Treasury Proposes New Rules to Safeguard U.S. National Security from Foreign Technology Threats

WASHINGTON – Today, the U.S. Department of the Treasury (Treasury) unveiled a Notice of Proposed Rulemaking (NPRM) aimed at implementing Executive Order 14105, "Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern," issued on August 9, 2023. This NPRM marks a significant step in the Biden administration's efforts to protect American national security interests from potential exploitation through outbound investments in sensitive technologies.

President Biden's commitment to safeguarding Americans has driven this initiative, responding to concerns over certain countries' efforts to acquire critical technologies essential for military, intelligence, surveillance, and cyber capabilities.

The Executive Order identifies the People’s Republic of China, along with the Special Administrative Region of Hong Kong and the Special Administrative Region of Macau, as countries of concern due to their potential to exploit U.S. outbound investments.

The NPRM outlines stringent measures to curb these risks, primarily focusing on three categories of national security technologies: semiconductors and microelectronics, quantum information technologies, and artificial intelligence. It mandates prohibitions on specific transactions involving these technologies and requires U.S. entities to notify Treasury of other relevant transactions that may pose national security threats.

Assistant Secretary of the Treasury for Investment Security, Paul Rosen, emphasized the rule's targeted approach: "President Biden and Secretary Yellen are committed to preventing sensitive technology advancements from threatening U.S. national security. This proposed rule ensures that U.S. investments do not inadvertently support the development of technologies that could compromise our security."

While maintaining an open investment environment, Treasury underscores that the program is narrowly focused, aiming to protect against the unintended consequences of U.S. investments in countries of concern. The NPRM builds upon insights gathered during the Advance Notice of Proposed Rulemaking (ANPRM) process initiated last year, reflecting extensive stakeholder feedback and international collaboration.

Today's NPRM release invites public feedback on proposed regulations, offering detailed insights into implementation specifics such as transaction obligations, categories of covered transactions, technical specifications for technology scope, notification requirements, and compliance expectations. It outlines penalties for violations and emphasizes the importance of thorough due diligence by U.S. entities engaging in covered transactions.

Treasury encourages stakeholders to participate actively in shaping these regulations, underscoring the collaborative approach with U.S. allies and partners. This NPRM represents a critical step forward in fortifying U.S. national security against emerging global threats while maintaining strategic economic relationships.

For more information and to participate in the public comment process, visit the Treasury Department's official website.