Robert Siegel talks with James Andrew Lewis, director of the CSIS Technology and Public Policy Program, about the panel reviewing the bid by a Chinese company to buy Unocal. Lewis says the Committee on Foreign Investment in the United States rarely rules against a company. The last time was during President George H.W. Bush's administration.
ROBERT SIEGEL, host: The China National Offshore Oil Corporation, C-N-O-O-C or CNOOC      (pronounced see-nook), is trying to buy the US oil company Unocal.  So is      Chevron.  CNOOC is willing to pay more, but the Chinese company faces a      hurdle that Chevron does not.  For the deal to go through it would have      to clear the Committee on Foreign Investment in the United States.  The      C-F-I-U-S or CFIUS (pronounced sif-ee-us) is a little-known body that has      representatives of 12 federal agencies.  James Andrew Lewis, who directs      the Technology and Public Policy Program at the Washington think tank      CSIS, is the rare scholar who has actually studied and written about      CFIUS, and he joins us from Cambridge, Massachusetts.</s>ROBERT SIEGEL, host: Tell us, who actually is on this committee?</s>Mr. JAMES ANDREW LEWIS (Director, Technology and Public Policy Program,      CSIS): You have Defense, Justice, Treasury, Commerce, the Department of      Homeland Security has just been added, the Department of State.  So the      Cabinet-level agencies with an interest in either international economics      or with law enforcement or with national security.</s>ROBERT SIEGEL, host: And how often does it actually review foreign investments, and      what are the criteria that it applies?</s>Mr. JAMES ANDREW LEWIS (Director, Technology and Public Policy Program,      CSIS): It is always on demand.  When a company comes in      and--notification of a purchase or a planned purchase is voluntary, so      when a company thinks that it needs to go to CFIUS, they then go to the      committee and say, `Here's what we're planning on doing.  Do you think it      warrants your opening an investigation?'  In most cases CFIUS says, `No,      this isn't--this falls below the level of interest for us.'  The things      they are looking at affect national security and law enforcement and now      critical infrastructure protection. They're looking for illicit      technology transfer.  They're looking for foreign involvement in the      communications systems and they're looking for foreign ownership of      infrastructures that are vital to the US interest.</s>ROBERT SIEGEL, host: But ownership of an American oil company, is there a track      record there?  Can we tell if that's something that historically has been      an interest of CFIUS?</s>Mr. JAMES ANDREW LEWIS (Director, Technology and Public Policy Program,      CSIS): Historically, it has not been an interest.  The bulk of the      cases reviewed involve companies that make defense or military technology      or are in telecommunications or which involve very high-tech items, you      know, like lithography for semiconductors.  So this is a little out of      the beaten path for them.</s>ROBERT SIEGEL, host: When was the last time that a deal actually was in some way      thwarted by this committee, by CFIUS?</s>Mr. JAMES ANDREW LEWIS (Director, Technology and Public Policy Program,      CSIS): CFIUS can thwart a purchase in two ways.  The last time one      went through the entire process and rejected was in the George H.W. Bush      administration when a Chinese company was forced to give back an      aerospace company it bought.  That was more than 15 years ago.  The      thwarting, though, is more frequent.  The recent case of Global Crossing,      which is now about a year and a half old, CFIUS reviewed and raised      concerns and, you know, the Hong Kong purchaser in that case--or the      potential Hong Kong purchaser eventually withdrew their offer because it      was clear they were facing such obstacles.  CFIUS usually doesn't deny a      case.  They usually end up discouraging the foreign purchaser.</s>ROBERT SIEGEL, host: A resolution passed the House of Representatives by a vote of      398-to-15 saying that for this Chinese company to buy Unocal would      threaten to impair the national security of the United States.  Is the      Committee on Foreign Investment in the United States by charter      responsible to do what the Congress says?  Should--would it naturally      take into account that sentiment of the House?</s>Mr. JAMES ANDREW LEWIS (Director, Technology and Public Policy Program,      CSIS): It will take it into account and I think that's part of the      reason that this case is getting some extra scrutiny is they don't want      to seem cavalier.  They don't want to seem that they just approved it or,      you know, dismissed it out of hand.  But at the end of the day, this      process is somewhat removed from politics.  So it's nice that the House      did this vote, but CFIUS has been a fairly honest broker in the past and      I expect they'll continue to be one for this case.</s>ROBERT SIEGEL, host: It seems like all of this would go along a lot more easily if      gasoline were selling for $1.70 a gallon at the pump right now.</s>Mr. JAMES ANDREW LEWIS (Director, Technology and Public Policy Program,      CSIS): That would probably help.  The obvious thing, though, is that      there are, you know, increasing concerns about China.  Some of them are      legitimate.  You know, the Chinese do have a military buildup.  Some of      them strike me as silly, kind of like what we went through with Japan in      the 1980s, you know, concern about this new growing economic power and      how it will affect the US.  You know, it's just that China in itself is      just such a hot spot that that would probably--even if gasoline was at      $1.70--keep this in the cards.</s>ROBERT SIEGEL, host: James Andrew Lewis of the CSIS Technology and Public Policy      Program, thanks a lot for talking with us.</s>Mr. JAMES ANDREW LEWIS (Director, Technology and Public Policy Program,      CSIS): Thanks very much.