A powerful U.S. national security committee was unable to reach a conclusive decision about whether Japan’s Nippon Steel should be allowed to buy U.S. Steel, according to letters the federal committee sent to the companies and the White House on Monday.
The move by the Committee on Foreign Investment in the United States to forgo a formal recommendation paves the way for President Biden to terminate a $14 billion transaction that became ensnared in election year politics.
Mr. Biden previously said that U.S. Steel must remain American owned and operated. He is expected to block the deal before leaving office. Still, rebuffing the transaction would be a departure from America’s long-established culture of open investment, one that could have long-term implications for the U.S. economy.
The interagency committee, known as CFIUS, expressed reservations about the deal to the companies in a letter earlier this month. The committee voiced concerns that the transaction could pose a national security threat to the United States by potentially leading to a decline in American steel production because of the other global business considerations that Nippon must weigh.
The Office of the United States Trade Representative has been staunchly opposed to the deal throughout the process, according to people familiar with the developments. Other officials, such as the chair of CFIUS, Treasury Secretary Janet. L. Yellen, have highlighted the importance of the United States attracting foreign investment.
Ms. Yellen, at an event in Texas earlier this year, declined to discuss U.S. Steel specifically but emphasized the importance of maintaining a climate that welcomes investment.
“Foreign direct investment in the United States is really important and by and large has been a huge positive for us,” Ms. Yellen said. “And it is a priority to maintain an open and healthy environment for foreign countries to invest in the United States, just as we’re investing in many countries around the world.”
Proponents of the deal have argued that the process has been a victim of election year politics and that a company from a close U.S. ally such as Japan could not pose a threat to American security.
Nippon has indicated that it would take legal action if the deal was blocked.
In a letter sent to CFIUS last week, lawyers for Nippon and U.S. Steel accused the White House of “impermissible influence” in the process. They said that the committee’s concerns were “littered with factual inaccuracies and omissions, misleading and incomplete statements, conjecture and hypotheticals that have no basis in fact and are plainly illogical.”
In recent weeks Nippon has made a final push to win support for the deal, lobbying local officials and U.S. Steel employees. However, the powerful United Steelworkers union has continued to push back vociferously against the transaction.
“Our concerns today are the same as they were on Day 1,” the union said in a statement last week. “Job security, benefit security, supply chain integrity and America’s national defense.”
Although Mr. Biden still needs to make his own final determination, the fate of the deal appeared to be sealed earlier this month when President-elect Donald J. Trump reiterated his opposition to a foreign company buying U.S. Steel.
“I am totally against the once great and powerful U.S. Steel being bought by a foreign company, in this case Nippon Steel of Japan,” Mr. Trump wrote in a post on Truth Social. “As President, I will block this deal from happening. Buyer Beware!!!”
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