Executive Order on Regulating U.S. Investments in Sensitive National Security Technologies in Countries of Concern

In this executive order, President Joseph R. Biden Jr. invokes his authority under the U.S. Constitution and federal law – including the International Emergency Economic Powers Act (IEEPA), the National Emergencies Act (NEA), and 3 U.S.C. § 301 – to regulate certain outbound U.S. investments that may pose risks to national security.

The order is built around a central conclusion: some “countries of concern” are implementing long-term, state-directed strategies to accelerate their capabilities in sensitive technologies that are essential for modern military, intelligence, surveillance, and cyber operations. These efforts are not limited to domestic research and development. They also leverage global access to cutting-edge technologies, blur the boundaries between civilian and military sectors, and seek to secure technological advantages that could undermine U.S. and allied security.

Particular attention is placed on three domains:

• Semiconductors and microelectronics
  
  
• Quantum information technologies
  
  
• Artificial intelligence
  
  

Rapid progress by countries of concern in these fields is seen as directly enabling advanced computational capabilities, more sophisticated weapons systems, the potential to break modern cryptographic codes, and other applications that could provide a strategic or operational military edge.

At the same time, the order notes that these states are able to exploit certain U.S. outbound investments. It is not only capital that matters, but also the “intangible” benefits that often accompany investment: reputation and signaling effects, managerial expertise, access to networks of talent and finance, and entry into key markets. While the United States continues to endorse open global capital flows as a foundation of its economic policy, it recognizes that some investments can unintentionally accelerate the development of sensitive capabilities in countries that are actively building them to counter U.S. and allied strengths.

On that basis, the President determines that the advancement of sensitive technologies and products by countries of concern constitutes an unusual and extraordinary threat to the national security of the United States, originating substantially from outside the country. Certain U.S. investments are judged to increase this risk. A national emergency is therefore declared to address this threat.

1. Notifiable and Prohibited Transactions

To manage this national emergency, the executive order directs the Secretary of the Treasury, in consultation with the Secretary of Commerce and other relevant agencies, to develop regulations that create two main categories of transactions involving “covered foreign persons”:

1. Notifiable transactions – activities that are permitted but must be reported to the U.S. government.
   
   
2. Prohibited transactions – activities that U.S. persons may not engage in, directly or indirectly.
   
   

The regulations must:

• Identify categories of notifiable transactions involving “covered national security technologies and products” that may contribute to the identified national security threat. U.S. persons will be required to notify the Department of the Treasury of each such transaction and provide relevant details.
  
  
• Identify categories of prohibited transactions involving covered technologies and products that pose a particularly serious national security risk because they may significantly advance the military, intelligence, surveillance, or cyber-enabled capabilities of countries of concern. U.S. persons will be barred from participating in these transactions.

2. Responsibilities of the Secretary of the Treasury

The Secretary of the Treasury is given a central coordinating role in implementing the order. In doing so, the Secretary is directed, as appropriate, to:

• Communicate with Congress and the public about implementation.
  
  
• Consult with the Secretary of Commerce on engagement with industry and analysis of notified transactions.
  
  
• Consult with the Secretaries of State, Defense, Commerce, and Energy, and with the Director of National Intelligence, on how covered technologies and products affect the military, intelligence, surveillance, and cyber capabilities of countries of concern.
  
  
• Work with the Secretaries of State and Commerce to engage with U.S. allies and partners on the risks associated with the advancement of covered technologies in countries of concern.
  
  
• Consult with the Secretary of State on foreign policy considerations relevant to the order and its regulations.
  
  
• Investigate potential violations of the order or its regulations, in coordination with relevant agencies, and pursue available civil penalties where appropriate.

3. Program Development and Regulatory Review

Within one year of the effective date of the initial regulations, the Secretary of the Treasury, in consultation with the Secretary of Commerce and other relevant agencies, must evaluate whether changes are needed. This includes assessing whether to modify the definition of “covered national security technologies and products” in the three key sectors:

• Semiconductors and microelectronics
  
  
• Quantum information technologies
  
  
• Artificial intelligence
  
  

The Secretary must also periodically review the effectiveness of the regulatory framework over time and adjust as necessary.

4. Reports to the President

Within one year of the effective date of the regulations – and at least annually thereafter – the Secretary of the Treasury, coordinating with the Secretary of Commerce and consulting with other relevant agencies and the Office of Management and Budget, will report to the President (through the National Security Advisor). These reports should include:

• To the extent feasible, an assessment of how effective the measures under the order have been in addressing the national security threats described.
  
  
• An analysis of how countries of concern are advancing in covered technologies and products that are critical to their military, intelligence, surveillance, or cyber capabilities.
  
  
• Aggregate sector trends evident from notifiable transactions and related capital flows, informed by analyses from the Department of Commerce, the intelligence community, and other agencies.
  
  
• Any other relevant information gathered through implementing the order.
  
  

The Secretary is also expected to provide recommendations, as appropriate, regarding:

1. Possible modifications to the order, including adding or removing sectors or countries of concern, or other changes needed to prevent circumvention and increase effectiveness.
   
   
2. Whether other federal programs should be created or expanded to address the same national security challenges, and whether additional legal authorities should be used or new actions taken.

5. Reports to Congress

The Secretary of the Treasury is authorized to provide recurring and final reports to Congress concerning the national emergency declared in this order, in line with the reporting requirements of the NEA and IEEPA.

6. Official U.S. Government Business

The order specifies that nothing in it, nor in the regulations issued under it, is intended to block transactions carried out for the official business of the U.S. government. This exemption applies to employees, grantees, and contractors acting in that capacity.

7. Confidentiality

The regulations issued by the Secretary must address how information and documentary materials submitted under the order will be handled, including confidentiality protections, consistent with applicable law.

8. Additional Prohibitions and Anti-Evasion Measures

The order explicitly prohibits:

• Any conspiracy formed to violate regulations issued under the order.
  
  
• Any action that seeks to evade or avoid, causes a violation of, or attempts to violate any prohibition established by the order or its regulations.
  
  

The Secretary of the Treasury is authorized, through regulation, to:

• Prohibit U.S. persons from knowingly directing transactions that would be prohibited if they were conducted by a U.S. person directly.
  
  
• Require U.S. persons to notify the Department of the Treasury about any transaction conducted by a foreign entity they control if that transaction would be a notifiable transaction were it carried out by a U.S. person.
  
  
• Require U.S. persons to take reasonable steps to prevent controlled foreign entities from entering into transactions that would be prohibited if a U.S. person engaged in them directly.

9. Key Definitions

For purposes of the executive order, several key terms are defined:

• Country of concern: A country or territory listed in the annex to the order that the President has identified as pursuing a long-term strategy to develop sensitive technologies and products critical to its military, intelligence, surveillance, or cyber capabilities in ways that threaten U.S. national security.
  
  
• Covered foreign person: A person from a country of concern who is involved in activities, as specified in the regulations, related to one or more covered national security technologies and products.
  
  
• Covered national security technologies and products: Sensitive technologies and products in the sectors of semiconductors and microelectronics, quantum information technologies, and artificial intelligence that are critical to the military, intelligence, surveillance, or cyber capabilities of a country of concern. The regulations may further limit this definition based on specific end uses.
  
  
• Entity: Any organization such as a partnership, association, trust, joint venture, corporation, group, subgroup, or similar structure.
  
  
• Person of a country of concern:
  
  
  
  • Any non-U.S. individual who is a citizen or permanent resident of a country of concern;
    
    
  • Any entity formed under the laws of a country of concern or with its principal place of business there;
    
    
  • The government of a country of concern, including its political subdivisions, parties, agencies, or instrumentalities, and any person or entity it owns, controls, directs, or for which it acts;
    
    
  • Any entity owned by such individuals, entities, or governmental actors.
    
    
• Person: An individual or an entity.
  
  
• Relevant agencies: This term includes, among others, the Departments of State, Defense, Justice, Commerce, Energy, and Homeland Security; the Office of the United States Trade Representative; the Office of Science and Technology Policy; the Office of the Director of National Intelligence; the Office of the National Cyber Director; and any other department, agency, or office the Secretary of the Treasury deems appropriate.
  
  
• United States person: Any U.S. citizen, lawful permanent resident, entity organized under U.S. law or the law of any U.S. jurisdiction (including foreign branches of such entities), and any person located in the United States.

10. General Provisions and Implementation Authority

The executive order grants the Secretary of the Treasury broad authority under IEEPA to:

• Issue rules and regulations, including refining the definitions from section 9 and creating additional definitions as necessary to implement the order.
  
  
• Investigate and request information related to notifiable or prohibited transactions at any time, including through civil administrative subpoenas.
  
  
• Nullify, void, or compel divestment of prohibited transactions that occur after the effective date of the regulations.
  
  
• Refer potential criminal violations of the order or its regulations to the Attorney General.
  
  

The Secretary may also:

• Exempt transactions from prohibitions or notification requirements if, after consulting relevant agencies, such transactions are deemed to be in the national interest of the United States.
  
  
• Redelegate functions within the Department of the Treasury to the extent allowed by law.
  
  

All federal agencies are directed to take appropriate actions within their authority to help implement the order.

The order further clarifies that:

• If any part of the order, or its application to a specific person or situation, is found invalid, the remaining provisions remain in effect.
  
  
• The order does not limit any authority already granted by law to an executive department or agency or to its head.
  
  
• It does not alter the roles of the Office of Management and Budget regarding budget, administration, or legislative matters.
  
  
• Implementation must comply with applicable law and is subject to the availability of appropriated funds.
  
  
• The order does not create enforceable rights or benefits, substantive or procedural, for any party against the United States, its agencies, officers, employees, or any other person.

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