Committee on Foreign Investment Review Anticipated
Lael Brainard, director of the National Economic Council, stated that the deal will likely undergo review by the Committee on Foreign Investment in the United States (CFIUS). Comprised of representatives from economic and national security agencies, the CFIUS investigates potential national security risks associated with foreign investments in American companies.
Brainard explained, “This transaction appears to fall within the parameters of the interagency Committee on Foreign Investment in the United States, which the Congress empowered and the Biden administration enhanced.”
Under the terms of the all-cash deal valued at approximately $14.1 billion, U.S. Steel will retain its name and remain headquartered in Pittsburgh, the city where it was originally founded by J.P. Morgan and Andrew Carnegie in 1901.
The Role of CFIUS in Safeguarding National Security
The CFIUS, chaired by Treasury Secretary Janet Yellen, is responsible for reviewing business transactions between U.S. companies and foreign investors. It has the authority to block sales or require modifications to agreements in order to protect national security interests.
President Biden issued an executive order in September 2020 that expanded the criteria the committee considers during its review process. This includes evaluating the impact on the U.S. supply chain and potential risks related to Americans’ sensitive personal data.
In a previous case, CFIUS ordered Beijing Kunlun, a Chinese mobile video game company, to sell gay dating app Grindr.
Union and Political Opposition
The United Steelworkers International, which endorsed President Biden during his 2020 campaign, swiftly opposed the recent proposed acquisition. The union expressed disappointment, stating that U.S. Steel decided to ignore the concerns of its workforce and sell to a foreign-owned company without prior consultation.
David McCall, president of United Steelworkers, asserted, “We will strongly urge government regulators to carefully scrutinize this acquisition and determine if the proposed transaction serves the national security interests of the United States and benefits workers.”
Political allies of President Biden from Pennsylvania, a key battleground state for his re-election campaign, also voiced objections to the sale and demanded guarantees from Nippon Steel about the retention of U.S. Steel’s workers, plants, and headquarters in the state.
Democratic U.S. Senator Bob Casey stated that the sale appeared to be a detrimental deal for Pennsylvania and its workers. Meanwhile, Democratic U.S. Senator John Fetterman, residing near U.S. Steel’s Edgar Thompson plant in Pittsburgh, declared his intent to prevent the acquisition based on national security concerns.
Fetterman emphatically stated, “It is absolutely outrageous that U.S. Steel has agreed to sell itself to a foreign company.”