Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern
Executive Order 14105, signed by President Biden on August 9, 2023, creates a framework to limit certain United States investments that could bolster the national security capabilities of countries the administration designates as “countries of concern.” The core idea is to require U.S. persons to notify the Treasury Department about certain investments and to prohibit others, focusing on sectors deemed strategically sensitive: semiconductors and microelectronics, quantum information technologies, and artificial intelligence. The order aims to prevent financial flows and strategic advantages that could accelerate these countries’ military, intelligence, surveillance, or cyber-enabled capabilities, while preserving overall openness to investment where consistent with national security. The order delegates authority to the Treasury (with input from Commerce and other agencies) to issue regulations that define notifiable and prohibited transactions, establish categories of covered technologies, and create processes for enforcement, exemptions, and potential divestment. It also establishes ongoing program development, reporting requirements to the President and Congress, and mechanisms for consultation with allies, while protecting government operations and confidential information. In short, it sets up a regulatory regime to curb U.S. investment activity that meaningfully advances the technology capabilities of countries of concern.
Key Points
- 1Notifiable and prohibited transactions regime: The Treasury, after public notice and comment, will issue regulations requiring U.S. persons to notify the Treasury about certain transactions involving covered national security technologies and products, and to prohibit others deemed to pose acute national security threats.
- 2Definitions and scope: The order defines “covered national security technologies and products” (sensitive tech in semiconductors/microelectronics, quantum information technologies, and AI) and identifies “countries of concern” via an annex; it also defines terms such as “covered foreign person,” “entity,” and “United States person” to determine who must comply.
- 3Regulatory authority and flexibility: The Secretary of the Treasury can promulgate rules, refine definitions, and create further requirements as needed; the order permits exemptions, civil/administrative actions, and potential divestment orders, subject to law.
- 4Program development and review: Within one year (and periodically thereafter), the Secretary, with Commerce and other agencies, will assess whether to add or remove technologies or countries from coverage and review the effectiveness of the regulations.
- 5Reporting and oversight: The Secretary must report to the President (annually or as practicable) on the measures’ effectiveness and may provide recommendations for modifying the order or expanding related federal programs; there are also authorities to report to Congress and to coordinate with allies.