CR Deal Expands Outbound Restrictions on AI, Ups Export Control Statute of Limitations to 10 Years
The outbound investment legislation that lawmakers agreed Dec. 17 to include in a newly unveiled continuing resolution (CR) (see 2412170063) would expand upon the Biden administration’s August 2023 executive order (see 2308090066) by covering more artificial intelligence models and by adding hypersonic and related aerospace technologies.
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While the EO is limited to AI intended for military and surveillance purposes, the proposed Comprehensive Outbound Investment National Security (Coins) Act would cover AI systems designed for use by the Chinese government or that operate on advanced, export-controlled semiconductors, according to a summary of the bill.
While Biden's EO doesn't include any sanctions authorities, the Coins Act would authorize the president to impose sanctions on Chinese entities connected to China’s military and intelligence apparatus, the summary says.
The fate of the CR was uncertain as of late Dec. 18, however, as conservative Republicans objected to a number of extra items added to the spending bill. Government funding expires Dec. 20, and the proposed CR would keep the government open through mid-March.
Other new language included in the Coins Act would force the divestment of publicly traded securities of entities on the Treasury Department's Non-SDN Chinese Military-Industrial Complex Companies (NS-CMIC) list. It also would require Treasury to determine whether entities on other U.S. government “blacklists,” such as the Commerce Department’s Entity List, should be added to the NS-CMIC list.
The Coins Act would authorize $150 million a year for two years for Treasury and Commerce to jointly conduct outreach to those affected by the new law. It would call on the administration to encourage U.S. allies and partners to develop outbound investment restrictions of their own.
House Speaker Mike Johnson, R-La., whose office helped lead negotiations on the 1,547-page CR, said he wanted to include the Coins Act in the resolution to ensure the incoming Trump administration has adequate tools to counter the Chinese Communist Party.
“America and our European partners should not be contributing to the CCP’s military advancements, and the past few decades of investments propping up Chinese aggression must come to an end,” Johnson said in a statement.
The CR, which was publicly released late Dec. 17, includes several other foreign affairs provisions, including the Haiti Criminal Collusion Transparency Act, which would require the State Department to report annually on ties between criminal gangs and political and economic elites in Haiti, and would ask the administration to impose sanctions based on what it finds (see 2307260017).
The CR would also impose a 10-year statute of limitations for export control and anti-boycott violations. To promote “licensing transparency,” the CR would amend the Export Control Reform Act of 2018 to require an annual report on export license applications and export control enforcement actions. Another provision would require the Bureau of Industry and Security to report annually on foreign boycotts targeted at Israel and enforcement steps the agency has taken against those boycotts under the Anti-Boycott Act of 2018.
The CR would delay implementation of the Financial Crimes Enforcement Network’s new beneficial ownership information (BOI) reporting rule by a year, to Jan. 1, 2026. Many lawmakers had called for such a delay, saying most small businesses are unaware of the new reporting requirements (see 2411190066).