US to Finalize New Outbound Investment Restrictions by Year's End, Raimondo Says

The Biden administration, which announced in August 2023 that it would develop restrictions on outbound investment in China (see 2308090066), expects to finalize the new regulations by the end of calendar year 2024, Commerce Secretary Gina Raimondo said May 8.

While the Treasury Department is leading the effort, which focuses on artificial intelligence, quantum technology and semiconductors, Commerce is playing a supporting role. “We’re providing the commercial-industrial-technological know-how to match up against Treasury’s financial know-how, and we’re already hard at work doing that,” Raimondo testified before the House Appropriations Subcommittee on Commerce, Justice and Science.

For example, Commerce is helping to figure out “which pieces of AI” and “which kinds of companies should we be most worried about,” Raimondo said. “When we talk about quantum, what does that actually mean?”

To perform its role, Commerce aims to hire more technology specialists, especially “commercially minded people, like former venture capitalists,” Raimondo said. It also plans to buy “data sets” and information technology systems to help it track outbound investments, which are often not publicly disclosed.

Also during the hearing, Raimondo defended the new restrictions on firearms exports that the Bureau of Industry and Security released last month (see 2404260054), saying they are needed to curb the diversion of firearms to bad actors. She said the interim final rule will affect less than 10% of U.S. firearms exports. "This is a very narrowly targeted change to tighten up our license requirements," she said.

However, Rep. Andrew Clyde, R-Ga., criticized the firearms rule, saying it's unnecessary and will hurt the gun industry. As a result, he said he can't support the 17% or $32 million funding increase that BIS is requesting for FY 2025 (see 2403110065). Clyde is co-sponsoring a recently introduced bill that would prohibit federal funds from being used to finalize, implement or enforce the rule (see 2405030035).

While Raimondo declined to comment on reports that Commerce revoked export licenses that Intel and Qualcomm used to sell computing chips to China’s Huawei (see 2405070081), she testified that Commerce will revoke a license when newly available information supports such a move. "Huawei's a threat," she said. "AI is our focus. As we get more data around our threats, we make changes to tighten screws, including revoking licenses that have been previously given."

Sen. Marco Rubio, R-Fla., who, along with Rep. Elise Stefanik, R-N.Y., raised concerns last month about the chip sales to Huawei (see 2404260031), said in a statement late May 7 that revoking the Intel and Qualcomm licenses was the "right decision" but that the licenses "never should have been granted in the first place." He said the "administration needs to be proactive in denying Chinese companies critical technologies, not just reactive when they get called out by lawmakers who actually take the threat seriously.”