Trump Memo on Outbound Investment No Substitute for Congressional Action, Lawmakers Say
The leaders of the House Select Committee on China said Feb. 25 that Congress should pass legislation restricting U.S. outbound investment in China despite a recent move by the Trump administration to address the issue.
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Committee Chairman Rep. John Moolenaar, R-Mich., said the White House took “a step in the right direction” by issuing a memo Feb. 21 that calls on U.S. agencies to consider expanding existing outbound investment restrictions against China (see 2502240051). The memo followed the Biden administration’s August 2023 executive order restricting investment in China’s artificial intelligence, quantum technology and semiconductor sectors (see 2308090066).
Despite those efforts, outbound investment legislation is needed to provide more permanent guidance than executive action can offer, Moolenaar and Rep. Raja Krishnamoorthi, D-Ill., the committee’s ranking member, said at a Brookings Institution event. “Congress needs to continue to develop this so that there is more clarity and then more continuity between administrations,” Moolenaar said.
“I agree,” Krishnamoorthi said. “We need a law. We can’t keep bouncing from one executive order to another.”
Later in the day, John Miller, senior vice president of policy for trust, data and technology and general counsel at the Information Technology Industry Council (ITI) told lawmakers that legislation would provide more certainty than executive action. Following the Supreme Court decision rejecting the Chevron principle of deferring to federal agencies' interpretations (see 2407310035), “the onus really is on Congress to write these rules as clearly as possible so that it’s not left to executive agency discretion, which may be overturned by the courts,” Miller testified before the House Financial Services Committee in response to questioning from Rep. Andy Barr, R-Ky.
Miller cautioned against passing overly broad restrictions, which he said could create compliance problems for U.S. companies. “Policymakers should be mindful of the economic security value of outbound investments, such as knowledge acquisition of the current state of the technology, insights into competitor activities, strengthened economic ties with allies, and access to global talent,” his written testimony says.
Barr, who has been working on outbound investment legislation for months, told reporters he continues to tweak his bill and hopes to introduce it as early as next week. He has received “very helpful” feedback from the Treasury, State and Commerce departments.
“I want to get on the same page with the new administration [and] make sure that our statutory language that we’re proposing is aligned” with the Trump memo, he said. “I think we’re headed in that direction.”
Barr also has asked Krishnamoorthi for feedback. “I want it to be bipartisan,” he said.
The Comprehensive Outbound Investment National Security (Coins) Act, which Barr introduced in December in the previous Congress, would expand upon the Biden executive order by covering more AI models and by adding hypersonic and related aerospace technologies (see 2412230038). It would also authorize the president to impose sanctions on Chinese entities connected to China’s military and intelligence apparatus.
Rush Doshi, assistant professor of security studies at Georgetown University's Walsh School of Foreign Service and director of the China Strategy Initiative at the Council on Foreign Relations, said in written testimony to the House Financial Services Committee that outbound investment restrictions should be expanded to cover the biotechnology sector. He also called for strengthening penalties “so they are not seen as the cost of doing business,” and improving enforcement capabilities.