Senate Backs Outbound Investment Restrictions in NDAA

The amendment, known as the Foreign Investment Guardrails to Help Thwart China Act, or Fight China Act, reflects “broad bipartisan agreement that we should be developing the most sensitive, cutting-edge technologies here at home, rather than funding their development in countries that do not share our values,” Senate Banking Committee ranking member Elizabeth Warren, D-Mass., said.

Led by Sen. John Cornyn, R-Texas, the Fight China Act would codify the Treasury Department’s new outbound investment program by prohibiting U.S. investment in certain sensitive technologies in China and creating a notification regime to increase transparency on certain unprohibited investments (see 2410280043 and 2509030060). It would authorize the president to sanction entities connected to China’s military and intelligence apparatus.

The Senate went on to pass the overall NDAA by a 77-20 vote. The defense bill will have to be reconciled with the House-passed version (see 2509100063), which does not have comparable provisions on outbound investment.

Other NDAA amendments the Senate approved in its nighttime session would:

• codify two U.S. executive orders that authorize property-blocking sanctions against those who threaten peace and stability in the Western Balkans and engage in corruption (see 2411200030).
• call for reimposing sanctions under the Caesar Syria Civilian Protection Act of 2019 if certain conditions are not met.
• require the executive branch to develop a strategy to counter deepening cooperation among U.S. "adversaries" in such areas as sanctions evasion and the sharing of restricted dual-use technology (see 2505290076).
• bar individuals and entities controlled by China, Russia, Iran and North Korea from buying agricultural land and businesses near U.S. military bases or other sensitive sites (see 2503070026).
• direct the Committee on Foreign Investment in the U.S. to aid real estate transaction reviews by annually updating lists of military, intelligence and national laboratory facilities designated as sensitive sites.
• remove certain obstacles to defense trade within the Australia-U.K.-U.S. security partnership (see 2506200003).
• allow re-transfers of U.S.-origin mobile rocket artillery systems among the three Baltic states without prior presidential consent.
• require a report on using AI in certain money-laundering investigations involving foreign terrorist organizations, drug cartels or other transnational criminal organizations.

Despite opposition from the semiconductor industry, the Senate retained an amendment it added to the NDAA in September to require U.S. manufacturers of advanced AI chips to make their products available to American firms before selling them to China and other “countries of concern" (see 2509050056). Tech policy nonprofit Americans for Responsible Innovation (ARI) welcomed the amendment's passage, saying U.S. firms face long delays in obtaining chips due to a backlog of demand.

“As we work to keep the U.S. ahead on AI development, we need advanced AI chipmakers to sell to American companies before going to countries of concern," ARI President Brad Carson said in a statement. The chips amendment, known as the Guaranteeing Access and Innovation for National Artificial Intelligence Act, or Gain AI Act, "is a major win for U.S. economic competitiveness and national security."

But an Nvidia spokesperson accused proponents of the Gain AI Act of "feeding fake news to Congress about chip supply" and trying to "surrender America's chance to lead in AI and computing worldwide." Nvidia's "sales to customers worldwide do not deprive U.S. customers of anything," the spokesperson said in a statement.

The Semiconductor Industry Association has urged Congress to reject the Gain AI Act, saying it would impose an “unprecedented expansion” of export controls on its members' products (see 2509080065).