Areas covered include semiconductors, quantum computing, and AI Proposed rules include an exception for transactions in the U.S. national interest Focus on China, Macau, and Hong Kong, with potential for expansion be
WASHINGTON/NEW YORK, June 21 (Reuters) – The United States on Friday released draft rules that would prohibit or require notification of certain Chinese investments in artificial intelligence and other technology areas that could threaten U.S. national security. did.
The U.S. Treasury Department released the proposed rule following an initial comment period following an executive order signed by President Joe Biden last August, announcing a new tab and a number of exceptions. The rule places the onus on U.S. individuals and businesses to decide which transactions to restrict or prohibit.
Biden’s executive order regulates some U.S. investments in semiconductors, microelectronics, quantum computing and artificial intelligence, allowing U.S. know-how to help China develop advanced technologies and dominate global markets. It is part of a broader effort to stop this.
As expected, the US plans to introduce regulations by the end of the year. Public comments on the proposed rule will be accepted until August 4.
Paul Paul, Assistant Secretary of the Treasury for Investment Security, said, “This proposed rule would allow many of the benefits of certain U.S. investments (not just capital) to be used to threaten national security in countries where they could be used to threaten national security. “It advances our national security by preventing the United States from supporting the development of sensitive technology.” Rosen.
The Treasury Department said the new rules are aimed at implementing a “targeted national security program” that focuses on specific foreign investments in countries of concern.
The Treasury Department outlined the proposed rules in August. The Treasury Department on Friday included additional exceptions, including for transactions deemed to be in the U.S. national interest.
The proposed rule would prohibit AI transactions for certain end-uses and transactions involving systems trained to use a specified amount of computational power, but not for other AI systems or transactions that are not prohibited. It also requires notification of transactions related to semiconductor development.
Focus on China, Macau and Hong Kong
Other exceptions apply to publicly traded securities such as index funds and mutual funds. Certain Limited Partnership Investments. Acquisition of ownership in the country. Transactions between a U.S. parent company and a majority-controlled subsidiary. Binding commitments dated prior to the order. and certain syndicated debt financings.
Treasury may also exempt certain third-country transactions that are determined to address national security concerns or where the third country adequately addresses national security concerns. said.
The order initially focuses on China, Macau and Hong Kong, but U.S. officials said it could later expand in scope.
Laura Black, a former Treasury official and attorney at Akin Gump in Washington, said the Treasury Department is trying to define the scope of the rule as narrowly as possible, but companies looking to invest in China should be more wary. said that it would be necessary.
“U.S. investors will need to undertake broader due diligence when making investments in China or investments that involve Chinese companies operating in the sector,” he said. .
Mr. Black said the Treasury Department’s proposed rules would subject not only U.S.-managed private equity and venture capital funds to scrutiny, but also investments by some U.S. limited partners in foreign-managed funds and convertible debt. He said that
Certain Chinese subsidiaries and parent companies will also be subject to the rule, and some investments by U.S. companies in third countries will also be prohibited, he added.
In addition to equity investments, joint ventures, and greenfield projects, defaulted debts may also be recovered upon equitization.
The regulation tracks restrictions on exports of certain technologies to China, such as banning the shipment of certain advanced semiconductors.
The goal is to prevent U.S. funds from helping China develop its own capabilities in these areas for military modernization.
Those who violate the rules are subject to both criminal and civil penalties and may have their investments revoked.
The Treasury said it had consulted with U.S. allies and partners about the objectives of the investment restrictions, and noted that the European Commission and the U.K. have begun considering whether and how to address outward investment risks.
Sign up here.
Reporting by Andrea Shalal and David Lowder in Washington and Karen Freifeld in New York. Editing: Chris Saunders, Chizu Nomiyama, Matthew Lewis
Our standards: Thomson Reuters Trust Principles opens in a new tab
Purchase license rights
Source link
