Senators Tim Scott and Bill Hagerty introduce a bill to block tech deals with risk countries, aiming to protect U.S. national security.
Senators Tim Scott and Bill Hagerty have proposed a new bill designed to enhance the security of American information and communication technology (ICT) supply chains. This legislation seeks to amend the Export Control Reform Act of 2018, granting the U.S. Department of Commerce broader authority to intervene in transactions involving technologies from entities associated with nations deemed as risks.
The proposed legislation, known as the ICTS Supply Chain Security Act, empowers the Department of Commerce to block or limit transactions if they involve technologies that threaten critical infrastructure, the digital economy, or U.S. national security. Scott commented on the need for this measure, saying, “Americans should not worry that China or Russia could use technology in our cars, phones, or networks against us.”
Key Provisions of the Bill
According to the Senate's announcement, the bill outlines specific criteria under which the Department of Commerce can take action against transactions. These include:
- Involvement of entities from designated risk countries;
- Potential for sabotage or disruption of U.S. communication systems;
- Risks of catastrophic impact on critical infrastructure or the digital economy;
- Unacceptable threats to national security.
The identified risk countries include China (including Hong Kong and Macau), Cuba, Iran, North Korea, and Russia. However, the bill allows for exceptions, particularly for informational materials such as publications, films, and social media content, and it ensures the continued availability of open-source software.
Importantly, the bill does not alter the existing powers of the Committee on Foreign Investment in the United States (CFIUS), which assesses foreign investment transactions for national security implications.
Consequences for Non-Compliance
The legislation establishes both civil and criminal penalties for violations of the Department of Commerce’s directives. Individuals found to be intentionally violating the prohibitions could face fines up to $1 million and possible prison sentences of up to 20 years. Civil penalties could reach $1.5 million or five times the transaction value involved in the violation.
In conjunction with this bill, President Donald Trump had previously signed an executive order aimed at fostering innovation and security in artificial intelligence, emphasizing the need to protect U.S. technology from exploitation by risk countries. Recently, export restrictions were also placed on Anthropic following concerns about its connection to a China-related group, further highlighting the ongoing scrutiny of foreign technology interactions.
