America’s national security is compromised by delaying implementation, the leaders of the House Select Committee on the Chinese Communist Party (CCP) say.
Reps. Mike Gallagher (R-Wis.) and Raja Krishnamoorthi (D-Ill.) sent a letter to Treasury Secretary Janet Yellen on Monday urging her to implement outbound investment restrictions that President Biden charged the Treasury with developing in an executive order in August.
That order called on the agency to issue regulations that require Americans to inform the Treasury of transactions in three categories of national security technologies (semiconductors and microelectronics; quantum information technologies; and artificial intelligence) when dealing with individuals in countries of concern.
The two leaders of the House Select Committee on the Chinese Communist Party (CCP) cautioned Yellen that Beijing is exploiting the interim before the restrictions go into effect.
“As Treasury deliberates on the definitions and scope to be issued in these guidelines, the Chinese Communist Party (CCP) is developing advanced technologies with the help of American capital and know-how,” Gallagher and Krishnamoorthi state in their letter, according to Reuters reporting.
Gallagher and Krishnamoorthi also warn that the CCP will leverage any loopholes if the investment restriction guidelines released by the Treasury Department are too narrow.
Indeed, we’ve seen this exploitation happen time and time again. Though the United States was the birthplace of the semiconductor, only 10% of the world’s semiconductors are currently Made in America. This erosion of the U.S. chip industry has serious ramifications for our national defense preparedness and economic security with the technology needed in everything from toaster ovens and fighter jets.
In August 2022, Biden set out to shore up America’s supply chain vulnerabilities and bolster our position as a global innovation and technology leader with the CHIPS and Science Act. The law invests nearly $53 billion in the U.S. semiconductor industry and has already stimulated $231 billion in private investment in domestic chip manufacturing, according to the White House.
But all that progress is imperiled if the federal government fails to couple industrial investment with strong trade action, like full implementation of outbound investment restrictions.
Worryingly, despite the export restrictions that are already in place, Chinese telecommunications company Huawei shocked the world in developing a smartphone equipped with an advanced chip that U.S. sanctions should have prevented the company from accessing. That same smartphone is now supercharging Huawei’s Chinese sales and challenging Apple’s market share.
Perhaps it was this shocking turn of events that prompted the Commerce Department to hold firm on export controls. Last week, the agency barred U.S. tech company Nvidia from exporting its AI chips to China to fulfill its order for 2024, putting export restrictions immediately into place.
The United States cannot allow China to leach America’s national security technologies, especially as military relations between the two nations remain strained. The Treasury Department must ensure that the outbound export controls are rigorous and comprehensive as soon as possible.