Revenge of the CFIUS
With help from Doug Palmer and Jenny Hopkinson
INVESTMENT WARS: REVENGE OF THE CFIUS: Chinese investments in the United States are getting a lot of high-level attention this week, with several senators suggesting potential changes to investigations by the Committee on Foreign Investment in the United States, which is the panel that reviews foreign investments for possible threats to national security.
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Senate Agriculture Committee members on Thursday urged the Treasury Department, which chairs CFIUS, to review whether the China National Chemical Corporation’s proposed purchase of Syngenta will affect the safety and security of the U.S. food system and to include the Agriculture Department and FDA officials in its investigation. ChemChina reached a deal in February to buy the Swiss pesticide and seed company for $43 billion.
“It is not unreasonable to suggest that shifts in company governance; operational strategy; or financial health — particularly in light of the magnitude of this leveraged transaction — could have consequences for food security, food safety, biosecurity, and the highly competitive U.S. farm sector as a whole,” Sens. Debbie Stabenow (D-Mich.), Chuck Grassley (R-Iowa), Sherrod Brown (D-Ohio) and Joni Ernst (R-Iowa) wrote in a letter to Treasury Secretary Jack Lew.
Meanwhile, Brown on Wednesday called for close scrutiny of the rising number of Chinese investments, including whether potential purchasers of U.S. companies could be Chinese state-owned enterprises disguising themselves as private firms.
In his own letter to Lew, the senator stressed the need for CFIUS to have “ample resources” to investigate a potential spike in Chinese takeovers as China’s economy slows. “In just the first weeks of 2016, reports indicate there have been a record 22 completed merger and acquisition transactions announced in the United States involving Chinese acquirers, worth a total of $23 billion,” Brown said. The Ohio Democrat also said CFIUS should look beyond the “direct impact of each discrete transaction and consider the trends and patterns of acquisitions.”
IT’S FRIDAY, MARCH 25! Welcome to Morning Trade, where your host’s idea to make this newsletter Star Wars-themed today got really out of control, really fast. You know the drill: Tips, comments? Send them along: firstname.lastname@example.org or @vtg2.
OBAMA AND XI MEET AGAIN, AT LAST: The White House on Thursday announced a bilateral meeting between President Barack Obama and Chinese President Xi Jinping while the Asian leader is in Washington for the Nuclear Security Summit on March 31. The notice does not say whether they will discuss bilateral investment treaty negotiations, mentioning only that they will chat about “a range of issues of mutual interest, while also enabling President Obama and President Xi to address areas of disagreement constructively.” The U.S. is expecting an updated market access offer in the BIT talks before Xi’s visit.
REPS: HELP US ON ETHANOL, USTR; YOU’RE OUR ONLY HOPE: The Obama administration should use trade talks with the European Union to push back against EU anti-dumping duties on U.S. ethanol, suggests a bipartisan group of nine farm-state House members led by Rep. Rod Blum (R-Iowa) and House Agriculture Committee ranking member Collin Peterson (D-Minn.).
“We respectfully request you examine opportunities to reduce any tariffs on U.S. produced energy, including ethanol, as you continue to engage our allies in the European Union during the Transatlantic Trade and Investment Partnership,” they said in a March 21 letter to U.S. Trade Representative Michael Froman.
The lawmakers, who appear to be largely following the arguments of the Renewable Fuels Association, said the U.S. has been “unfairly targeted” for the increased tariffs of $83.20 per metric ton, which they said has eliminated the U.S. share of the European ethanol market. They asked Froman to “leverage access to all domestic energy sources” in order to reduce or eliminate the duties.
Disagreements about the methodology in an anti-dumping case are usually litigated at the World Trade Organization rather than discussed in the context of free trade agreements. In a press release praising the letter, the Renewable Fuels Association said the USTR has so far refused to bring a case at the global trade body. The group is also challenging the duties in the General Court of Luxembourg.
TTIP LOOKING TO MAKE THE KESSEL RUN ON ONE TANK OF GAS: Okay, okay, so we’re mixing references here. Anyway, at the most recent round of talks in late February, the two sides talked about a slew of areas in which they could reach agreements on regulatory cooperation, including automobiles. According to an EU summary of the round posted this week, the two sides have agreed on three areas where they might be able to harmonize regulations quickly: adaptive headlights, with work based on research from the U.S. National Highway Traffic Safety Administration; automatic emergency braking systems, where the commission is working on a proposal; and seat-belt anchors, where the two sides will exchange information.
The summary also says crashworthiness, or the ability to protect occupants in a collision, is “the most complex issue.” Click here to read the whole paper: http://bit.ly/1MoaJPX.
STAY ON TARGET: U.S. WHEAT STILL PURSUING CHINA WTO CASE: As part of their push for USTR to bring China to the WTO over its wheat subsidies, the National Association of Wheat Growers and U.S. Wheat Associates on Thursday flagged updated numbers showing the cost of Beijing’s alleged violations of its WTO subsidy commitments.
A January 2016 update to an Iowa State University study that attempts to keep tabs on ag subsidization in emerging economies, released Thursday, shows the decline in world prices “has increased the projected annual loss in U.S. wheat farm revenue from China’s policies by 16 percent to $653 million.”
“At the direction of the USW and NAWG boards, we are working with the Office of the U.S. Trade Representative and USDA to develop a possible WTO challenge,” the groups said in a press release. Click here to read the report: http://bit.ly/25nMc44.
MAY THE EFFECTIVE FOOD SAFETY CHECKS BE WITH YOU: USDA is monitoring the beef situation in France after a case of bovine spongiform encephalopathy, or mad-cow disease, was confirmed in the country, Animal and Plant Health Inspection Service spokeswoman Donna Karlsons has told POLITICO. “We have control measures already in place for any country that is considered a controlled risk region for BSE,” she said.
The French agriculture department said consumers should not be alarmed, our friends at POLITICO Europe report. According to EU rules, cows in the area will be restricted from sale for meat consumption, and the agriculture minister will ask the commission to investigate. The government said the detected case shows the system of checks are efficient throughout the food chain and that it will not have consequences for the consumer.
CFR: DON’T TRY TO FRIGHTEN US WITH YOUR ARGUMENTS ON DRUGS: Despite consternation on both sides of the trade debate about TPP’s potential effect on drug prices, data over the past decade shows “national drug spending has remained flat as a share of overall health expenditure in reviewed countries since the U.S. trade agreements entered into force,” according to a senior fellow with the Council on Foreign Relations. Click here to read Thomas Bollyky’s full article in Foreign Affairs: http://fam.ag/1pAZBF7.
ICYMI: SIERRA CLUB: I’VE GOT A BAD FEELING ABOUT ISDS: Major trade pacts that the United States is seeking with European Union and Pacific Rim countries would more than double the number of fossil fuel companies able to challenge U.S. laws through investor-state arbitration, the Sierra Club has found in a new report.
“The fight for climate progress already faces enough obstacles without the additional roadblocks imposed by the TPP and TTIP,” the report says. “Replacing these toxic deals with a new climate-friendly model of trade is an essential component of the growing effort to keep fossil fuels in the ground.”
The two deals would newly grant broad foreign investor rights to more than 1,000 U.S. subsidiaries of over 100 foreign energy companies, including Royal Dutch Shell, BP and BHP Billiton. Click here to read the report: http://bit.ly/1T8DZvD.
Donald Trump’s China tariff proposal could actually increase the merchandise trade deficit by $67 billion, the Wall Street Journal reports: http://on.wsj.com/1MoO8mD.
Republicans and Democrats are united in their opposition to free trade, a Bloomberg poll finds: http://bloom.bg/1T8DLEO.
Chinese Premier Li Keqiang said Beijing wants to conclude negotiations on the Regional Comprehensive Economic Partnership by the end of the year, according to the Straits Times: http://bit.ly/1RAutMk.
The Mexican government will allow imports of fresh Canadian duck and poultry for the first time in a decade, Canadian publication iPolitics reports: http://bit.ly/1UoHekd.
A Russian steel magnate says his government should embrace TPP, state-funded Russian news outlet RT reports: http://bit.ly/1WN3vpt.
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