Lawmakers Offer Praise, Skepticism for New Outbound Investment Rule
The Treasury Department's new final rule for outbound investment received mixed reviews from Congress this week.
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Sen. Bob Casey, D-Pa., who has proposed an outbound investment bill with Sen. John Cornyn, R-Texas, as well as offered his own legislation (see 2409230016 and 2409110036), welcomed the new rule as an "important step" to counter the Chinese Communist Party. "When we allow American businesses to invest in Chinese sectors like AI and semiconductors, we’re putting our national security and our economic future at risk," he said.
Casey said he will continue pursuing legislation to make an outbound investment program permanent. The Treasury rule, released Oct. 28, creates new prohibitions and notification requirements to limit certain U.S. business activities in China’s AI, quantum and semiconductor sectors (see 2410280043).
Rep. Rosa DeLauro, D-Conn., the ranking member on the House Appropriations Committee, said the rule is “a meaningful step in strengthening U.S. competitiveness and safeguarding our national security and supply chains. … [W]e cannot allow U.S. capital and capabilities to fuel the Chinese Communist Party’s policies.”
By contrast, House Financial Services Committee Chairman Patrick McHenry, R-N.C., said that while he appreciates "Treasury’s attempts to focus narrowly on military technologies," he remains “skeptical of a sectoral approach to regulating outbound investment” and would prefer imposing restrictions on individual entities. “To have a strong, immediate, and global impact on the CCP’s ability to wage war, policymakers in Congress and the administration must embrace our time-tested sanctions regime,” he said.
McHenry said last week that House lawmakers continue to search for a legislative compromise between the two approaches (see 2410250025).
Rep. Andy Barr, R-Ky., who also favors an entity-based approach, said in an e-mailed statement that while the rule "is a step forward in recognizing the national security risks posed by the Chinese Communist Party, the responsibility still lies with Congress to deliver a balanced and robust solution that will safeguard American interests."
House Select Committee on China Chairman John Moolenaar, R-Mich., said the rule is a “strong” step but that “Congress should build on these rules and address a broader set of technologies and transactions that threaten our national security.”