FLURRY OF PROTECTIONIST BILLS FOLLOWS PORTS FLAP

by Emad Mekay

(IPS) WASHINGTON -- Congressional leaders are pressing ahead with legislation that would give the secretary of defense and U.S. intelligence agencies the right to oversee acquisitions of certain U.S. assets, and the Congress access to confidential business information surrounding such deals.

The move is one of several protectionist policies, a hard sell for the past few years during one of the highest tides of corporate globalization, suddenly taking hold in Congress.

But some prominent U.S. business lobbies are resisting the changes and warn that they could be counter-productive.

Sen. Susan Collins, a Republican from Maine who chairs the Homeland Security Committee, introduced a bill Monday to overhaul the national security review process for foreign investments in the United States following the controversy over a bid by a Dubai company to operate port facilities in six U.S. cities.

The bill would place the Committee on Foreign Investment in the United States (CFIUS), which represents 12 U.S. departments and agencies and is now chaired by the secretary of the treasury, under the direct management of the Department of Homeland Security.

It calls for the secretaries of defense and the treasury to serve as vice chairs, while the director of national intelligence would be designated as a standing member, in order to ensure that important intelligence information is part of the deliberative process.

Collins' bill, which is backed by several other influential senators, including Joseph I. Lieberman of Connecticut, requires that members of Congress be briefed in a timely manner about prospective acquisitions in the United States.

"The Committee on Foreign Investment in the United States focuses too much on the financial component and not enough on security," Collins said.

A number of other lawmakers have introduced similar bills. Sens. Robert Menendez and Hillary Clinton, both Democrats, have sponsored legislation to block the sale of U.S. port operations to foreign governments, while Rep. Duncan Hunter of California, best known for his "Buy American" crusade, says he would use opposition to the ports deal to further protect U.S. jobs and businesses at home.

Similarly, Rep. Benjamin L. Cardin, the lead Democrat on the House Trade Subcommittee, and the chairman of the subcommittee, Rep. Clay Shaw, introduced legislation to prohibit foreign-owned operations at U.S. seaports.

And Sen. Norm Coleman, a Republican from Minnesota, has introduced his own bill that would also bar foreign government-controlled companies from managing a national security-related "facility or investment."

The bill, however, would permit foreign governments to own and invest in such facilities provided that the foreign government establishes a U.S.-based corporate entity.

All these initiatives are being pushed despite the fact that the Dubai deal collapsed last week when the company said it would divest its U.S. ports holdings. And as lawmakers continue to revisit the issue, they are likely to hammer away at legislation targeting foreign investment in the United States.

Sen. Chuck Schumer, a lead critic of the ports deal, said he would continue to ask for specific information from the company as to its withdrawal timetable.

"We will do whatever it takes to make sure DP World and American ports are totally separate," he said.

Dubai Ports World, which is owned and operated by the United Arab Emirates, backed out of the 6.8-billion-dollar deal, which had been approved by CFIUS last month, after Congress' House appropriations committee voted 62-2 to bar DP World from holding leases or contracts at U.S. shipping facilities.

In a statement Wednesday, DP World said it expects to sell the U.S. ports assets within four to six months to a U.S. buyer.

The Democrats in particular are hoping to capitalize on the unpopularity of the deal, and appear intent on making protectionist measures and national security a centerpiece of the campaigning for midterm elections later this year in the United States.

"This debate is not over," said Democratic National Committee Spokesman Luis Miranda in a recent statement. "Democrats have led the fight to close the gaps in our nation's security, and have stood firm in insisting that America's security is America's business. Republicans owe the American people answers as to where they really stand, and should join Democrats in working to do what they were elected for: keeping America safe."

The only opposition to this re-energized protectionist sentiment in Congress so far has come from U.S. business groups that fear a backlash against their expansive presence and free trade agenda across the globe.

On Tuesday, eight groups representing the U.S. business community cautioned against some of the changes, including a proposed requirement of disclosing confidential information on prospective investments to Congress.

"Congress must proceed with care as foreign investment is a critical component of the U.S. economy and vital to future U.S. economic growth," said John J. Castellani, president of the Business Roundtable.

"The danger in counterproductive legislation is real," he said. "Congress must step back and make certain any changes to the current system are more than political window dressing."

The Bush administration has generally sided with the business groups, warning against the protectionist backlash but approving an overhaul of the review process for foreign investments.

"It is vital that we avoid taking steps in the name of national security that instead are isolationist, having the effect of choking off vital investments in America," U.S. Treasury Secretary John W. Snow said Tuesday.