General Discussion

The measure at issue is known as the “outbound investment” provision. We have heard for years about the problem of manufacturing businesses shipping jobs overseas to China, with its low worker wages and low environmental standards. China typically forces businesses wanting to locate factories in its country to transfer their technology and intellectual property to Chinese firms, which can then use that to undercut competitors in global markets, with state support.

Congress has been working itself into a lather about China for years now, and they finally came up with a way to deal with this issue. Sens. John Cornyn (R-TX) and Bob Casey (D-PA) have the flagship bill, which would either prohibit U.S. companies from investing in “sensitive technologies” in China, including semiconductors and artificial intelligence, or set up a broad notification regime around it.

The bill would add some reporting requirements and enhanced reviews as well; in general, it expands restrictions that the Treasury Department has already put forward in regulatory rules. Codifying those rules into statute means that they cannot be changed by successive administrations.

Cornyn-Casey passed the Senate last year, and after about a year of legislative wrangling, a final outbound investment package made it into the year-end bill. “We’re taking a necessary step to safeguard American innovation against bad actors and ensure our lasting dominance on the world stage,” Cornyn said in a statement.