House Bill to Screen Outbound Investments

A bipartisan group of House lawmakers have reintroduced legislation that would require the federal government to screen US outbound investments to countries like China and Russia.

The National Critical Capabilities Defense Act would establish a review process over the potential offshoring of critical US supply chains to foreign adversaries.

The bill would create a whole-of-government screening process for outbound investments to ensure that the United States can quickly detect supply chain vulnerabilities and protect national, economic and health security interests where needed.

Reps. Rosa DeLauro (D-Ct), Brian Fitzpatrick (R-Pa) and Bill Pascrell (D-NJ) are the chief sponsors of the legislation.

Critical Capabilities Committee

The bill would create the National Critical Capabilities Committee, composed of representatives from a broad range of federal agencies, led by the White House and including top officials from the Commerce, Treasury, Homeland Security, Defense and Labor Departments. US firms operating in critical industries would be required to report to the committee outbound investments to certain foreign markets and nonmarket economies.

The NCCC would have the ability to review and recommend the President take remedial action when needed to guard against supply chain outsourcing, including but is not limited to supporting domestic industry by increasing research and developing investment and utilization of manufacturing institutes. The NCCC also could recommend mitigating or halting outbound investments outright should they pose a risk to national security.

Sectors to be Screened

Sectors that would be subject to review include semiconductors, artificial intelligence, quantum computing, large capacity batteries, critical minerals and materials, active pharmaceutical ingredients and automobile manufacturing.

The bill specifies that factors to be considered when reviewing supply chains are the long-term strategic economic, national security, health security and crisis preparedness interests of the United States, the target country’s history of distortive or predatory trade practices, the ownership structure of the parties involved and the impact to domestic industry resilience. The legislation would establish a rulemaking process to add relevant industries covered under national critical capabilities systems, services and assets within the NCCC’s purview.

“The last few years have exposed critical vulnerabilities in the United States supply chains, spotlighting how our overdependence on foreign manufacturing has hampered our ability to quickly respond to supply chain challenges and meet the needs of America and its citizens,” Rep. DeLauro commented. “We have seen the dangerous cost of relying on foreign adversaries for items that are critical to our national, economic, and health security. We must know of and be able to prevent the offshoring of supply chains so that the U.S. can better defend manufacturing capacity and protect jobs here at home. China has shown its willingness to weaponize supply chains, we must eliminate critical vulnerabilities.”