Ports and State-Owned Companies

Now here’s a question for you. Should the federal government allow U. S. port facilities to be taken over by companies owned by foreign governments? The Wall Street Journal reports:

A U.S. national-security review has raised concerns about Chinese state-run conglomerate Cosco Shipping Holdings Co. taking control of a large container terminal in Long Beach, Calif., according to people familiar with the matter.

The terminal is part of Cosco’s proposed $6.3 billion purchase of an Asian shipping rival, which holds a long-term concession to operate the facility at the Port of Long Beach, one of the biggest gateways for imports into the U.S.

Cosco’s takeover of Orient Overseas International Ltd. 0316 0.78% , announced in July 2017, is undergoing a review by the Committee on Foreign Investment in the U.S., a secretive federal panel that vets foreign purchases of American companies on national-security grounds.

Cosco executives met with CFIUS officials this week and proposed to divest or carve out the Long Beach terminal to satisfy U.S. concerns about the deal, the people said.

I know what my answer would be. I don’t think that companies owned by foreign governments should be allowed to do business in the United States full stop. And I realize how that would affect hundreds of banks and airlines.

The very notion raises a whole host of thorny issues of international law, regulation, and diplomacy. We shouldn’t allow it.

8 comments… add one
  • CuriousOnlooker Link

    If the proposed rule went to the limit; PBS could not air Masterpierce Threater since it could not work with the BBC, the Northeast could not buy its electricity from Hydro-Quebec. What about the German car makers – they are partially state owned.

    Why not specify what State Corporations can do on a bilateral basis in trade deals. Different countries raise different concerns.

  • walt moffett Link

    This is a question of national security and I would prefer the port be managed by either a US government chartered corp or American owned corp (in so far as possible). Wild cat strikes, mass equipment failures, might be less likely to occur when

    Buying goods and services from stated owned corps should be considered case by case. Won’t want Chinese made electronics aboard a ballistic missile sub, but buying most of our military’s small arms from friendly government owned corps (FN, IMI, etc) isn’t a problem other than the question of why can’t we design weapons that work.

  • I would distinguish between companies owned by foreign governments setting up shop here and their taking American partners to do business here. That should be something familiar to the Chinese—it’s what they require of U. S. companies doing business in China. To me reciprocity should be a guiding principle.

    The Beeb has a contract with WGBH. It doesn’t have broadcast rights in the U. S.

  • Gray Shambler Link

    The “peoples republic of China” is a lie. It’s a dictatorship with multiple layers of control over a vast slave population.
    They lie to us all the time, they lie to their people, they lie to themselves.
    It has to be morally wrong to buy “Made in China”, why would we want to sell them control over critical infrastructure? Are we THAT desperate for money?

  • bob sykes Link

    The Chinese specialize in port management operations, and they run numerous ports all over the world, including the Panama Canal. They also have a very large merchant marine and a large number of shipyards. They are pretty dominant in marine shipping operations.

    We have allowed our merchant marine and commercial shipyards to disappear. And we have few companies that can run port facilities. The longshoreman unions are still powerful. They shut down Portland (?) for months a while back.

    Today, we are in the same position v.v China and Japan was v.v. us in the 1940’s. We have powerful fleets and air forces (no so much land forces), but we lack the industrial capacity to replace combat losses. We can’t even maintain the forces we have. The same can be said about our servicemen. The current highly trained professional force would be replaced by half trained conscripts in any war with a near peer.

  • Guarneri Link

    Precedent suggests that only foreign governments investing in US uranium supply and logistics should be allowed. Provided, that is, that the proper tribute be paid to certain charities…….

  • steve Link

    44 banks that are owned, at least 25%, by foreign banks. Precedent was set many, many years ago. The FDIC insures their deposits too.

    http://www.cleveland.com/business/index.ssf/2015/11/sale_of_citizens_bank_leaves_4.html

    Steve

  • The FDIC insures their deposits too.

    Not all foreign banks are state-owned. I don’t object to foreign banks operating in the U. S. My objection is to foreign state-owned banks operating in the U. S. The Royal Bank of Scotland, cited in the article to which you linked, is not state-owned.

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