By Jeannette Chu, NFTC Vice President for National Security Policy
The CHIPS Act is intended to strengthen America’s technology and manufacturing leadership. By serving as a catalyst for private investment in semiconductors, the CHIPS Act seeks to spur growth in jobs and innovation. The Administration has proposed “national security guardrails” but these should support CHIPS Act objectives and legislative intent by bolstering U.S. competitiveness in global markets.
The National Foreign Trade Council (NFTC) was pleased to provide comments on the national security guardrails for CHIPS Act funding that the National Institute of Standards and Technology (NIST) proposed in March. These guardrails would restrict the ability of CHIPS Act recipients to build new semiconductor fabs or expand legacy facilities in China and other countries of concern; the guardrails would also limit joint research and technology licensing, among other proposed curbs. On the same day, the Treasury Department also issued a proposed rule that would affect implementation of the CHIPS Act.
As currently proposed, recipients of CHIPS funding would be prohibited from investing in the expansion of semiconductor manufacturing in foreign countries of concern, which have been identified as China, Russia, Iran and North Korea. And while an earlier rule clearly sought to curb China’s ambitions in being able to make advanced chips needed for applications including AI and quantum, these proposed guardrails would define even certain mature chips as being critical to national security and therefore subject to tighter restrictions that extend beyond existing export controls administered by the Bureau of Industry and Security (BIS).
Close consultation and coordination between the CHIPS Program Office and BIS can address national security concerns by harmonizing the efforts of both agencies. Similar coordination between Commerce and Treasury would further enhance the effectiveness of the CHIPS Act and avoid introducing mechanisms that disincentivize either private investment or further innovation in process technologies that are key to maintaining competitiveness.
In our comment, we noted that implementation of any new legislation “must not unfairly disadvantage companies through overly restrictive rules on selective globalization. Guardrails must be clear, consistent and avoid creating redundancies that slow the ability of companies to respond to market conditions.” To achieve this we must create constructive precedents while not going beyond original legislative intent and NFTC is pleased to add our perspective to this discussion. Guardrails need to support and strengthen national security, not undermine productivity and technological leadership.
Read more about NFTC’s National Security Policy work here.
About the NFTC
The National Foreign Trade Council (NFTC) is the premier business association advancing trade and tax policies that support access to the global marketplace. Founded in 1914, NFTC promotes an open, rules-based global economy on behalf of a diverse membership of U.S.-based businesses.