National Critical Capabilities Defense Act of 2023

National Critical Capabilities Defense Act of 2023

This bill establishes a notification process for certain U.S. investment (known as outbound investment) involving national critical capabilities sectors in countries of concern (e.g., China and Russia). National critical capabilities sector includes, among others, a sector involving semiconductor manufacturing and advanced packaging, artificial intelligence, active pharmaceutical ingredients, or automobile manufacturing.

Specifically, the bill directs the President to establish a Committee on National Critical Capabilities, which must establish regulations to carry out this bill.

The bill requires a U.S. business or individual, 90 days before undertaking a covered activity (e.g., investment), to submit a written notification to the committee. The committee may review a covered activity that is the subject of a notification to determine if the activity poses a risk to U.S. national security. The bill outlines the factors to be considered during this review.

The committee may, if it has reason to believe that a covered activity poses a risk to national security, take certain actions to mitigate the risk posed by the activity. Further, the committee may prohibit or regulate covered activities (with exceptions).

Additionally, the committee must determine the sensitivities and risks for sourcing goods, materials, and technologies needed for national critical capabilities sectors.

The bill outlines enforcement mechanisms and establishes civil penalties for violations.

The bill directs (1) the President to conduct bilateral and multilateral engagement with U.S. allies and partners, and (2) the committee to develop a strategy to work with these countries and provide technical assistance.