Senators push for National Defense Authorization Act to get tough on outbound investment screening

In a letter to the chairman and ranking members of the Senate and House Armed Services Committees, a group of federal lawmakers this week urged strong language be added to the 2024 National Defense Authorization Act (NDAA) to keep sensitive technologies from American adversaries.

“There is strong bipartisan consensus in both the U.S. Senate and U.S. House of Representatives that Congress must act to address the national security threat posed by these outbound investments,” the lawmakers wrote. “The Administration is also focused on the issue. On August 9, 2023, the President issued an Executive Order (E.O. 14105) titled Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern, seeking to deal with this same issue set. In fact, the E.O. goes beyond notification to consider prohibition of investment in some sectors.”

At the heart of the issue is sensitive technologies with dual-use applications – something the senators feared makes them attractive to American foes. The letter specifically called out threats from China in that regard, but discussions of foes also usually include Russia, Iran and North Korea. In either case, the senators did not want to see the United States develop technology that could be used against it, either through espionage or in warfare.

Yet the senators accused some U.S. companies of sending capital, intellectual property and innovation to these nations. At the least, they said, there should be notification of sensitive investments by U.S. firms in those countries, so the government can properly screen them. Building on that same idea, the Senate voted earlier this year to include Amendment No. 931 in the NDAA, which would create an outbound investment screening program under the Department of the Treasury, in coordination with the Department of Commerce.

“Outbound investment screening will fill a gap in our ability to combat this growing national security threat,” the lawmakers wrote. “This is not novel, nor a threat to America’s outwardly facing economy. The United States has deployed a number of tools to protect against technology theft by our adversaries, including export controls, sanctions and inbound foreign investment screening, even as it remains one of the most open economies in the world.”

Still, they reckoned that none of the existing tools at the government’s disposal have fully addressed the specific risks raised by this issue.

Signatories included U.S. Sens. Dan Sullivan (R-AK), Jacky Rosen (D-NV), Marco Rubio (R-FL), Rick Scott (R-FL), Joni Ernst (R-IA), Debbie Stabenow (D-MI), John Fetterman (D-PA), Tommy Tuberville (R-AL), Tammy Baldwin (D-W), Gary Peters (D-MI), Michael Bennet (D-CO), Bob Casey (D-PA), John Cornyn (R-TX), Pete Ricketts (R-NE), Jeanne Shaheen (D-NH), Chris Van Hollen (D-MD), Angus King (I-ME), and Mark Kelly (D-AZ), along with more than 20 House members.