The CFIUS is reviewing Nippon Steel's $15 billion acquisition of U.S. Steel
Faizan Farooque
Nov 26, 2024
GURU FOCUS
Summary
GURU FOCUS
Summary
CFIUS previously flagged the acquisition as a potential risk to the U.S. steel supply chain critical to national security.
Japanese Prime Minister Shigeru Ishiba has formally urged U.S. President Joe Biden to approve Nippon Steel's (NISTF, Financials) $15 billion acquisition of U.S. Steel (X, Financials), highlighting the deal's importance to bilateral relations, according to sources familiar with the matter.
Biden has voiced opposition to the purchase, citing possible hazards to national security, along with a major U.S. labor organization. The Committee on Foreign Investment in the United States is reviewing the deal; next month it has a deadline to provide a recommendation before President-elect Donald Trump takes office on Jan. 20.
Government agency CFIUS, which evaluates foreign investments for security concerns, might accept the agreement with restrictions, prolong the assessment process, or suggest its rejection. The panel had already raised concerns about the vulnerability of the steel supply chain resulting from the proposed deal.
Emphasizing the geopolitical and financial advantages of the purchase, Ishiba stressed in a letter dated Nov. 20, the reflection of Japan's position as the biggest foreign investor in the United States. He noted that enhancing the economic cooperation fits the "unprecedented strength" of the Japan-U.S. relationship under Biden's leadership.
Nippon Steel has promised to invest in modern technologies and safeguard employment in line with American concerns. In the letter, Ishiba said, "The proposed acquisition will enable Japanese and U.S. steel companies to combine advanced technologies and increase competitiveness, and will contribute to enhancing steel production capacity and employment in the United States."
While Ishiba's office sent inquiries to the foreign ministry, which had no response, the U.S. Embassy in Japan refused to comment. Both Nippon Steel and U.S. Steel ignored calls for comments.
Under former Prime Minister Fumio Kishida, who separated his government from the agreement and presented it as a private commercial affair, this direct appeal marks a change from the posture taken by the Japanese government before.
Particularly in swing states crucial to the next U.S. presidential contest, the purchase has become politically contentious. As the next government gets ready to assume office, Biden's choice might influence opinions on foreign investment policy.
Following the election, CFIUS expanded its investigation to evaluate the deal's ramifications more fully. Ishiba has expressed worries about the possible consequences of a refusal of the purchase. The prime minister reportedly brought up the matter at his most recent meeting with Biden at an international forum, stressing its significance for Japan-U.S. economic ties.
U.S. Steel review targeted by Republicans for potential probe
Japanese Prime Minister Shigeru Ishiba has formally urged U.S. President Joe Biden to approve Nippon Steel's (NISTF, Financials) $15 billion acquisition of U.S. Steel (X, Financials), highlighting the deal's importance to bilateral relations, according to sources familiar with the matter.
Biden has voiced opposition to the purchase, citing possible hazards to national security, along with a major U.S. labor organization. The Committee on Foreign Investment in the United States is reviewing the deal; next month it has a deadline to provide a recommendation before President-elect Donald Trump takes office on Jan. 20.
Government agency CFIUS, which evaluates foreign investments for security concerns, might accept the agreement with restrictions, prolong the assessment process, or suggest its rejection. The panel had already raised concerns about the vulnerability of the steel supply chain resulting from the proposed deal.
Emphasizing the geopolitical and financial advantages of the purchase, Ishiba stressed in a letter dated Nov. 20, the reflection of Japan's position as the biggest foreign investor in the United States. He noted that enhancing the economic cooperation fits the "unprecedented strength" of the Japan-U.S. relationship under Biden's leadership.
Nippon Steel has promised to invest in modern technologies and safeguard employment in line with American concerns. In the letter, Ishiba said, "The proposed acquisition will enable Japanese and U.S. steel companies to combine advanced technologies and increase competitiveness, and will contribute to enhancing steel production capacity and employment in the United States."
While Ishiba's office sent inquiries to the foreign ministry, which had no response, the U.S. Embassy in Japan refused to comment. Both Nippon Steel and U.S. Steel ignored calls for comments.
Under former Prime Minister Fumio Kishida, who separated his government from the agreement and presented it as a private commercial affair, this direct appeal marks a change from the posture taken by the Japanese government before.
Particularly in swing states crucial to the next U.S. presidential contest, the purchase has become politically contentious. As the next government gets ready to assume office, Biden's choice might influence opinions on foreign investment policy.
Following the election, CFIUS expanded its investigation to evaluate the deal's ramifications more fully. Ishiba has expressed worries about the possible consequences of a refusal of the purchase. The prime minister reportedly brought up the matter at his most recent meeting with Biden at an international forum, stressing its significance for Japan-U.S. economic ties.
U.S. Steel review targeted by Republicans for potential probe
Four House Republicans wrote to Treasury Secretary Janet Yellen and Commerce Secretary Gina Raimondo on Friday, saying that recent developments related to the Committee on Foreign Investment in the United States (CFIUS) "have called into question the integrity of its decision-making process,” and demanding the preservation of records related to a potential sale of U.S. Steel to Japan's Nippon Steel. | REUTERS
By Josh Wingrove
BLOOMBERG
Nov 26, 2024
Republican lawmakers are calling on U.S. President Joe Biden’s administration to preserve documents related to the proposed sale of United States Steel to Japan-based Nippon Steel, expressing "serious concerns” that politics have tainted an ongoing national security review of the deal and raising the prospect of a congressional probe.
Four House Republicans wrote to Treasury Secretary Janet Yellen and Commerce Secretary Gina Raimondo on Friday, saying that recent developments related to the Committee on Foreign Investment in the United States (CFIUS) "have called into question the integrity of its decision-making process,” and demanding the preservation of records related to the steel transaction.
The matter raises "broader issues about whether the statutory mandate of CFIUS to prioritize national security considerations has been subordinated to political interests,” the lawmakers wrote, according to a copy of the letter obtained by Bloomberg News. The documents should "remain intact and available for any forthcoming oversight needs,” the letter, from some members of the House Financial Services Committee, adds.
The Treasury Department declined to comment. The Commerce Department did not immediately respond to a request for comment.
"I don’t have a comment on the process, and we are careful to follow all rules and regulations when it comes to the preservation of records,” White House spokesman Andrew Bates said Monday.
The GOP letter suggests that the political firestorm over the proposed sale of an iconic American firm — a transaction which became a flash point during the 2024 presidential campaign — is unlikely to subside even with Biden signaling opposition to the deal and Republican President-elect Donald Trump pledging to block it. Trump’s opposition to the deal could complicate Republican attempts to make political hay of Biden’s efforts to block its consummation, with the current and incoming president politically aligned.
The deal has faced heightened scrutiny, touching on questions about union jobs and wages, which were at the centerpiece of an election that largely revolved around voter anxiety about the economy. U.S. Steel is based in Pennsylvania, a state that was fiercely contested by Trump and his general election opponent Vice President Kamala Harris.
Biden has opposed the deal for months but deferred to a review by the secretive CFIUS panel, which scrutinizes proposals by foreign entities to buy companies or property in the U.S. The transaction is barreling toward another deadline in December when the panel must present a recommendation and can refer the case back to the president for a decision. Even as he has awaited the review, Biden has pledged that U.S. Steel will remain domestically owned.
The letter was signed by Republican Reps. Bill Huizenga, Andy Barr, Dan Meuser and John Rose. Huizenga chairs the Oversight and Investigations Subcommittee of the House Financial Services Committee. Republicans will also control the House in the next Congress.
The lawmakers are demanding the preservation of communications between the White House and CFIUS, as well as communications between federal agencies and other stakeholders, such as the United Steelworkers, who oppose the sale, and Cleveland-Cliffs, a rival domestic bidder.
Rose, in a statement, alleged that the Biden administration had "politicized CFIUS in an attempt to score cheap political points.”
"It is important to national security that during the transition CFIUS keeps all records,” he added.
The high-profile case is unusual, with CFIUS reviews more commonly reserved for acquisitions by adversarial nations, like China, and not allied ones, like Japan. They also typically are aimed at technology companies or other sensitive sectors.
Biden’s administration has argued that steel is a strategically important industry. The CFIUS panel granted a request in September to refile the submission, effectively approving a delay.
Trump’s Treasury and Commerce nominations + Nippon Steel’s bid for U.S. Steel
NOVEMBER 26, 2024
By: Emily Kilcrease and Geoffrey Gertz
Emily and Geoff react to the nominations of Scott Bessent for U.S. Treasury Secretary and Howard Lutnick for U.S. Commerce Secretary and overall point man for trade and tariffs. Then Evan Robinson-Johnson, business reporter from the Pittsburgh Post Gazette, joins to talk about the national security review of Nippon Steel’s bid to buy U.S. Steel - which both President Biden and President-elect Trump have vowed to block. Complicated labor union dynamics, the companies’ threat to sue, and election-year politics have kept this deal in purgatory, but an impending government deadline could force action in the coming weeks.
“Editorial: Time for post-election sanity: Approve Nippon-U.S. Steel deal” by the Pittsburgh Post Gazette editorial board
“Japanese steelmaker Nippon says it will not accept presidential block of U.S. Steel deal” by Evan Robinson-Johnson, Pittsburgh Post Gazette
“Arbitration board signals support for U.S. Steel’s sale to Nippon in a blow to United Steelworkers union” by Evan Robinson-Johnson, Pittsburgh Post Gazette
"US Steel Review Targeted by Republicans for Potential Probe" by Josh Wingrove, Bloomberg
“Under Pressure, Dubai Company Drops Ports Deal” by David E. Sanger, The New York Times
Ralls V. CFIUS decision by U.S. Court of Appeals, District of Columbia Circuit
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