By Nancy McLernon, GBA President and CEO
At the end of 2023, Nippon Steel Corporation (NSC), Japan’s leading steel producer, unveiled plans to acquire U.S. Steel for a substantial $14.9 billion. Since the announcement, some politicians have demanded an intervention from the Committee on Foreign Investment in the United States (CFIUS) to block the deal. Critics have predetermined the acquisition as a threat to national and economic security without examining the facts.
CFIUS, an interagency committee that reviews transactions involving foreign direct investment in the United States (FDIUS), is structured to do just that and plays a pivotal role in safeguarding the nation’s national security. To keep the United States globally competitive, however, politics has no business in any CFIUS decisions. Unfortunately, political rhetoric around CFIUS reviews is nothing new and has the potential to scare off investors.
The Committee, established in 1975, was strengthened a few years ago through the bipartisan Foreign Investment Risk Review Modernization Act (FIRRMA). The international business community endorsed FIRRMA as a robust and well-resourced review process that provides Congress reassurance that deals will be thoroughly examined, which helps avoid politicization.
FDIUS is a key contributor to job creation and U.S. economic growth. U.S. subsidiaries of foreign companies already employ nearly eight million Americans, including about three million U.S. manufacturing jobs. In 2022 alone, international companies invested $5.25 trillion in the U.S. economy. Seventy-five percent of that number comes from companies globally headquartered in eight countries – Japan, Canada, United Kingdom, Germany, France, Ireland, Switzerland and the Netherlands, all longtime friends and allies of the United States. These countries are not merely investors but strategic partners contributing to America’s prosperity and tranquility.
Japan, a close military ally with a mutual defense treaty with the United States since 1951, houses more American troops than any country in the world. This alliance makes it clear that Japan shares the same security concerns facing the United States, especially in the face of adversarial nations like Russia, North Korea and China, whose official media has expressed concerns that this sale increases Japan’s ties to American geopolitical strategy. And according to the most recent government statistics, Japan ranked first in FDI in the United States, with more than $700 billion.
“When lawmakers and others seek to leverage the CFIUS process to advance their own interests, it politicizes the process, resulting in an investment landscape where multinational companies face increased risks, which could result in less foreign investment, fewer American jobs and less prosperity overall.”
When lawmakers and others seek to leverage the CFIUS process to advance their own interests, it politicizes the process, resulting in an investment landscape where multinational companies face increased risks, which could result in less foreign investment, fewer American jobs and less prosperity overall. The smart move is to let CFIUS do the job Congress gave it, one that only it has the unique expertise and information to get done right.