MICHEL MARTIN, HOST:
U.S. Steel and Nippon Steel are preparing to battle the U.S. government in court after President Biden blocked their proposed merger. Biden justified his action by arguing it poses a risk to national security because Nippon Steel is based overseas. The decision to block the nearly $15 billion merger was supposed to be guided by a little-known government group, the Committee on Foreign Investment in the United States - known by its acronym, CFIUS. But the committee, which includes representatives from multiple U.S. agencies, was actually split on whether the deal should be approved or denied. So that made us curious about this committee, so we've called Sarah Bauerle Danzman for this. She is a former State Department policy adviser and case analyst for the committee. And I do want to mention she was not involved in these discussions. Good morning.
SARAH BAUERLE DANZMAN: Good morning, Michel.
MARTIN: So tell me about this Committee on Foreign Investment in the United States. How was it created? What problem is it intended to solve?
DANZMAN: Yes, so CFIUS was created in 1975. And over the years, it has developed into a much stronger interagency committee that reviews national security concerns of foreign investment into the U.S. when a foreign company seeks to buy a U.S. business. And the purpose of CFIUS is to ensure that any decision to block a transaction for national security reasons is done so only because of a fact-based assessment of the risk, rather than for political reasons.
MARTIN: How unusual is it that the committee was split on its decision?
DANZMAN: Well, it's not unprecedented, but it is unusual. The committee really seeks to develop consensus among it and doesn't like to bring a split decision to the president. It wants to speak with a unified voice if possible.
MARTIN: So if the committee is supposed to advise the president, I do have to ask if the president - if President Biden overstepped by publicly stating his preference that the deal be blocked before the committee made its recommendation.
DANZMAN: Well, I'm sure that Nippon Steel and U.S. Steel are going to point to that in their proceedings. But, of course, I was not involved in the inner workings of this particular deal, and so I don't want to comment too strongly on that.
MARTIN: I wonder, though, if there is a precedent for a president having publicly expressed a preference. I mean, I am thinking about - there are other independent bodies like the Fed, for example, that make their own decisions apart from what a president may or may not - whatever a president's preferences may be. And presidents do occasionally - I mean, obviously, President Trump comes to mind. Former President Trump comes to mind. And future President Trump comes to mind, who often stated his views about what the Fed should do. And the Fed, obviously, as an independent body, would make its own decisions. But as an advisory body, I'm just trying to figure out if there's a precedent for this.
DANZMAN: Yes, so CFIUS likes to - you mentioned at the top that it's kind of a shadowy organization. And CFIUS...
MARTIN: Well, I didn't use the word shadowy.
DANZMAN: OK.
MARTIN: I mean, I would imagine that most Americans have never heard of - I certainly had not.
DANZMAN: Yes, it's frequently discussed as a shadowy or very kind of secretive organization. And it is that way because when CFIUS is doing reviews, it is trying to - you know, it has to get a lot of information from the parties involved, and so it doesn't want to be on front page news. It doesn't want to move markets as everyone is waiting on its decision. And so typically, the idea is to keep what's happening on CFIUS out of the news until the decision has been made. But in the end, it really is the president's decision about whether to block a transaction or not. CFIUS can only advise the president on this, but it's his decision to make. And so in that respect, it's a little bit different from the Fed and other more independent bodies.
MARTIN: Point taken, so thanks for that clarification. Before we let you go, do you have a thought about what this might mean for foreign investment in the U.S. going forward?
DANZMAN: Well, I think that going forward, other countries and other companies that are foreign are really going to question whether they will be able to invest in the U.S. and create jobs in the U.S. and strengthen those kinds of ties in the U.S.
MARTIN: That's Sarah Bauerle Danzman. She's a former case analyst for CFIUS. That's the Committee on Foreign Investment in the United States. She's now a professor at Indiana University and a senior fellow at the Atlantic Council. Thank you so much for joining us.
DANZMAN: Thank you very much. Transcript provided by NPR, Copyright NPR.
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.
