US President partially bans foreign investments in technology

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US President Biden has foreign investors in “critical technologies” checked carefully. This is intended to secure technology leadership.

US President Joe Biden has extended the Defense Production Act (Section 721) by decree. The Committee on Foreign Investments in the United States (CFIUS) must review investments by foreign companies and individuals in “critical technologies” and “critical infrastructure” if they can threaten national security. The possible involvement of “a particular country that has a proven or stated strategic objective” that could undermine US leadership should also be taken into account.

The decree relates, for example, to supply chains, suppliers, manufacturing capacities, services and critical technologies and natural resources that pose a threat to national security. For example, foreign investments or investments with foreign participation in artificial intelligence, microelectronics, quantum computing and advanced and clean energy such as battery storage and hydrogen technology must be verified by the CIFUS.

It must also be ensured that foreign investments in US companies do not endanger the cybersecurity of the United States and that critical infrastructure or communication with regard to confidentiality, integrity and availability is avoided. Access to sensitive databases and information systems and the influencing and disruption of US elections must also be taken into account.

But the US government is also concerned about personal data. As a result, genetic information or other sensitive data such as health records or the digital identity of US citizens can be used by foreign governments or individuals in ways that threaten the US. Finally, data is an increasingly powerful tool for tracking and targeting individuals or groups with potentially adverse national security implications. Attention should also be paid to a possible re-identification or de-anonymization of non-identifiable information.

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Other areas include biotechnology, climate adaptation technologies, critical materials such as lithium and rare earths, and also elements of agriculture that impact food security. Incremental investments that permanently cede partial control of an area or technology of US companies and transfer it to a foreign person must also be monitored.

Although foreign investment often helps spur national innovation, it is important to protect America’s leadership in technology. To this end, risks from foreign investments and threats from individuals or companies – including those with relevant connections to third parties – should be avoided. China is not explicitly mentioned in the decree.

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According to the decree, the Office of Science and Technology Policy (OSTP) regularly publishes a list of technology sectors that are fundamental to US leadership and national security.

Most recently, the Defense Production Act 2020 was applied during the Corona pandemic and General Motors was obliged to produce ventilators. The US federal law originally dates back to 1950 and was passed on the occasion of the Korean War. The Defense Production Act gives US presidents the power to force industrial companies to produce certain goods. Section 721 of the Defense Production Act provides legal provisions for the CFIUS Committee – which controls foreign investments in the United States.


(bme)