US President Joe Biden’s Executive Order clamping down on high-tec investments in China has also major implications for European companies. The order must be complied with by any “United States Person” and this includes not only companies with headquarters in the US or organised under laws of US states, but also their subsidiaries abroad as well as by individual US citizens living abroad. The Order regulates certain investments into so-called “countries of concern” in entities engaged in activities involving sensitive technologies which are thought to be critical to US national security. European subsidiaries of these entities are also affected.
The Order explicitly lists three sectors: semiconductors and microelectronics, quantum information technologies, and artificial intelligence. Other technologies can be added later.
An annexe to the Order lists the only “country of concern” as China, including the Special Administrative Regions of Hong Kong and Macau.
The exact rules implementing the Order are still to be finalised, and the US Department of Treasury has issued a so-called Advance Notice of Proposed Rulemaking to provide more transparency and clarity to the rules before they go into effect. Hopefully, the rules will set out in more detail which types of investments are likely to be absolutely prohibited and which are notifiable. The Treasury is inviting comments on the rules.
Together with our US network of correspondents, we shall be monitoring these regulations and can advise European companies as to the effects on their business and investments.
