The Treasury Department said in a new report to Congress that it will cost $10 million in fiscal 2023 to meet lawmakers’ directive to set up a program to monitor U.S. outbound investment in sensitive technology that raises national security questions.
The Treasury report said most, $6.5 million, of the money would be used for information technology systems, with another $2.5 million going for staff to draft regulations, set up program operations and conduct international engagement. Another $250,000 would cover the cost of data and subscriptions, and $750,000 would meet other, unidentified expenses, it said.
The Treasury report and one from the Commerce Department’s International Trade Organization were sought by lawmakers in the fiscal 2023 spending bill asking both departments to come up with a way to track and potentially halt U.S. capital going to fund advanced technology startups in China. Lawmakers were concerned that sanctions and curbs on exports were insufficient to halt Beijing’s technological advances.
The two reports said the president’s fiscal 2024 budget request, scheduled to be released Thursday, would recommend additional funding to implement and administer the program, but they didn’t provide more details.
Both reports said the final policy decisions are expected in the near future. The approach focuses on outbound investment into entities involved in a subset of certain key advanced technologies critical to national security, they said.
“Action may include prohibiting certain investments and/or collecting information about other investments to inform potential future action,” they said, adding that the departments are working on clear definitions and scoping to ease swift implementation and prevent U.S. capital and expertise from being exploited in ways that threaten U.S. national security while not placing an undue burden on U.S. investors and businesses.
Rep. Rosa DeLauro, D-Conn., the top Democrat on the House Appropriations Committee, who pushed for the reports in last year’s appropriation bill when she chaired the committee, said she looked forward to supporting the budget request.
“This report is a good first step to ensure U.S. investment does not fuel the Chinese Communist Party’s capabilities and create dangerous dependencies,” DeLauro said in a statement. “It lays the groundwork for the work we hope to do long term — it sets up the structure to advance U.S. interests, which should also be used to address other critical dependencies in addition to those described in the report.”
In an earlier interview with CQ Roll Call, DeLauro said she would reintroduce a measure that passed in the House in the last Congress but didn’t advance in the Senate. The legislation would codify the mechanism for tracking outbound capital investments as opposed to executive branch action as contemplated by the Treasury and Commerce departments.
A recent report by the Center for Security and Emerging Technology at Georgetown University’s Walsh School of Foreign Service found that between 2015 and 2021, at least $40.2 billion, or about 37 percent, of the $110 billion in capital raised by Chinese artificial intelligence companies involved U.S. investors.
But the data, collected from Crunchbase, a company that tracks startup funding, doesn’t clearly spell out how much money came from U.S. investors specifically, Emily Weinstein and Ngor Luong, the authors of the report, said in a recent interview.
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