June 25, 2024
National Security: Treasury Proposes Outbound Investment Screening Rule
Last year, President Biden issued an executive order directing the Treasury & Commerce Departments to adopt outbound investment screening regulations. As Meredith blogged at the time, Treasury responded by issuing an advance notice of proposed rulemaking. On Friday, the Treasury Department issued a proposed rule to implement the screening regime. Here’s the intro from this Fried Frank memo:
On June 21, 2024, the U.S. Treasury Department issued a Proposed Rule to implement President Biden October’s 2023 Executive Order (“EO”) establishing a regime to restrict certain types of outbound investment to China. The Proposed Rule builds upon and adopts the same structure as an earlier Advance Notice of Proposed Rulemaking (“ANPRM”) — the notification, and in some instances the outright prohibition, of certain investments by U.S. persons in Chinese companies (including Hong Kong and Macau) that are engaged in specific activities related to semiconductors and microelectronics, quantum computing, and artificial intelligence (“AI”).
Treasury seeks public comments on the Proposed Rule through August 4, 2024, including on several provisions for which Treasury provides alternative formulations or parameters. The investment restrictions will only apply prospectively and will not take effect until Treasury publishes a final rule.
The memo goes on to summarize the proposed rule and notes that the Treasury Department has posted a fact sheet on the proposed rules on its Outbound Investment Security Program website.
– John Jenkins