Chuck Schumer Gets Misty on PRC Canada

♠ Posted by Emmanuel in , at 7/27/2012 05:51:00 AM
With apologies to Johnny Mathis:'re as nasty as a kitten bred by...Dick Cheney

While that may be the intro to the theme song of Senator Charles Schumer (D-NY/China Suxland), rest assured that Democrats are far from alone in declaring open season on China and its assumed unfair trade practices.  See, for instance, the private equity maven-turned-protectionist Mitt Romney. Today, though, let us focus on the latest shenanigans of Senator Schumer. Back in 2005, he washed his hands clean of the attempted CNOOC purchase of the middling American oil firm Unocal:
There was nothing wrong with CNOOC taking over UNOCAL and for that reason I didn't oppose the merger. But the furor over China treating American companies and workers unfairly up and down the line is real. And while it led to an incorrect result in this case, it must be dealt with. For instance China likely wouldn't allow an American company to buy a similarly situated Chinese company. If China were open to American companies buying Chinese companies, I think CNOOC would have had a much easier time of it.
Seven years later, general perceptions of the United States not welcoming Chinese investment linger. More recently we had news of the Chinese state-owned firm CNOOC now setting its sights on the Canadian firm Nexen, which has a lot of opportunities with oil sands. But, since Nexen also has some interests in the Gulf of Mexico, ol' Chuck is once again bashing China through Treasury Secretary Tim Geithner who heads the Committee on Foreign Investment in the United States (CFIUS). CFIUS, remember, has the ability to scrutinize foreign investment Stateside. In other words, Schumer is proposing to hold up a Chinese deal for a Canadian concern because it has some US-based operations:
In a letter to be sent Friday, Mr. Schumer, a New York Democrat who serves on the Senate Finance Committee, will ask Mr. Geithner "to withhold approval of this transaction until China's government has made tangible, enforceable commitments to ensure U.S. companies reciprocal treatment," according to a copy reviewed by The Wall Street Journal. Citing Chinese promises to treat foreign investment more fairly, Mr. Schumer writes, "I believe approval of the Cnooc-Nexen transaction should be a test of these reciprocal commitments, and that concrete progress must be made by both sides simultaneously."
It is unclear whether the CFIUS will butt into other nations' proposed mergers, though Nexen does indeed have Gulf of Mexico holdings:
But if the deal is consummated, Cnooc would be the first Chinese company to control and operate offshore oil fields in the Gulf region, a strategically and environmentally-sensitive area that is the source of roughly one quarter of U.S. crude oil production...

Energy consulting firm Wood Mackenzie pegs the value of Nexen's Gulf of Mexico operations at about 10% of the total value of Cnooc's offer price—about $1.6 billion. Currently, most of its participation is that of a passive partner with international oil companies such as Royal Dutch Shell PLC, Chevron, Norway's Statoil ASA and BHP Billiton.
Sticking their noses in others' business is an American preoccupation from Afghanistan to Zimbabwe, so expect more histrionics from the likes of Schumer. And no, the US doesn't exactly do itself favours here improving its reputation for discriminating against Chinese investment. Free trade? Gimme a break.

UPDATE: Bloomberg now notes that CNOOC has hired lobbyists Stateside with further CFIUS entanglements in mind. The game is on.