Panel reviewing Nippon Steel takeover of US Steel hits deadlock: FT
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Both Joe Biden and President-elect Donald Trump have slammed the proposed buyout, which is heavily opposed by American labor organizations.
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A slab of steel on a hot rolling mill at Nippon Steel's Kashima Plant in Kashima, Japan, on December 6, 2024 (AP)
A panel investigating whether Japan's Nippon Steel's takeover of US Steel would pose national security threats has hit a deadlock, the Financial Times reported, raising the possibility that President Joe Biden may veto the $14.9 billion transaction.
The US Treasury informed both sides that the nine agencies that comprise the Committee on Foreign Investment in the United States (CFIUS), which analyzes such purchases, were unable to reach an agreement as a December 23 deadline for making a recommendation to Biden approaches, according to FT.
Biden, like President-elect Donald Trump, has slammed the proposed buyout, which is heavily opposed by American labor organizations.
US Steel is headquartered in Pennsylvania, and in September, the Biden administration informed the steelmaker that its $14.9 billion bid to acquire US Steel would threaten national security by weakening the American steel industry, according to three sources, signaling that the US is likely to block the deal.
Division among the CFIUS agencies would make it simpler for the president to reject the transaction, whereas the panel's unanimous approval would force Biden to find other reasons to oppose it.
The proposed acquisition of the historic US steelmaker was initially disclosed in December and was anticipated to be completed by this year's third quarter. According to the FT, anonymous US sources said the Treasury, Defense, and State departments all agreed that the sale presented no national security concern.
The "main opposition', it added, has come from US trade representative Katherine Tai, who, according to the sources, was unconvinced even by a draft from CFIUS outlining how Nippon Steel may act to alleviate worries.
Biden argues that the steel sector has a strategic role for the US, which is currently the world's largest steel importer. The United Steelworkers union strongly opposes the takeover, despite the Japanese group's vow not to slash employment or close any US Steel facilities for at least two years.
In a statement released Wednesday, Nippon Steel condemned the "inappropriate" involvement of politics in the decision-making process, adding that the agreement will "bolster American economic and national security by countering the threats posed by China."
According to the firm, the weight of politics on the "true national security interests" is "inappropriate", especially in light of Japan and the US' "indispensable alliance" as the foundation.
A former CFIUS official told the Financial Times that if the trade representative helps stop the agreement, it would be "a huge geostrategic misstep," requiring the US "to put in writing that Japan is a national security threat, which is simply untrue and detrimental to American security."
