The Washington Post

House and Senate Respond to Dubai Ports Deal
July 27, 2006

By Chris Kirkham
Washington Post Staff Writer

The House and Senate passed competing bills yesterday that would revamp the government panel that scrutinizes foreign purchases of U.S. companies, such as the Dubai Ports World deal that erupted into a national-security debate earlier this year.

Both proposals say that any transaction involving the takeover of U.S. commercial interests by any entity controlled by a foreign government would require an additional 45-day national security investigation on top of the 30-day review period already mandated by the panel.

The Committee on Foreign Investment in the United States, an arm of the Treasury Department, was criticized this year after it approved the sale of a London company that operated six East Coast port terminals to Dubai Ports World, owned by the government of that Arab country.

The deal, which had received routine Treasury approval, later died under criticism from the public and both major U.S. political parties. Congress took up measures to ensure that national security was considered more carefully in future deals.

Both bills would make the Treasury secretary chairman of the committee, as he is now, but would restructure the panel to strengthen the role of departments such as Homeland Security, Commerce and Defense.

The Senate bill, sponsored by Banking Committee Chairman Richard C. Shelby (R-Ala.), goes beyond the House measure. It contains provisions that apply to takeovers by any foreign company, not just those owned by a foreign government.

The Senate measure would require that House and Senate leaders be briefed on any potential foreign takeover within 10 days of the company applying for the purchase. The Senate version would also give the Treasury committee the power to require an additional 30 days, on top of the two other review periods, if it perceived a national-security risk.

The stronger language in the Senate bill alarmed some business groups, who fear foreign companies would be discouraged from investing in the United States.

"The extra 30-day extension and the really broad congressional notification don't do anything for national security and would have a negative impact on foreign investors," said Todd Malan, president and chief executive of the Organization for International Investment, a group representing the U.S. subsidiaries of foreign companies.

The House bill would require congressional notification of the deals, but only after the committee's national-security investigation was complete.

"We simply must not drive off those who want to make [a] wise investment in our great economy," said Rep. Michael G. Oxley (R-Ohio), a co-sponsor of the House bill.

But Senate Majority Leader Bill Frist (R-Tenn.) defended the Senate bill, saying it "strikes a careful balance between continuing to welcome this investment and ensuring that Congress has an appropriate role in reviewing transactions that impact our nation's homeland security."

A spokesman for Shelby said it would be premature to talk about differences in the bills. House and Senate negotiators must resolve discrepancies before any measure can become law.