The United States has long been well-served by its commitment to the rule of law.
Our rights and liberties as Americans are best protected when state authority works within the bounds of our constitutional framework, and when government institutions rule within their legal mandates — even, and perhaps especially, when circumstances tempt them to stretch the law.
This is easier said than done, especially in a political environment — both at home and abroad — more turbulent than any in recent memory.
It has become tempting for politicians to forget the governing tradition that has long served us well.
The latest example: President Biden, unfortunately, seems to have fallen prey amidst ongoing discussions about Japanese company Nippon Steel Corporation’s bid to acquire U.S. Steel.
Recently, Biden made an extremely unusual statement about the deal’s ongoing review by the Committee on Foreign Investment in the United States (CFIUS), the interagency panel that oversees foreign investments in U.S., saying that the U.S. needs to "maintain strong American steel companies powered by American steel workers" and that "U.S. Steel has been an iconic American steel company for more than a century, and it is vital for it to remain an American steel company that is domestically owned and operated."
Dan Price, a former senior White House official on international trade issues, was shocked by Biden’s willingness to politicize what is supposed to be a neutral legal process, "I am unaware of any president preemptively signaling he may oppose an acquisition that is undergoing national security review, much less an acquisition by a company from a treaty partner that we are obligated to defend with U.S. troops."
Biden, likely motivated by his waning electoral prospects in key battleground states like Pennsylvania (where U.S. Steel is headquartered), has caved to opponents of the acquisition, both on the left and right, who have suggested that CFIUS should advise the White House to block the deal on national security grounds.
Their argument, in other words, is that allowing foreign control over key U.S. commodity production would weaken the nation’s ability to defend itself in a crisis.
It's worth remembering: CFIUS serves a crucial purpose, but its legal powers are narrow and well-defined. These powers should not be stretched to elevate politics over the legality of the acquisition — and most importantly, CFIUS should not step beyond its legal limits.
The 2018 Foreign Investment Risk Review Modernization Act (FIRRMA) marked the last major expansion of CFIUS legal authority.
The law expanded CFIUS power to scrutinize foreign investments targeting the transfer of technologies relevant to national security from U.S. to foreign companies.
When the bill was being debated, many legislators attempted to broaden CFIUS power even further, along the lines and logic of President Biden’s recent politicization of the Nippon acquisition.
These lawmakers pushed for a much broader expansion of CFIUS power, including the consideration of economic competitiveness factors in assessing foreign investment deals.
In the end, Congress passed only the narrower, tech transfer-focused expansion. Under those rules, CFIUS must prove that an acquisition threatens the nation’s "critical infrastructure" in a way that could seriously destabilize America’s national security.
That description does not credibly describe Nippon’s proposed acquisition — so, from a legal point of view, CFIUS should greenlight the deal.
But, hypothetically, even if one took a more expansive interpretation of CFIUS powers into consideration, permitting the acquisition will likely strengthen — not undermine — U.S. national security.
U.S. Steel and Nippon together would rise to become the globe’s second-largest steel producer, allowing the U.S. and Japan to compete with the world leader: China’s Baowu Group.
Cooperation with allies, especially in sectors where the U.S. has largely lost its comparative advantage, shouldn’t be understood as anything other than a positive development.
George Landrith has served as president of Frontiers of Freedom, since 1998. He is a graduate of the University of Virginia School of Law, where he was Business Editor of the Virginia Journal of Law and Politics.To learn more about Frontiers of Freedom, visit www.ff.org. Read George Landrith's Reports — More Here.