On August 9, 2023, President Biden signed Executive Order 14105, “Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern,” directing the Department of the Treasury to issue regulations prohibiting or requiring notification of certain outbound U.S. investments in companies located in or owned by nationals of “countries of concern.” China, including Hong Kong and Macau, was designated as the sole country of concern at the time of issuance.
The Executive Order identified three categories of “covered national security technologies and products”: semiconductors and microelectronics, quantum information technologies, and artificial intelligence systems critical for military, intelligence, surveillance, or cyber-enabled capabilities. For quantum information technologies specifically, the Treasury Department’s accompanying Advance Notice of Proposed Rulemaking (ANPRM) contemplated prohibiting U.S. investment in the development of quantum computers and production of critical quantum computing components, as well as the development or production of certain quantum sensing platforms, quantum networking, and quantum communication systems.
The ANPRM, published alongside the Executive Order, solicited public comments on more than 80 questions related to the program’s implementation, with a comment deadline of September 28, 2023. The order directed Treasury, in consultation with the Department of Commerce and other agencies, to develop final regulations distinguishing between “notifiable transactions” requiring disclosure and “prohibited transactions” that would be banned outright. The Executive Order complemented existing export control and inbound investment screening tools and followed a 91-6 vote in the U.S. Senate backing related outbound investment transparency provisions in the draft Fiscal Year 2024 National Defense Authorization Act.