Protectionism isn’t the way to grow an economy. However, when considering how to maintain America’s competitive edge technologically, economically and militarily, we need to take a common sense approach to setting barriers.
Over the next week, the Committee on Foreign Investment in the United States or CFIUS will make a determination on the proposed sale of A123 Systems to Chinese conglomerate Wanxiang Group.
Never heard of CFIUS?
You’re not alone.
The committee operates largely out of sight but has enormous power to permit the transfer of American assets to foreign concerns.
Why should you care about A123? Because the American taxpayer just spent $250 million as part of President Obama’s largely failed ‘green energy’ program to fund the now bankrupt company’s development on the next generation of lithium ion battery technology. Despite A123’s financial troubles, the company has apparently succeeded where others had failed in developing key components of the new battery system.
Foreign entities acquire U.S. companies and buy U.S. real estate all the time. It’s part of free trade and a global economy.
But this isn’t real estate or some consumer product company. It’s a company the American taxpayer invested in to the tune of $250 million to create a technology that, if brought to market, could end up in our cars, power grid, computers, phones, telecommunications systems and perhaps most importantly military infrastructure.
Should CFIUS and the White House permit the sale, it would be yet another example of Obama advancing his dangerous world view. In the president’s collectivist mindset, American exceptionalism is anathema. It’s jingoistic. Like his push to level the playing field domestically, Obama believes that the same should exist on an international basis.
Americans need to pay closer attention to this and other similar transactions and how the White House handles them.
We need to connect the dots. The second term of Obama's presidency is about to begin and the now bolder commander in chief, unfettered by reelection, is already demonstrating his contentment to watch American power and influence fade.
The president's choice for Secretary of State, John Kerry, peddles ‘soft diplomacy.’ Defense Department nominee Chuck Hagel at the Pentagon would favor massive defense cuts and unilateral, unconditional negotiations with our enemies. John Brennan at CIA, if confirmed, would mean fewer field operatives and more desk jockeys at Langley. Rumor has it Obama may also nominate vocal anti-proliferation advocate Ashton Carter to head the Department of Energy.
It’s a White House-led team that will make us weaker and less competitive on a range of levels. The sale of companies like A123 to China would compound the already pressing problem of outside forces controlling our supply chains, obtaining or pirating our intellectual property and impacting our national security.
This is free market espionaqe and if we allow it to happen we will only have ourselves to blame for the consequences. A123’s technology could set the standard for new battery systems for the next decade. The technology may be a critical component to a renewable energy strategy, efficiency programs and new military components.
The bankruptcy judge gave clearance for Wanxiang’s bid to proceed noting that the government contracts would be handled by a small U.S. firm. That firm Navitas, a company with a very limited track record, reorganized late last year coincidentally just before the bankruptcy judge’s ruling permitting the sale to Wanxiang. As part of the scheme, the smaller, U.S.-based company would separate any government contract work or classified material from Wanxiang.
Anyone who has worked at a national security agency like the Department of Defense will tell you that concocting an operational separation between government contractors handling potentially classified technology and the owners of a company is nonsense. What is fittingly called a “Chinese wall” between the business units is an ineffective barrier to the parent company’s obtaining the intellectual property, or having access to potentially classified material.
Either way, should the A123 sale be approved, a foreign concern that is a direct competitor militarily with the United States will have access to technology so vital to our national security, that less than three years ago the White House approved spending a quarter billion dollars to support their research and development efforts.
Oh, and did I mention, we’re talking about China here, folks. No matter what their propaganda says, all companies in that troubled country have some link to the government. The chairman of Wanxiang has significant ties to the Chinese Communist Party and has served as a deputy to the last three sessions of National People’s Congress. What is unknown is if the company has direct ties to the Chinese intelligence community. I wouldn’t doubt it.
These sales need tougher scrutiny or we could wake up one morning and find the Chinese are in every layer of the supply chain for the development, marketing or deployment of new commercial and military technologies.
New York Senator Chuck Schumer and other lawmakers went wild over the Dubai ports deal back in 2006. Where is the outrage from folks today about this proposed deal and the larger strategy that exists on the part of China or other non-aligned nations to acquire the components of sensitive American technologies?
CIFUS needs to be rewritten to adopt a new battle plan that will protect intellectual property that may be critical to our national security. More oversight and reporting is needed particularly if taxpayer dollars are involved in any way.
Congresswoman Marsha Blackburn (R-Tenn.) is introducing a bill called the "SMART SALE Act" will require companies that receive federal funding from the Department of Energy for technology research and development to report if they are being acquired by a non-allied foreign nation, and require the Secretary of Energy to report to Congress about whether the acquisition represents a threat to the United States. The legislation would also require companies so acquired to repay the government for grants or loans issued to the company by the Department of Energy.
It’s a step in the right direction.
Throwing up barriers to free trade is not a winning strategy in a global economy. But we also must acknowledge that as a nation, we can’t be friends with everyone. We can’t be trusting of everyone. Perhaps not in Obama’s world, but in the real world, there are still lines in the sand.
The free market itself can be used as a weapon against us. We need logical protections against this kind of abuse of the taxpayer and this type of potential threat to our technological superiority.
Thomas J. Basile is a Republican commentator and former Executive Director of the New York State Republican Party. Follow him on Twitter @TJBasile and at www.TJBasile.com.