Does Nippon Steel’s offer to buy US Steel threaten national security?

President Biden The decision to block Nippon Steel’s proposed $14 billion acquisition of US Steel was based on national security concerns – a rationale that sparked opposition

Biden announced the decision on Friday after the Committee on Foreign Investment in the United States deferred the decision to the president after failing to reach consensus on its review. The president’s order cited “credible evidence” that Nippon Steel “may take actions that threaten to impair the national security of the United States” — although the order did not elaborate on those concerns.

In an accompanying statement, Biden made clear that “a strong, domestically owned and operated steel industry is a core national security priority,” and added that he “will never hesitate to act to protect this nation’s security and infrastructure as well as the resiliency of its economy.” supply chains.”

US Steel and Nippon Steel issued a statement condemning the decision Block the deal She called it “illegal” and said the commitments made by Nippon Steel would have strengthened national security. The companies noted that they have offered to ban the relocation of any production and jobs outside the United States, as well as to give the Committee on Foreign Investment in the United States the ability to veto any decline in production at US steel facilities in the next 10 years to allay concerns about steel supply and its impact. On national security.

President Biden blocks the sale of US steel to NIPPON STEEL

However, they said CFIUS “did not give due consideration to a single mitigation proposal that was submitted…as evidenced by the lack of any written comments on the four powerful nations.” National security The agreements were proactively offered by the parties over a period of 100 days.” “The CFIUS process was deeply corrupted by politics, and the outcome was predetermined, without an investigation of the merits, but to meet Biden-White’s political goals,” the companies added. Home.

Nippon Steel has also pledged to invest at least $2.7 billion to modernize US Steel’s Mon Valley Works near Pittsburgh and Gary Works in Indiana to enable these steel plants to better compete with international competitors. US Steel CEO David Porritt previously said The Wall Street Journal That the company won’t be able to do it if the deal falls through because “I don’t have the money.”

The companies said in a statement on Friday that they still believe the deal “is the best way to ensure that US Steel, and particularly its USW-represented facilities, can compete and thrive well into the future.” US Steel and Nippon Steel They added that they “will take all appropriate measures to protect our legal rights and secure this future.”

tape	protection	last	It changes	% changes
X	United States Steel Corporation.	30.46	-2.14	-6.56%
NPSCY	Nippon Steel Company	6.917	-0.05	-0.76%

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The White House’s decision received praise from United Steelworkers Union (USW).. USW International President David McCall said Nippon is a “chain trade fraudulent company that has worked for decades to undermine our domestic industry by dumping its products into our market.”

He added that the purchase would have allowed Nippon to “destabilize our trading system from within” while undermining “our ability to meet our national security and critical infrastructure needs.”

“It is clear from US Steel’s recent financial performance that it can easily remain a strong and resilient company. We now call on US Steel’s board of directors to take the necessary steps to allow it to further prosper and remain profitable,” McCall said.

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Scott Lincecum, vice president for public economics and the Cato Institute’s Stifel Center for Trade Policy, noted in a blog post that the deal was backed by Independent arbitration body It was selected by US Steel and USW, as well as 98% of US Steel shareholders when the deal was put to a vote.

Lincecum noted The Departments of Treasury, State, and Defense concluded that the deal poses no security risks, and that many independent national security and foreign policy experts view the deal as a way to strengthen national security and relations with a close ally in Japan.

He added that while the companies may ultimately prevail in the legal challenge against Biden’s decision to allow the deal to proceed, the president’s action “risks harming the US investment review process; US-Japan relations; and the US’s standing as a welcoming venue for the deal.” And foreign investment, the general rule for countries against using “national security” as a cover for political patronage and economic protectionism, and unfortunately, the American economy itself will be unable to reverse any of that.

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Alexis Early, a partner at Jenner & Block whose practice includes a focus on CFIUS affairs, said in a statement that “the decision appears political, related Economic security“It is not supported by serious national security concerns that cannot be resolved.”

She also noted that the decision could weaken efforts to strengthen relations with a close ally needed to help counter China’s growing influence. Japan is a party to the Mutual Defense Treaty with the United States and has been a critical partner in economic and defense initiatives.

“Low-risk foreign investors will think twice before voluntarily putting themselves through such an arbitrary and unaccountable process,” she added. “As the daughter of a Pennsylvania steelworker and a lawyer for CFIUS, I have watched this deal closely. CFIUS has deviated from its core national security responsibility by focusing on a subset of economic criticisms.”

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Jason Furman, a professor of economic policy at Harvard University who has chaired the Council of Economic Advisers for most of its time President Obama In his second term, he also objected to the Biden administration’s decision to block the deal.

“President Biden’s claim that Japan’s investment in an American steel company poses a threat to national security is a pathetic and cowardly cave-in for special interests that will make America less prosperous and secure,” Furman wrote in a post on X. “We see him betraying our allies while abusing the law.”