Lawmakers Add Outbound Investment Restrictions to Final NDAA

The NDAA, a more than 3,000-page package that was publicly released late Dec. 7, contains the Comprehensive Outbound Investment National Security Act, or Coins Act, which was expanded from its earlier focus on China to apply to investments in Iran, Russia, Cuba, North Korea and Venezuela as well. The Coins Act also was adjusted to give the Treasury Department more flexibility to determine which technologies should be regulated.

The Coins Act “is an important step toward ensuring the United States remains the world’s leader in advanced technology,” Senate Banking Committee ranking member Elizabeth Warren, D-Mass., said. “Our bipartisan bill will help ensure that we develop the most sensitive and cutting-edge technology here in America rather than supercharge its development in countries that do not share our values.”

As expected, the NDAA doesn't contain a Senate-passed proposal to require U.S. manufacturers of advanced AI chips to make their products available to American firms before selling them to China (see 2512020047). The semiconductor industry strongly opposed the chip measure, named the Guaranteeing Access and Innovation for National Artificial Intelligence Act, or Gain AI Act.

Brad Carson, president of Americans for Responsible Innovation, which has supported the Gain AI Act, said the NDAA won't be the last word on chip exports to China. "The Gain AI Act is one piece of a broader debate over whether we sell our most powerful engine for innovation to China," Carson said. "The debate over export controls is very much a live issue both in Congress and the administration."

The NDAA contains several Senate-passed sanctions bills, including the Break Up Suspicious Transactions of Fentanyl Act, or Bust Fentanyl Act, which would authorize the president to sanction Chinese government-owned or controlled entities, including financial institutions, that finance foreign opioid trafficking (see 2509050056).

The package also has the Countering Wrongful Detention Act, which would allow the State Department to impose sanctions and other penalties on countries that wrongfully detain Americans, and the Western Balkans Democracy and Prosperity Act, which would codify two U.S. executive orders that authorize property-blocking sanctions against those who threaten peace and stability in the Western Balkans and engage in corruption (see 2510100015).

The NDAA would repeal the Caesar Syria Civilian Protection Act of 2019 but would authorize the president to impose “targeted sanctions” on individuals if the Syrian government doesn't meet certain conditions, such as “taking concrete and tangible action to eliminate the threat posed by ISIS and other terrorist groups.”

The package also contains the Senate-passed AUKUS Improvement Act, which is intended to make it easier for AUKUS partners to transfer equipment to industry for further development, operation, maintenance and sustainment (see 2511050018).

Other provisions would:

• require the State Department to periodically review whether any defense exports available through the Foreign Military Sales program but not the Direct Commercial Sales (DCS) licensing process should become eligible for DCS
• direct the Defense Department, when annually updating its 1260H List of Chinese military companies, to consider whether to include Chinese entities added to other restrictive lists during the past year
• require an assessment of the impact of arms embargoes, sanctions and other restrictions on Israel’s defense capabilities
• direct the State Department to study the feasibility of creating an export licensing fee system for the commercial export of defense items and services to partially or fully finance the department’s licensing costs.

Negotiators did not include a Senate-passed proposal by Sen. Mike Rounds, R-S.D., to bar individuals and entities controlled by China, Russia, Iran and North Korea from buying agricultural land and businesses near U.S. military bases or other sensitive sites. “There wasn’t a matching provision in the House, so we were unable to secure the bill in the final NDAA,” a Rounds spokesperson said. “This remains a priority of ours and we will continue working for the next vehicle.”

The NDAA now heads to the full House and Senate for their consideration. The House Rules Committee plans to meet Dec. 9 to discuss rules for debating the package on the House floor.