July 7, 2006

US bills to revamp foreign deal rules slow down

By Susan Cornwell

WASHINGTON (Reuters) - Legislation to tighten rules on
foreign investment in the United States has slowed in Congress,
facing questions from lawmakers and a White House that is cool
to the idea.

Another hearing was scheduled for next week on the House
version of the legislation, which will delay a bipartisan bill
that sponsors earlier this year had predicted would be on the
floor of that chamber in June.

A furor early this year over Dubai Ports World taking
control of the management of several U.S. port terminals threw
a spotlight on other proposed takeovers.

President George W. Bush did not mention the House and
Senate proposals when asked on Friday about the plan by
France's Alcatel to acquire Lucent Technologies Inc..

"We have laws that prevent sensitive technologies from
being transferred as a result of sale and/or merger," Bush told
a news conference.

"On the broader scale, I have no problem with foreign
capital buying U.S. companies; nor do I have a problem with
U.S. companies buying foreign companies. That's what free trade
is all about," he said.

Congressional proposals to reform the way the government
reviews foreign acquisitions of U.S. companies flew through two
committees in the House and Senate with unanimous votes this
spring after the firestorm over the Dubai deal. The company
eventually agreed to sell its newly acquired U.S. assets.

Lawmakers at that time complained that the Bush
administration had not carefully scrutinized the Dubai
contract, and expressed concerns that foreign operations of
U.S. ports would jeopardize national security.

The legislative proposals call for the U.S. government to
take more time to investigate business deals when a foreign
state-owned company is involved. The Senate bill is tougher and
could extend the reviews longer than the House version.

However, in the Senate, Sen. John Warner has blocked an
effort to fast-track that chamber's bill, said people close to
the discussions who asked not to be named. A spokesman for
Warner, a Virginia Republican, declined to comment.

Bush administration officials oppose automatic time
extensions of reviews, and business interests say they worry
too many complications could discourage foreign investment.

In the House, an Energy and Commerce subcommittee announced
it would hold a hearing next Tuesday on the House bill to
overhaul the Committee on Foreign Investments in the United
States (CFIUS), the inter-agency government group that reviews
foreign takeovers of U.S. assets.

The bill was already unanimously approved by the House
Financial Services Committee. But the Energy and Commerce
Committee also has jurisdiction and has decided to exercise it
by holding the hearing.