House Panel Hears Ideas for Overseeing Outbound Investment Program
Congress should ask the Trump administration several key questions as part of its oversight of the Treasury Department’s new program restricting outbound investment, two investment security experts told the House Financial Services national security subcommittee July 16.
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Sarah Bauerle Danzman, associate professor of international studies at Indiana University Bloomington and a former Committee on Foreign Investment in the U.S. staffer at the State Department, testified that she would want to know how many outbound investment transactions are being notified to Treasury, what the process is for looking for non-notified transactions that should have been prohibited, and whether any such non-notified, prohibited transactions have been found.
The program is still "in very early days," but as it matures, Baurle Danzman would want to understand how it is affecting the “innovation ecosystem.”
Brian Reissaus, former acting assistant Treasury secretary for investment security, said Congress should look at whether the program is creating an enforcement burden. “One recommendation I would have is trying to understand the number of transactions that Treasury is looking into from an enforcement matter and the percentage of those that end up being either failure to notifies or were violations of the prohibition,” Reissaus testified.
The witnesses made their comments in response to Rep. Joyce Beatty, D-Ohio, the subcommittee’s ranking member, who said she’s concerned Treasury has not provided a report to Congress on the outbound program, which has been active for six months. The program, which arose from an October 2024 Biden administration rule (see 2410280043), created new prohibitions and notification requirements to limit certain U.S. investment in China’s semiconductor, artificial intelligence and quantum sectors (see 2410280043).
With Congress considering legislation to codify and expand the program, it should ensure that its policies are clearly articulated, consistently applied and narrowly focused on national security, Bauerle Danzman said. It should also promote coordination with allies and review its policies regularly to ensure they remain effective, she added.
Rep. Warren Davidson, R-Ohio, the subcommittee’s chairman, said he favors passing an outbound investment bill to "prevent U.S. capital from supporting industries in adversarial nations that threaten our sovereignty." The legislation "must provide a clear, streamlined framework, ensuring American companies comply without bureaucratic obstacles," he added.
A bill introduced by Rep. Andy Barr, R-Ky., and Sen. John Cornyn, R-Texas, would expand upon the Biden-era rule by covering more AI models and by adding hypersonic and related aerospace technologies. It also would authorize the president to impose sanctions on Chinese entities connected to China’s military and intelligence apparatus. The Trump administration is reviewing the proposal (see 2505070044).
Barr told Export Compliance Daily that Treasury and other agencies have submitted their technical feedback on his bill to the White House Office of Management and Budget, which is synthesizing those inputs. “And then they’re going to send it to us soon,” Barr said.
Also during the hearing, witnesses called for improving the government’s review of inbound investment. Jonathan Samford, president and CEO of the Global Business Alliance, said that “recent trends of expansive information requests, unclear standards, prolonged mitigation negotiations, and extended review timelines create uncertainty for investors.” His specific recommendations include updating public guidance; improving interagency coordination; making timely, risk-based decisions; and forging a “fast-track pathway” for investors with proven compliance records.
Samford also said that CFIUS should remain focused on national security threats and avoid being influenced by "political or commercial interests."
Benjamin Joseloff, former CFIUS lead counsel at Treasury, said he would narrow the scope of "critical technologies" that trigger mandatory filings with CFIUS. "Doing so could improve the current framework, which too often requires U.S. businesses across a broad range of industries and sectors to undertake time-consuming and expensive export control analyses that are not required in the course of their day to-day business operations," he testified.
For transactions that don't trigger a mandatory filing, “transaction parties may spend substantial time and energy in determining whether a given transaction warrants a voluntary filing, and how they may be able to design the transaction to proactively address potential national security concerns," Joseloff said. "CFIUS could assist transaction parties in streamlining this decision-making process by updating its formal guidance on the types of transactions likely to raise national security concerns.” The existing guidance was published in 2008.