WASHINGTON (Reuters) – Nippon Steel Co. defended its $14.9 billion bid for U.S. Steel Inc., saying it would boost the U.S. steel industry and that politics were driving U.S. opposition to the deal, according to a strongly worded letter first reported by Reuters.
Here is a summary of some of the key arguments Nippon Steel is making to refute the national security risks identified by the Committee on Foreign Investment in the United States, as first reported by Reuters.
The Committee on Foreign Investment in the United States considers Japan an ally.
In its letter to businesses, CFIUS described Japan as a “key ally of the United States,” adding that the committee “took into account the importance of our alliance to the national security of both countries.”
Response from Nippon Steel and US Steel
In response, the steel companies called the statement “just empty talk.” The companies said the committee “does not take this fact seriously and does not explain how it affects its risk analysis,” adding that CFIUS does not take into account a U.S.-Japan agreement that “explicitly recognizes that Japanese steel does not pose a risk to the U.S. market.”
The companies also assert that CFIUS “has never blocked an acquisition by a Japanese company.”
Committee on Foreign Investment in the United States of America in India
The Committee on Foreign Investment in the United States suggests that Nippon Steel may decide to move U.S. production to India, citing its presence and alleged expansion there and relatively low production costs.
“India is one of Nippon Steel’s largest production markets outside China,” the Committee on Foreign Investment in the United States said, citing public reports that Nippon Steel plans to double its production capacity in India by 2030.
“A review of the total cost of steel production at facilities in the United States and India shows that costs in the United States are much higher than those in India,” she added.
Response from Nippon Steel and US Steel
The companies say Nippon Steel’s expansion in India will not threaten its penetration into the United States. “India is a growth market for Nippon Steel, but that growth will not come at the expense of Nippon Steel’s commitment to the U.S. market,” they said.
“Simply put, Nippon Steel intends to invest in the US and develop the US steel industry to serve the US market; and Nippon Steel invests in India to develop steel produced in India to serve the Indian market, consistent with India’s similar focus on developing its domestic steel industry,” they said.
Committee on Foreign Investment in the United States on Tariffs
The Committee on Foreign Investment in the United States alleged that Nippon Steel “makes limited use of trade measures,” or measures aimed at imposing tariffs on foreign competitors, and has sometimes opposed efforts to impose protective U.S. tariffs on steel imports. The committee said this suggests that its potential acquisition of U.S. Steel could jeopardize its future attempts to mitigate tariffs, despite the U.S. company’s history of aggressively pursuing tariffs.
“While U.S. Steel repeatedly requests (trade) relief, Nippon Steel stands out as a foreign respondent resisting trade relief for the U.S. domestic steel industry,” CFIUS said.
Response from Nippon Steel and US Steel
The companies respond, saying, “It is absolutely untrue that Nippon Steel has made limited use of trade measures,” stressing that Nippon Steel has participated in all of Japan’s active trade measures.
Nippon Steel recently called on the Japanese government to follow the U.S. lead and impose anti-dumping tariffs on Chinese steel exports to protect Japan’s domestic industry, steel companies said.
But to allay any doubts, Nippon Steel proposed in the letter to maintain an internal “trade committee” to ensure that decisions on pursuing trade issues are made without interference from Nippon Steel.
Comments are closed, but trackbacks and pingbacks are open.