A years-running bipartisan effort at national security sector investment scrutiny from U.S. Sens. Bob Casey (D-PA) and John Cornyn (R-TX) gained traction this week, as the Senate voted to attach the Outbound Investment Transparency Act to the National Defense Authorization Act (NDAA).
At the heart of the bill is the notion of vulnerability – Casey and Cornyn feel that U.S. national security sectors are too vulnerable to investment from countries of concern. Those countries, like the specifically called out China, would face increased scrutiny for investments American technology and sectors of national security interest, including: advanced semiconductors and microelectronics, artificial intelligence, quantum information science and technology, hypersonics, satellite-based communications, and networked laser scanning systems with dual-use applications.
“The United States is at a crossroads; we can take control of our own future or we can let China eat our lunch,” Casey said. “The Outbound Investment Transparency Act is a strong first step to give the U.S. insight into the risks of allowing American national security technology and know-how get into the hands of our adversaries. Today’s overwhelming vote shows that there is bipartisan consensus to meet the challenge posed by the Chinese government and I hope that this is just the start.”
The amendment was added as an amendment to the NDAA in a 91-6 vote. This grants it more traction than the legislation faced when first introduced in 2021, as an amendment to the United States Innovation and Competition Act.
“When American companies invest in technology like semiconductors or AI in countries like China and Russia, their capital, intellectual property, and innovation can fall into the wrong hands and be weaponized against us,” Cornyn said. “This bill would increase the visibility of these investments, which will help the U.S. gather the information needed to better evaluate our national security vulnerabilities, confront threats from our adversaries, and remain competitive on the global stage.”
China, Russia, Iran and North Korea would all gain added checks under the new bill. Covered investments would include joint ventures, greenfield investments, board representation, provision of business services and the transfer of technology through operational cooperation.