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The US Treasury Department told Nippon Steel that the committee examining its proposed takeover of US Steel has not reached a consensus on how to mitigate security risks, raising the odds that President Joe Biden will block the $15 billion deal.
The Treasury Department, which chairs the Committee on Foreign Investment in the United States, wrote to Nippon Steel and US Steel on Saturday to explain that the nine agencies on the Cfius committee were struggling to reach an agreement before the Dec. 23 deadline to send a recommendation to Biden. According to several sources familiar with the talks.
the Financial Times It was reported earlier this week that at least three agencies affiliated with CFIUS – the Treasury Department, the Pentagon and the State Department – had concluded that the acquisition of the iconic US steelmaker poses no security risks. The main opposition within Cfius to this deal is led by Katherine Tai, the US Trade Representative.
Biden and President-elect Donald Trump have expressed their opposition to the agreement. Biden announced his public opposition to the deal earlier this year, which critics said amounted to a politicization of the CFIUS process.
Cfius has drafted a mitigation agreement outlining how Nippon Steel can mitigate concerns raised by some government agencies. But the USTR has shown no sign of backing down in its opposition, the people said.
If Cfius reaches a unanimous agreement, Biden will have to find another justification to block the deal if he wants to block it. However, if the committee remains divided, Biden will have to make the decision.
One person very close to the process said Biden was determined to derail the deal. Some government agencies seeking approval for the deal have also increasingly resigned themselves to losing the Cfius battle, he said.
In response to a question about whether Biden would block the agreement, he said: “Not if it is possible, but when.”
This situation has strained US relations with Japan, its most important ally in Asia. Japanese officials point out that Washington wants Tokyo to work together to confront China, but says Japan poses a security risk.
Several senior US officials told the Financial Times that Biden's opposition is political. Biden, then Kamala Harris, and Trump used their opposition to try to win union votes in Pennsylvania, where US Steel is headquartered.
Japanese Prime Minister Shigeru Ishiba asked Biden to support the deal when they met at the G20 summit in Lima, Peru, according to a person familiar with the conversation.
Takahiro Mori, Nippon's vice president and chief negotiator, visited Washington this week to press for a deal. Four people familiar with his visit said that Mori held phone calls with Treasury Secretary Janet Yellen and Commerce Secretary Gina Raimondo on Friday to discuss the situation.
The Treasury and Trade Department declined to comment. Nippon Steel also declined to comment.
Deputy Cabinet ministers from CFIUS agencies met last week to try to reach consensus but were unsuccessful. Several people said they would hold another meeting this week in a final attempt to reach an agreement, but said there was no indication Tai would change her mind. The US Trade Representative did not respond to a request for comment.
It remains unclear whether Raimondo supports the mitigation agreement. Several people said the trade appears neutral. The Ministry of Commerce declined to comment.
“The Nippon case exposes a flaw in the OFI process, where a member like the US Trade Representative, who has no national security pedigree and presents no specific risk arising from this deal, is capable of making a major geostrategic blunder,” one former said. Biden administration official Cfius.
“Tai is playing a game that would expose the CFIUS process to become a permanent tool for politicians, unreasonably expand the scope of what is considered national security, and would force the United States to declare in writing that Japan poses a national security threat, which is simply not true,” the former official added. It harms American security.
