rule is clear, implementable, and does not impact a wider set of investments than needed to achieve the administration’s national security objectives. The United States should not replicate China’s system, which requires government approval or notification for overseas investments in a loosely defined range of sensitive areas.

The technologies and products covered by the NPRM all have complicated supply chains, and their inclusion in its scope followed rigorous consultation with the business community. Therefore, USCBC strongly urges the administration to act with restraint regarding any future expansions. If the scope of the proposed rule should eventually be expanded, the rule should follow a similarly rigorous consultation process and have a prospective application. Congress has also proposed alternative approaches to US outbound investment. To avoid unnecessary confusion, USCBC encourages the administration and Congress to work to ensure there is one clear set of rules that will apply to US businesses. Any expansion of prohibited or notifiable activities should include a notice and comment period.

In our comments below, USCBC strives to act as a constructive partner to Treasury and the broader US government. Our submission provides specific feedback and suggestions on key definitions, concepts, and elements of the NPRM.

See our full submission:

USCBC Comments Regarding the Proposed Rule Pertaining to US Investments in Certain National Security Technologies and Products in Countries of Concern