Senate Aims to Mandate Outbound Investment Screening, Strengthen Export Controls

The Senate will work over the next several months to build a bill Majority Leader Chuck Schumer, D-N.Y., sees as a sequel to its China package -- also known as the Chips Act -- that could expand China-related export controls and investment restrictions.

Schumer, who spoke at a press conference May 3 along with a dozen Democratic senators addressing various pieces of this competition bill, said that Sen. Todd Young, R-Ind., his co-sponsor on the previous bill, and Sen. John Cornyn, R-Texas, are both interested in the proposal. He said the committee leaders have been speaking with their ranking members, as well, and that the "initial reaction [from Republicans] has been excellent."

On the floor of the Senate, shortly before the announcement of the initiative, Schumer said, "We must not aid and abet the Chinese Government’s development of advanced technologies -- like microchips, 5G, AI, quantum computing, and more -- that will shape the course of this century.

"We must limit investment capital from flowing to the Xi regime, the Chinese government and prevent them from taking advantage of America’s critical assets."

At the press conference, Schumer said the new bill would build on the momentum of the Chips Act, and would "limit the flow of advanced technology to the Chinese government" by building on the semiconductor export controls recently released by the Biden administration. It would "strengthen export control laws and identify new sanctions that may be needed, and counter Chinese government coercion," he said.

Congress will also look to pass a law to "limit the flow of [U.S.] investment" to ensure the U.S. does not provide "the financial lifeblood" for China's "military technological advancement," Schumer said.Treasury and Commerce would be given new authorities to "screen, and where appropriate, halt investment," citing the outbound investment screening bill co-sponsored by Sen. Bob Casey, D-Pa., and by Cornyn as a foundation for that work (see 2206140048 and 2201140038).

He said the Senate also would want to "further strengthen" the Committee on Foreign Investment in the U.S. Agriculture Committee Chairwoman Debbie Stabenow, D-Mich., said that they're concerned about foreign control of agricultural land, and that someone from USDA and from the FDA would be made permanent members of CFIUS so that "these transactions will face proper scrutiny." Senators earlier this year said they believe they have enough bipartisan support to add the USDA secretary to the committee (see 2303010036).