Friday, February 09, 2007

Dems Push to Limit Foreign Investment

The other day I criticized the efforts of Duncan Hunter and others to unnecessarily limit foreign investment in the US. This is one case where his approach would be worse than that of Congressional Democrats:

House Democrats are moving quickly to approve legislation in response to last year’s controversy surrounding a United Arab Emirates-based company’s attempted takeover of several U.S. shipping ports, but may be headed for a clash with a Republican presidential candidate and Senate Democrats.

Leaders of key House and Senate committees are expected to forge ahead with rival bills similar to those approved last year when both chambers were under Republican control.

Congress was unable then to reconcile differences over how to update rules governing the Committee on Foreign Investment in the U.S. (CFIUS), an interagency panel led by the Treasury Department that reviews foreign investment deals for national-security threats. CFIUS approved Dubai Ports World’s acquisition of a British company that operated several U.S. ports, sparking vibrant debate one year ago this month.

Privately, House Financial Services Committee Chairman Barney Frank (D-Mass.) has told supporters of the House bill that his goal would be to move legislation to the House floor immediately following the President’s Day recess, according to business sources. This would allow House Democrats to say they had moved legislation responding to the Dubai Ports deal early in their majority tenure.

Frank currently is working on a manager’s amendment to bipartisan legislation approved unanimously by the House in 2006 and reintroduced in January by Reps. Carolyn Maloney (D-N.Y.), Joseph Crowley (D-N.Y.), Republican Whip Roy Blunt (R-Mo.) and Rep. Deborah Pryce (R-Ohio), two business sources said.

On the floor, the bill is expected to be considered under an open rule that would allow amendments, and Frank has indicated some misgivings regarding amendments from the Republican side. For example, Rep. Duncan Hunter (R-Calif.), a presidential candidate and vocal critic of the Dubai deal, voted for last year’s House bill under some pressure from leadership. He might be more inclined to offer amendments while pursuing a presidential bid, particularly with Democrats running the House, one lobbyist said...

In the Senate, Democratic presidential candidate and Banking Committee Chairman Chris Dodd (D-Conn.) told The Hill he intends to move a bill quickly. He also suggested it would look similar to the legislation approved by the Senate in 2006 that was opposed by the U.S. Chamber of Commerce, Business Roundtable, Organization for International Investment and other groups representing U.S. multinationals.

Dodd, whose presidential campaign is seen by business as a potentially complicating factor in the debate, said his committee would consider modifying last year’s bill, but said it may make more sense to consider changes during a conference with the House...

There should be a review process to ensure that foreign investments and acquisitions do not compromise national security. But if Congress goes overboard, those job-creating investments will go elsewhere. For example, once China's CNOOC failed in its attempt to purchase Unocal, it purchased Nigeria's Apko oil field, and has looked to acquire petroleum interests in Equatorial Guinea and Kenya, as well as other African nations. I suspect that US security concerns would be better addressed by having Cnooc invest in US assets, rather than in regions where we have limited access and influence.

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