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US President Biden on Wednesday formally blocked a planned takeover of US Steel by Japanese iron and Steel Corp, saying the deal posed a national security risk. The decision caused a public uproar in Japan, many media repeatedly stressed that Japan’s\u201cAmerican ally\u201d status, and said this is the first time the U. S. President ordered to block the acquisition of Japanese companies. The Asahi Shimbun said the incident showed the \u201cPolitical risks\u201d of doing business in the US. Takefuji, the trade minister, called the US ban \u201cIncomprehensible and regrettable\u201d. Japanese media revealed that the Japanese railway has decided to take legal action against the US government. According to the Japanese Jiji Press, the Japanese government is prepared to support JR’s prosecution of the US government and convey its position to the visiting US Secretary of State, Blinken. US media quoted analysts as saying Biden’s decision sent a \u201cVery bad signal\u201d to the Japanese and would raise eyebrows among European countries, which are also allies. Bloomberg said some analysts believe the incident reflects a serious departure from the principles of globalization in the United States.<\/p>\n
Japanese official: it’s really difficult<\/p>\n
A strong steel industry owned and operated by local companies is a \u201cKey national security priority,\u201d Biden said in a statement on Wednesday, the acquisition\u201cPuts one of the largest U. S. Steel producers under foreign control, posing risks to U. S. national security and critical supply chains.\u201d. The US United Steelworkers Agency (USW) was quick to welcome the move, thanking Biden for his \u201cBold action\u201d, AFP reported Thursday. Nikkei Asia said the USW had previously deemed the Japanese company unreliable and said it might shift steel production to other countries.<\/p>\n
JCRC and USC expressed disappointment, saying the move\u201cClearly violates due process and relevant laws\u201d. They said in a joint statement that\u201cThe statements and orders of the president of the United States do not provide any reliable evidence on national security issues\u201d and that it was therefore a\u201cPolitical decision.\u201d. The companies said they had had\u201cTransparent contact\u201d with the Committee on foreign investment in the US, which vets the deal, but that the process had been\u201cHeavily corrupted by politics\u201d, the findings were\u201cPredetermined\u201d. The announcement sent a\u201cChilling signal to any U.S. ally considering a major investment in the United States,\u201d the statement said.<\/p>\n
In December, the Japanese 2023 announced plans for a $14.9 bn takeover of misteel, which was approved in April the following year. Since then, however, CFIUS has been reviewing the deal for months on national security grounds. On December 23, CFIUS submitted its final assessment to the White House, which could not agree on whether the acquisition posed a national security risk. So the final decision rests with Biden. CFIUS said allowing JR to acquire US steel companies could reduce domestic steel capacity and pose a potential threat to us national security.<\/p>\n
Takefuji yung-chih, the Japanese trade minister, said on the same day that the NHK had been blocked by the US, \u201cThe Japanese and n economic circles, especially the Japanese industrial circles,\u201d expressed\u201cStrong concern\u201d about the future investment cooperation between the two countries, \u201cWhich the Japanese government has to attach great importance to. Prime Minister Shigeru Ishiguro requested Biden’s approval of the Asahi Shimbun in a letter in November, but the move had no practical effect, it said. \u201cThere was no problem with the acquisition,\u201d said a Japanese government official. \u201cWe can only say that Biden did not approve the acquisition because of United Steelworkers sentiment.\u201d.<\/p>\n
There has been some frustration within the Japanese government over the Jiji Press of planned corporate takeovers between allies, the Japanese government reported yesterday. \u201cThe US encourages [ foreign ] investment, but when you do invest you get blocked,\u201d said a foreign ministry official. \u201cIt’s very difficult.\u201d<\/p>\n
US media: Biden ignored the advice of some aides<\/p>\n
The decision by Biden, less than three weeks before he steps down as president, comes after a long debate in the US over the deal, AFP said, it involves\u201cConflicting domestic political, economic and trade needs\u201d. Biden’s decision means he ignored the advice of some senior aides, the Washington Post said Friday. At a meeting chaired by Zincz, the White House Office Director, on Thursday, people familiar with the matter said Harry Stack Sullivan, the President’s National Security Adviser, and others thought the deal could be \u201cConditionally\u201d blocked, asking JCRC to come up with more ways to minimise potential national security risks could also push the issue to the next administration.<\/p>\n
It is reported that in the past few months, finner, the President’s Deputy National Security Adviser; Blinken, the Secretary of State; Campbell, the Deputy Secretary of State; Immanuel, the US Ambassador to Japan; Yellen, the Treasury Secretary; and Leonard Bernstein, the chairman of the White House Council of Economic Advisers, were among those who opposed or had reservations about blocking Nippon Steel entirely. Several aides stressed that Japan was America’s most important ally in East Asia and that cancelling the deal could strain relations. But for some members of Biden’s economic team and other political advisers, blocking the deal gives the white house a \u201cRare opportunity\u201d to protect American jobs and \u201cPolish Biden’s legacy\u201d. The report said Biden was backed by officials including Dai Qi, the US Trade Representative, and three of his \u201cMost loyal and longest-serving\u201d advisers.<\/p>\n
\u201cNikkei Asia\u201d 4 comments that the turmoil shows that despite the decline of the U. S. steel industry, but it still has political influence. The total number of steel workers in the United States is already smaller than that of manicurists, according to labor data, but the political clout of the steel industry remains high because of the hollowing out of other industries. \u201cIt’s not a coincidence\u201d that Pennsylvania, home to U. S. Steel Company headquarters and major plants, is a key swing state in the U. S. election.<\/p>\n
Japanese media: the Japanese railway faces three scenarios<\/p>\n
\u201cNikkei Asia\u201d 5, said the acquisition of U. S. Steel setback, the Japanese iron will face three situations, the first is to take legal action. The company can not prosecute Biden’s decision, but it can reportedly point to the CFIUS review process. According to the Asahi Shimbun, JCR has decided to sue the US government.<\/p>\n
The second scenario analysed by Nikkei Asia is that JCRC could scale back the deal to buy only a portion of misteel, but that option would still be scrutinised by CFIUS. The situation also presents other hurdles, such as the possibility that the two companies will share technology to a lesser extent as investment levels decline, sources said. The third scenario cited by the media is a \u201cMiraculous\u201d revival of the deal with Donald Trump. But that seems unlikely, given that Donald Trump opposed Nippon Steel’s acquisition throughout the presidential campaign.<\/p>\n
Japan’s Kyodo News Agency, said Biden’s ban makes the Japanese rail adjustment of global strategy has become a top priority. The plan, which was intended to be a gamble on the company’s future to become\u201cThe world’s largest steel producer by combined strength,\u201d has hit a snag, with strengthening the U.S. market at the heart of the company’s potential business, so the blow was\u201cParticularly huge\u201d.<\/p>\n
Meanwhile, the BBC said on the 4th that there are serious questions about the future path of US Steel. The 124-year-old name, once a symbol of America’s industrial might, is now in decline. Deutsche Welle says it may not be able to find a buyer for the entire company now. According to Politico, William Chow, an expert on us-japan relations at the Conservative think-tank Hudson Institute, Biden’s decision cut off much-needed capital and equipment inflows to the US steel industry, he\u201cHas been talking in the abstract about protecting the US steel industry\u201d, but has no thought about how investment in technology can make the industry more productive.<\/p>\n
The United States is in\u201cBig question mark.\u201d<\/p>\n
Biden’s decision caused an uproar in Japanese public opinion. \u201cJapan Economic News\u201d said Friday that he blocked\u201cAs an ally\u201d of the legal acquisition of Japanese Enterprises, which runs counter to its free and open economic philosophy. The Asahi Shimbun agreed that the ban exposed a tension between Biden and his own policies. The article said the rejection of the significant investment by the Japanese, one of the largest sources of investment and an ally, raised big questions about the consistency of Biden and his \u201cSignature policy\u201d. It set a\u201cClear precedent\u201d and showed the world the\u201cPolitical risks\u201d of US politicians meddling in corporate activities with arbitrary standards.<\/p>\n
An editorial in the Yomiuri Shimbun said it was\u201cExtremely rare\u201d for a US president to use his power to block a Japanese takeover and that the decision was\u201cUnacceptable\u201d and would affect japan-us relations. Such an unreasonable decision will have a negative impact on investment in the United States. \u201cFor the United States, what kind of allies exist?\u201d Japan’s\u201cSankei\u201d 5 editorial said that the U. S. decision raises such questions.<\/p>\n
According to Politico, foreign companies are being signalled to consider diplomatic and political issues as well as purely commercial strategies when deciding to invest in the US. \u201cEuropeans will have to look askance, too, and people will become more cautious [ about investing in the US ] ,\u201d said Reinsch, a former United States Department of Commerce official. Japan’s Kyodo news agency quoted analysts as saying the U. S. government ban on acquisitions\u201cWill send the wrong message to friendly and allied countries.\u201d.<\/p>\n
The slowdown in US Direct Investment Asahi Shimbun is likely to be the beginning of a \u201cCollectivization\u201d of the global economy, the Financial Times said Friday. In a Bloomberg article, Biden concluded that even a company from a close ally would not be enough to allay so-called \u201cNational security concerns\u201d, \u201cThis is the new political ecology of global trade and investment\u201d.<\/p>\n","protected":false},"excerpt":{"rendered":"
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