I 118th CONGRESS 2d Session H. R. 8361 IN THE HOUSE OF REPRESENTATIVES May 10, 2024 Mr. McCormick introduced the following bill; which was referred to the Committee on Foreign Affairs , and in addition to the Committee on the Judiciary , for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To impose sanctions with respect to economic or industrial espionage by foreign adversarial companies, and for other purposes.

1. Short title This Act may be cited as the Economic Espionage Prevention Act . 2. Findings Congress finds the following: (1) On March 14, 2024, the Department of State notified Congress of the following: (A) People’s Republic of China exports of semiconductors to Russia have increased substantially since Russia’s full-scale invasion of Ukraine. (B) In the second half of 2023, China exported between $25,000,000 and $50,000,000 in additional semiconductors to Russia every month relative to pre-invasion levels. (C) During the same period, China also exported between $50,000,000 and $100,000,000 in additional exports to Russia every month to known transshipment hubs. (D) These exports include both Chinese and United States-branded semiconductors (integrated circuits), according to analysis of commercially available trade data by the Bureau of Industry and Security of the Department of Commerce, and are almost certainly supporting Russia’s military capabilities based on Ukrainian analysis of recovered Russian weapons. (E) Because of the prevalence of United States manufacturing equipment in global semiconductor supply chains, nearly all chips produced worldwide, including in the People’s Republic of China, are subject to United States export controls if destined for Russia or Belarus. (F) All advanced semiconductors described on the Commerce Control List have been subject to a license requirement if destined to an entity in Russia since its further invasion of Ukraine. (2) On April 3, 2024, Deputy Secretary of State, Kurt Campbell, said I think we have assessed, over the course of the last couple of months that Russia has almost completely reconstituted militarily. And after the initial setbacks on the battlefield delivered to them by a brave and hearty group in Ukraine, with the support of China in particular, dual use capabilities and a variety of other efforts, industrial and commercial, Russia has retooled and now poses a threat to Ukraine. . .But not just to Ukraine, its new found capabilities pose a longer term challenge to stability in Europe and threatens NATO allies. . 3. Report (a) In general Not later than 90 days after the date of the enactment of this Act, the Secretary of State, in coordination with the heads of relevant Federal departments and agencies, as appropriate, shall submit to the appropriate congressional committees, a written report that contains the following: (1) An analysis and description of the extent to which any foreign person who is a citizen of the People’s Republic of China or an entity organized under the laws of the People’s Republic of China, or any foreign person or entity controlled by or operating at the direction of the Government of the People’s Republic of China— (A) is knowingly a material source of critical components necessary for the manufacture of weapons, vehicles, and other military equipment by the defense industrial base of the Russian Federation; (B) has knowingly delivered critical components to or entered into any agreement relating to the sale or delivery of critical components with any entity operating in the defense or intelligence sectors of the Government of the Russian Federation; (C) has knowingly delivered critical components to or entered into any agreement relating to the sale or delivery of critical components with any country or entity with which the defense or intelligence sectors of the Government of Russian Federation are cooperating in support of Russia’s war against Ukraine; or (D) has knowingly delivered critical components to or entered into any agreement relating to the sale or delivery of critical components with a foreign person that knowingly and directly provides these components to the defense or intelligence sectors of the Government of the Russian Federation. (2) The extent to which— (A) any foreign person that is a citizen of the People’s Republic of China or an entity organized under the laws of the People’s Republic of China has knowingly engaged, on or after the date of the enactment of this Act, in transactions with a person that is part of, or operates on behalf of, the defense or intelligence sectors of the Government of the Russian Federation; (B) any foreign person identified pursuant to subparagraph (A) has engaged in transactions which would constitute a significant transaction with persons that have been sanctioned for being part of, or operating on behalf of, the defense or intelligence sectors of the Government of the Russian Federation; or (C) any foreign person identified pursuant to subparagraph (A) has been subjected to sanctions imposed pursuant to sections 231 and 235 of the Countering America’s Adversaries Through Sanctions Act (22 U.S.C. 9525 and 9529). (b) Form and availability (1) Form The report required by subsection (a) shall be submitted in unclassified form, but may include a classified annex. (2) Availability The unclassified portion of the report required by subsection (a) may also be made available to the public. 4. Imposition of sanctions with respect to economic or industrial espionage by foreign adversary entities (a) In general On and after the date that is 30 days after the date of the enactment of this Act, the President (a) may impose the sanctions described in subsection (c) against any of the foreign persons described in subsection (b). (b) Foreign persons described A foreign person is described in this subsection if the President determines on or after the date of the enactment of this Act that the person is a foreign adversary entity that knowingly engages in— (1) economic or industrial espionage with respect to trade secrets or proprietary information owned by United States persons; (2) the provision of material support or services to a foreign adversaries’ military, intelligence, or other national security entities; or (3) the violation of United States export control laws. (c) Sanctions described The sanctions that may be imposed with respect to a foreign person under subsection (b) are the following: (1) Property blocking The exercise of all powers granted to the President by the International Emergency Economic Powers Act ( 50 U.S.C. 1701 et seq. ) to the extent necessary to block and prohibit all transactions in property and interests in property of the foreign person if such property and interests in property are in the United States, come within the United States, or are or come within the possession or control of a United States person. (2) Visa revocation (A) In general An alien described in subsection (b) is subject to revocation of any visa or other entry documentation regardless of when the visa or other entry documentation is or was issued. (B) Immediate effect A revocation under subparagraph (A) shall take effect immediately; and automatically cancel any other valid visa or entry documentation that is in the alien’s possession. (d) Exceptions (1) Exception for intelligence activities Sanctions under this section shall not apply to any activity subject to the reporting requirements under title V of the National Security Act of 1947 ( 50 U.S.C. 3091 et seq. ) or any authorized intelligence activities of the United States. (2) Exception to comply with international obligations Sanctions under subsection (c)(2) shall not apply with respect to the admission of an alien if admitting or paroling the alien into the United States is necessary to permit the United States to comply with— (A) the Agreement regarding the Headquarters of the United Nations, signed at Lake Success June 26, 1947, and entered into force November 21, 1947, between the United Nations and the United States; or (B) other applicable international obligations. (3) Exception to carry out or assist law enforcement activities Sanctions under subsection (c)(2) shall not apply with respect to an alien if admitting or paroling the alien into the United States is necessary to carry out or assist law enforcement activity in the United States. (e) Waiver The President may waive the application of sanctions under this section with respect to a foreign person for renewable periods of not more than 180 days each if the President determines and submits to the appropriate congressional committees a report that contains a determination of the President that such a waiver is in the national security interests of the United States. (f) Implementation; penalties (1) Implementation The President may exercise the authorities provided to the President under sections 203 and 205 of the International Emergency Economic Powers Act (50 U.S.C. 1702 and 1704) to the extent necessary to carry out this section. (2) Penalties A person that violates, attempts to violate, conspires to violate, or causes a violation of subsection (a) or any regulation, license, or order issued to carry out that subsection shall be subject to the penalties set forth in subsections (b) and (c) of section 206 of the International Emergency Economic Powers Act ( 50 U.S.C. 1705 ) to the same extent as a person that commits an unlawful act described in subsection (a) of that section. (3) Procedures and guidelines for sanctions The President shall establish procedures and guidelines for the implementation and enforcement of sanctions imposed under this section. (4) Annual report (A) Unless the exception in subparagraph (B) applies, not later than one year after the date of the enactment of this Act, and for each of the 5 years thereafter, the President shall submit to the appropriate congressional committees a report on any notable developments regarding economic or industrial espionage activities by foreign persons. (B) The President shall not be required to submit the annual report described by subparagraph (A) if the President has imposed sanctions as authorized under this section within the previous calendar year. (g) Rule of construction For purposes of this section, a transaction shall not be construed to include participation in an international standards-setting body or the activities of such a body. 5. Clarifying amendments Section 203 of the International Emergency Economic Powers Act ( 50 U.S.C. 1702 ) is amended— (1) in subsection (b)— (A) in the matter preceding paragraph (1), by striking , directly or indirectly ; (B) in paragraph (3)— (i) by striking including but not limited to and all that follows through news wire feeds. and inserting except to the extent that the President determines that such imports and exports would seriously impair his ability to deal with any national emergency declared under section 202. ; and (ii) by striking under section 5 of the Export Administration Act of 1979, or under section 6 of such Act and inserting under other statutory or regulatory export control authorities ; and (C) in paragraph (4), by inserting , except to the extent that the President determines that such imports and exports would seriously impair the ability to deal with any national emergency declared under section 202 before the period at the end; and (2) by adding at the end the following: (d) Rules of construction relating to sensitive and personal data The communication, the importation to a country, or the exportation from a country, directly or indirectly, whether commercial or otherwise, of bulk sensitive personal data or of source code used in a connected software application may not be construed to constitute— (1) a postal, telegraphic, telephonic, or other personal communication , for purposes of subsection (b)(1); or (2) an importation from a country, or an exportation to a country, of information or informational materials , for purposes of subsection (b)(3). . 6. Definitions In this Act: (1) Appropriate congressional committees The term appropriate congressional committees means— (A) the Committee on Foreign Affairs of the House of Representatives; and (B) the Committee on Foreign Relations of the Senate. (2) Economic or industrial espionage The term economic or industrial espionage has the meaning given that term in section 1637(d) of the Carl Levin and Howard P. Buck McKeon National Defense Authorization Act for Fiscal Year 2015. (3) Foreign person The term foreign person means any person that is not a United States person. (4) Knowingly The term knowingly , with respect to conduct, a circumstance, or a result, means that a person has actual knowledge, or should have known, of the conduct, the circumstance, or the result. (5) Own, proprietary information, and trade secret The terms own , proprietary information , and trade secret have the meanings given those terms in section 1637(d) of the Carl Levin and Howard P. Buck McKeon National Defense Authorization Act for Fiscal Year 2015 ( 50 U.S.C. 1708(d) ). (6) Person The term person means an individual or entity. (7) United states person The term United States person means— (A) a United States citizen or an alien lawfully admitted for permanent residence to the United States; or (B) an entity organized under the laws of the United States or any jurisdiction within the United States, including a foreign branch of such an entity. (8) Foreign adversary The term foreign adversary means the countries listed in section 7.4 of title 15, Code of Federal Regulations.