By Doug Palmer
June 20 A bipartisan group of 15 U.S. senators
urged the Obama administration on Thursday to consider whether
the proposed sale of Smithfield Foods Inc to the Chinese
meat company Shuanghui International posed a threat to the U.S.
food supply that could justify blocking the deal.
"We believe that our food supply is critical infrastructure
that should be included in any reasonable person's definition of
national security," the senators said in a letter to Treasury
Secretary Jack Lew, whose department chairs the interagency
panel that reviews foreign investment for national security
Smithfield, based in Smithfield, Virginia, is the world's
largest producer and processor of pork. Shuanghui is planning to
acquire it for $4.7 billion in what would be the biggest
takeover of a U.S. company by a Chinese firm.
"We strongly encourage you to include the Department of
Agriculture and the Food and Drug Administration in any CFIUS
(Committee on Foreign Investment in the United States) review of
this transaction," the senators said.
The group included 15 of the 20 members of the Senate
Agriculture Committee, including the Democratic chairman, Debbie
Stabenow of Michigan, and the panel's top Republican, Thad
Cochran of Mississippi.
They said the Agriculture Committee had not taken a formal
position on the proposed sale but planned to "further examine
how this transaction is reviewed and how these transactions will
be reviewed in the future," given the potential for other
foreign purchases of U.S. food assets.
Senate Minority Leader Mitch McConnell, a Kentucky
Republican, and Senate Finance Committee Chairman Max Baucus, a
Montana Democrat, were among the five Agriculture Committee
members who did not sign the letter.
The CFIUS review process does not typically include either
the USDA or FDA, although the statute allows the president to
bring in additional agencies on a case-by-case basis.
In addition to Treasury, other CFIUS members include the
Departments of Justice, Homeland, Security, Commerce, Defense,
State and Energy as well as the offices of the U.S. Trade
Representative and Science and Technology Policy.
The senators urged Lew to make the USDA one of the lead
agencies in the Smithfield review and to consider "the broader
issues of food security, food safety and biosecurity" posed by
the proposed takeover.
They also suggested the U.S. government should require
certain safeguards, if the deal was approved, to ensure
Shuanghui complied with U.S. food safety and biosecurity
"We welcome a full review and fair consideration of the
Shuanghui-Smithfield combination from the U.S. government," a
Smithfield spokeswoman said, noting the company would continue
to collaborate with Congress and CFIUS.
"We believe the proposed combination does not present any
national security concerns, is good for U.S. farmers and
agriculture, and will advance U.S.-China relations," the
RISING 'TO OUR STANDARDS'
U.S. Treasury Department spokeswoman Holly Shulman declined
to comment on the senators' letter, citing confidentiality
requirements of CFIUS reviews.
"By law, information filed with CFIUS may not be disclosed
by CFIUS to the public. Accordingly, the Department does not
comment on information relating to specific CFIUS cases,
including whether or not certain parties have filed notices for
review," Shulman said.
Nancy McLernon, president of the Organization for
International Investment, which represents foreign companies
that invest in the United States, said she believed the
Smithfield purchase would be approved and there was already no
question that Shuanghui would have to abide by U.S. law.
"When foreign companies invest here, it's not a race to the
bottom. It's about having them rise to our standards, because we
have laws and regulations that they have to abide by. That's the
price of entry into our market," McLernon said.
Treasury should respond quickly to the senators' letter so
"the concerns don't spiral out any further," McLernon added.
CFIUS could sign off on the deal by mid-July if the
companies satisfactorily answer all its questions in an initial
30-day review. But some analysts expect the investigation will
go into a second phase, which could take up to 45 additional