Lawmakers Reach Deal to Curb US Investment in China, McCaul Says
House Foreign Affairs Committee Chairman Michael McCaul, R-Texas, said Dec. 17 that lawmakers have forged a compromise on legislation to restrict U.S. outbound investment in China.
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McCaul described the deal as “kind of a hybrid” between the approach his committee favored, which would impose restrictions on whole technology sectors, and the entity-based approach that the House Financial Services Committee had proposed (see 2410250025).
The agreed-upon “technology-based” restrictions will be “going after certain defined technologies that are AI, military-grade technologies that we should never be selling to China,” McCaul told reporters. "And then we have enhanced sanctions on these companies” that will be administered by the Office of Foreign Assets Control.
McCaul expects the outbound investment language to be included in the continuing resolution that lawmakers plan to take up this week to keep the government temporarily funded when the current CR expires Dec. 20 (see 2412120063).
The CR text hadn't yet been released at press time. Some lawmakers criticized last-minute funding additions to the CR unrelated to outbound investment, raising uncertainty about the resolution's ability to pass the full House and Senate.
McCaul said lawmakers have been eager to finish the outbound investment agreement this year, rather than delay it until next year. “Because of the threat, there’s some urgency,” he said.
House Foreign Affairs Committee ranking member Gregory Meeks, D-N.Y., and Rep. Andy Barr, R-Ky., a senior member of the House Financial Services Committee, both told Export Compliance Daily that they support the compromise. “It’s not perfect, in my opinion,” Barr said. “It’s not the way I would have drafted it exactly. However, I’m very happy that we’re doing something on it.”
With the text not yet public, it is not yet fully clear how the legislation would build on the Treasury Department's new final rule restricting outbound investment in China’s artificial intelligence, quantum and semiconductor sectors (see 2410280043).