February 23, 2006
Dubai Ports Acquisition is not like the CNOOC Acquisition
The argument against the CNOOC acquisition of Unocal is getting lumped in with arguments against the Dubai Ports World acquisition of Peninsular & Oriental Steam. They are different cases. The argument against the CNOOC acquisition was based on the lack of reciprocity -- we cannot buy Chinese companies. Reciprocity is at the heart of bargaining over international trade and investment rights; it is the tit-for-tat bargaining game. The argument against the Dubai acquisition is old fashioned protectionism in the guise of national security. National security is a legitimate concern and we should be able to block acquisitions in the name of national security but national security can also be a false front for raw protectionist sentiments. At issue here is, first,whether the national security concerns are legitimate and ,second, the government's mechanism for deciding such cases. The latter issue involves the standards of the Exon-Florio amendment and the CFUIS procedures implementing those procedures. Also in issue is whether Congress wants to play a role in making the decisions.
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