Foreign investment panel is split on Nippon’s bid for US Steel

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The US Treasury told Nippon Steel that the panel examining the proposal to purchase US Steel did not reach a consensus on how to reduce security risks, which increased the possibility of President Joe Biden blocking the $15 billion deal.

Treasury, which chairs the Committee on Foreign Investment in the United States, wrote a letter to Nippon Steel and US Steel on Saturday, explaining that the nine institutions on the Cfius panel were having difficulty reaching an agreement before the December 23 deadline to send recommendations to Biden. According to several sources familiar with the talks.

Finance Times It was reported earlier this week that at least three Cfius agencies – the Treasury, the Pentagon and the state department – had concluded that the acquisition of the iconic American steelmaker did not pose any security risk. The main opposition to the transaction within Cfius is led by US trade representative Katherine Tai.

Biden and President-elect Donald Trump have voiced opposition to the agreement. Biden publicly opposed the agreement earlier this year, and critics said it amounted to politicizing the Cfius process.

Cfius has prepared a draft mitigation agreement outlining how Nippon Steel could address concerns raised by some government agencies. But USTR has shown no signs of reversing its opposition, people said.

If Cfius reaches unanimous agreement, Biden will have to find another justification to derail the transaction if he wants to block it. But if the panel remains divided, Biden will have to make the decision.

A person very close to the process said Biden was determined to block the deal. He said some government agencies that had pushed to approve the agreement were also increasingly resigned that they would lose the Cfius battle.

Asked if Biden would block the deal, he replied: “Not like that, but when.”

This situation damaged relations with Japan, the United States’ most important ally in Asia. Japanese officials say Washington wants Tokyo to work together against China, but Japan poses a security risk.

Multiple senior US officials told the FT that Biden’s opposition was political. Biden, then Kamala Harris, and Trump used their opposition to win union votes in Pennsylvania, where US Steel is headquartered.

Japanese prime minister Shigeru Ishiba asked Biden to support the agreement when they met at the G20 in Lima, Peru, according to a source familiar with the conversation.

Takahiro Mori, Nippon’s vice president and chief negotiator, visited Washington this week to lobby for the deal. Mori had phone calls with Treasury Secretary Janet Yellen and Commerce Secretary Gina Raimondo on Friday to discuss the situation, four people familiar with his visit said.

Treasury and commerce declined to comment. Nippon Steel also declined to comment.

Deputy cabinet secretaries from Cfius agencies met last week to try to reach a consensus but failed. Several people said they would hold another meeting next week as a last-ditch effort to reach an agreement, but they said there was no sign Tai would change his mind. USTR did not respond to a request for comment.

It is not yet clear whether Raimondo supports the mitigation agreement. A few people said the trade seemed to be on the edge. The commerce department declined to comment.

“The Nippon case exposes a flaw in the Cfius process in which a member like USTR, who has no national security background and does not represent any specific risk from this transaction, can make a major geostrategic misstep,” one former person said. Biden administration Cfius official.

“Tai argues that making the Cfius process a permanent tool of politicians, unreasonably broadening the scope of what is considered national security, and forcing the United States to write off Japan as a national security threat, which is simply a hoax.” The former official stated that it was not true and harmed American security.