Biden will decide on U.S. Steel-Nippon Steel deal after panel fails to reach consensus on national security risk
A powerful government panel on Monday failed to reach consensus on the possible national security risks of a nearly $15 billion proposed deal for Nippon Steel of Japan to purchase U.S. Steel, leaving a decision to President Joe Biden, a longtime opponent of the deal.
The Committee on Foreign Investment in the United States, known as CFIUS, sent its long-awaited report on the merger to Mr. Biden, who formally came out against the deal in March of this year and now has 15 days to reach a final decision, the White House said. A U.S. official familiar with the matter, speaking on condition of anonymity to discuss the private report, said some federal agencies represented on the panel were skeptical that allowing a Japanese company to buy an American-owned steelmaker would create national security risks.
Both Mr. Biden and President-elect Donald Trump courted unionized workers at U.S. Steel and vowed to block the acquisition amid concerns about foreign ownership of a flagship American company. The economic risk, however, is that Nippon Steel also has the financial resources to invest in the mills and upgrade them, possibly helping to preserve steel production within the United States.
The interagency committee reviews such deals with an eye toward potential national security risks. Monday was the deadline to approve the deal, recommend that Mr. Biden block it or extend the review process.
The Washington Post earlier reported CFIUS’ submission of its report.
Justin Merriman/Bloomberg via Getty Images
Under the terms of the approximately $14.9 billion all-cash deal, U.S. Steel would keep its name and its headquarters in Pittsburgh, where it was founded in 1901 by J.P. Morgan and Andrew Carnegie. It would become a subsidiary of Nippon Steel, and the combined company would be among the top three steel-producing companies in the world, according to 2023 figures from the World Steel Association.
Mr. Biden, backed by the United Steelworkers, said earlier this year that it was “vital for (U.S. Steel) to remain an American steel company that is domestically owned and operated.”
Trump has also opposed the acquisition and vowed earlier this month on his Truth Social platform to “block this deal from happening.” Trump proposed to revive U.S. Steel’s flagging fortunes “through a series of Tax Incentives and Tariffs.”
The steelworkers union has said it doesn’t believe Nippon Steel would keep jobs at unionized plants, make good on collectively bargained benefits or protect American steel production from cheap foreign imports.
“Our union has been calling for strict government scrutiny of the sale since it was announced. Now it’s up to President Biden to determine the best path forward,” David McCall, the steelworkers’ president, said in a statement Monday. “We continue to believe that means keeping U.S. Steel domestically owned and operated.”
In the face of political opposition, Nippon Steel and U.S. Steel had waged a public relations campaign to win over skeptics.
U.S. Steel said in a statement Monday that the deal “is the best way, by far, to ensure that U.S. Steel, including its employees, communities, and customers, will thrive well into the future.”
A growing number of conservatives had publicly backed the deal, as Nippon Steel began to win over some steelworkers union members and local officials around its blast furnaces in Pennsylvania and Indiana. Many backers said Nippon Steel has a stronger financial balance sheet than rival Cleveland-Cliffs to invest the necessary cash to upgrade aging U.S. Steel blast furnaces.
Nippon Steel pledged to invest $2.7 billion in United Steelworkers-represented facilities, including U.S. Steel’s blast furnaces, and promised not to import steel slabs that would compete with the blast furnaces.
It also pledged to protect U.S. Steel in trade matters and to not lay off employees or close plants during the term of the basic labor agreement. Earlier this month, it offered $5,000 in closing bonuses to U.S. Steel employees, a nearly $100 million expense.
Nippon Steel also said it was best positioned to help American steel compete in an industry dominated by the Chinese.
The proposed sale came during a tide of renewed political support for rebuilding America’s manufacturing sector, a presidential campaign in which Pennsylvania was a prime battleground, and a long stretch of protectionist U.S. tariffs that analysts say has helped reinvigorate domestic steel.
Chaired by Treasury Secretary Janet Yellen, CFIUS screens business deals between U.S. firms and foreign investors and can block sales or force parties to change the terms of an agreement for the purpose of protecting national security.
The committee’s powers were significantly expanded in 2018 through an act of Congress called the Foreign Investment Risk Review Modernization Act, known as FIRRMA.
In September, Mr. Biden issued an executive order that expands the factors that the committee should consider when reviewing deals — such as how the deal impacts the U.S. supply chain or puts Americans’ sensitive personal data at risk.
Nippon Steel already has manufacturing operations in the U.S., Mexico, China and Southeast Asia. It supplies the world’s top automakers, including Toyota Motor Corp., and makes steel for railways, pipes, appliances and skyscrapers.
Source: cbsnews.com