On June 14, The Wall Street Journal first reported on a draft legislative measure that would require U.S. companies and investors to disclose and comply with screening of technology and critical supply chain investments in China and other nations considered to be threats to national security and the U.S. economy. The measure reportedly would target the manufacture of semiconductors, batteries, and pharmaceuticals.
Turning up the scrutiny and limits on foreign investments has bipartisan, bicameral backing, with Sens. Bob Casey (D-PA) and John Cornyn (R-TX) having drafted the first version. The measure is reportedly part of a larger effort to support U.S. manufacture and competitiveness in the tech sector. According to Reuters, the legislation would grant chip makers $52 billion to expand U.S. operations.
Sen. Mark Warner (D-VA) told Reuters on June 14 that there was discussion about focusing solely on subsidies for chip manufacturing plants and dropping trade-related measures that would help the U.S. compete with China in tech.
The news reports followed a June 13 joint statement from Sens. Casey and Cornyn, and Reps. Rosa DeLauro (D-CT), Bill Pascrell, Jr. (D-NJ), Michael McCaul (R-TX), Brian Fitzpatrick (R-PA) and Victoria Spartz (R-IN) about their conference discussion on the proposal for an “outbound investment mechanism” of H.R. 4521, the larger Bipartisan Innovation Act.
The legislators said they want to make sure the U.S. “is not ceding its manufacturing power in industries critical to our economic and national security to foreign adversaries.” They said their discussion draft would align the U.S. with its allies’ approach to investment. “Creating an outbound investment review mechanism is a critical tool as Congress works to provide guardrails on taxpayer funds and safeguard our supply chains from countries of concern, including the People’s Republic of China.”
On May 6, the White House released a statement saying the Bipartisan Innovation Act would:
- Establish a Supply Chain Office at the Department of Commerce.
- Support foundational technologies such as additive manufacturing.
- Invest in regional technology hubs.
- Increase funding for Manufacturing USA Institutes, which strives to bring U.S. resources together, e.g., people, companies, and technologies, and the Manufacturing Extension Partnership (part of the National Institute of Standards and Technology), a public-private partnership which supports small and mid-sized manufacturers.
“Keeping pace with technological change should not be the capability of a few, or an over-the-horizon goal, out of reach for most of our manufacturing base,” the White House statement said. “It should be a pillar of American industrial competitiveness – something that is broadly deployed and available to small and large companies alike.”
Edited by Tom Hagy for MoginRubin LLP.