Skip to comments.Fact Sheet: The CFIUS Process And The DP World Transaction
Posted on 02/23/2006 1:50:22 PM PST by Cboldt
For Immediate Release
Office of the Press Secretary
February 22, 2006
Fact Sheet: The CFIUS Process And The DP World Transaction
"If there was any chance that this transaction would jeopardize the security of the United States, it would not go forward. The company has been cooperative with the United States government. The company will not manage port security. The security of our ports will continue to be managed by the Coast Guard and Customs. The company is from a country that has been cooperative in the war on terror, been an ally in the war on terror. The company operates ports in different countries around the world, ports from which cargo has been sent to the United States on a regular basis."
- President George W. Bush, February 21, 2006
President Bush Strongly Supports The Decision To Move Forward With The DP World Transaction
The Administration, As Required By Law, Has Reviewed The Transaction To Make Certain That It Does Not In Any Way Jeopardize National Security. Under the process conducted by the Committee on Foreign Investment in the United States (CFIUS), officials carefully reviewed the national security issues raised by the transaction and its effect on our national security. Twelve Federal agencies and the government's counterterrorism experts closely and carefully reviewed the transaction to make certain it posed no threat to national security.
DP World Has Provided Strong Security Assurances To The United States. DP World has signed a letter of assurances making commitments to meet and maintain security standards for the port terminals that they will own and operate in the United States. There are a number of safeguards that are in place in the agreement, and the American people should feel confident that the transaction will in no way harm the security of the Nation's ports.
DP World's Bid For The London-Based Peninsular And Oriental (P&O) Steam Navigation Company Was Announced Last Fall. DP World, a UAE-based commercial entity, is purchasing the U.S. subsidiary of the London-based P&O Steam Navigation Company. The announcement of DP World's bid for P&O was made in November 2005, and the news was widely reported in the press and international financial trade publications. The formal CFIUS process was set into motion in December, and the Federal government conducted a thorough review to ensure that port security would in no way be compromised by the deal.
The Administration Has Taken A Principled Position Based On The Security Of Our Nation And Careful Review Of The Transaction. The President has made clear that he stands firmly behind the decision to allow the DP World transaction to move forward. Preventing this transaction by a reputable company to go forward after careful review would send a terrible signal to friends and allies that investments in the United States from certain parts of the world are not welcome.
The Port Security Of the United States Is The Administration's First And Foremost Concern
The Department of Homeland Security (DHS) Is Always In Charge Of The Nation's Port Security, Not The Private Company That Operates Facilities Within The Ports. Nothing will change with this transaction. DHS, along with the U.S. Coast Guard, U.S. Customs and Border Protection, and other Federal agencies, sets the standards for port security and ensures that all port facility owners and operators comply with these standards.
The Transaction Is Not About Port Security Or Even Port Ownership, But Only About Operations In Port. DP World will not manage port security, nor will it own any ports. DP World would take on the functions now performed by the British firm P&O - basically the off- and on-loading of cargo. Employees will still have to be U.S. citizens or legal permanent residents. No private company currently manages any U.S. port. Rather, private companies such as P&O and DP World simply manage and operate individual terminals within ports.
Background On The CFIUS Process
The CFIUS Process Was Rigorously Followed, And CFIUS Agencies Carefully Reviewed The Transaction. Ensuring the protection of our national security is the top priority of all members of CFIUS. In reviewing a foreign transaction, CFIUS brings together 12 Federal agencies with diverse expertise to consider transactions from a variety of perspectives and identify and analyze all national security issues.
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Tellingly, there is not the name of a single person in this "fact sheet," other than that of President Bush himself. Who exactly was it at these 12 federal agencies who signed off on this? If "All CFIUS decisions are made by consensus of the entire committee," we should know who comprised the committee. Interestingly, the fact sheet states, "The Department of the Treasury, which chairs CFIUS..." Actually, the CFIUS website says that the "Secretary of the Treasury" is the chairman of the committee. This is one big ball that was dropped by the administration, and no one wants to pick it up.
once Bush gives UAE MFN status, they'll be just like China.
Do you think this is a secret that President Bush is keeping from you?
See http://hill.beef.org/newview.asp?DocumentID=14671 (U.S. BEGINS FTA NEGOTIATIONS WITH UAE AND OMAN), http://www.ustr.gov/Trade_Agreements/Regional/MEFTA/Section_Index.html (USTR - Middle East Free Trade Area Initiative) and various other publications.
UAE, US FTA talks continue
United Arab Emirates: Tuesday, January 31 - 2006 at 06:27
Free trade agreement talks between the UAE and US resumed in London yesterday. The fourth round of talks will focus on customs agreements, intellectual property, textiles and government purchases. Agreement had previously been reached on the environment, agriculture and labour.
UAE debate on benefits of FTA rekindled
Middle East Times
February 14, 2006
DUBAI, United Arab Emirates -- After almost two years, negotiations between the United Arab Emirates (UAE) and the United States over a Free Trade Agreement (FTA) are nearing an end, with the two sides expected to close a deal within a few months. But the debate over the effect of the agreement on the UAE's economy has recently been reignited.
OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
EXECUTIVE OFFICE OF THE PRESIDENT
WASHINGTON, D.C. 20508
USTR PRESS RELEASES ARE AVAILABLE ON THE USTR WEBSITE AT WWW.USTR.GOV.
For Immediate Release: Contact: Richard Mills / Neena Moorjani
March 15, 2004 (202) 395-3230
United States and United Arab Emirates Sign Trade and Investment Framework Agreement WASHINGTON - U.S. Trade Representative Robert B. Zoellick and United Arab Emirates (UAE) Minister of State for Finance and Industry Mohammed Khalfan bin Khirbash today signed a Trade and Investment Framework Agreement (TIFA), providing a forum for the UAE and the United States to examine ways to expand bilateral trade and investment.
"Today's signing is an important step in promoting America's export opportunities in the UAE, a top 30 U.S. export market," said Zoellick. "At the same time, increased trade and economic engagement with the United States can assist the UAE in its ongoing efforts to liberalize and diversify its economy. This agreement solidifies the relationship between our two countries on an economic level which complements our strong partnership in our fight against terrorism."
"Expansion of trade with the United Arab Emirates is part of our efforts to promote democracy and economic vitality in the Middle East and the Gulf Region," added Zoellick.
"In May 2003, the President proposed a Middle East Free Trade Area (MEFTA) by 2013; this month's FTA with Morocco and the completion of the second round of FTA negotiations with Bahrain puts us in good standing to achieve that goal."
The TIFA creates a Joint Council that will consider a wide range of commercial issues and sets out basic principles underlying the two nations' trade and investment relationship.
The council will establish a permanent dialogue with the expectation of expanding trade and investment between the United States and the UAE with the goal of resolving trade issues and deepening the bilateral trade relationship. The United States uses TIFA's to strengthen bilateral trade and support economic reform through regular senior-level discussions on commercial and economic issues.
In 2003, the United States exported $3.5 billion worth of goods to the United Arab Emirates, including machinery, aircraft, vehicles, optical and medical instruments, live animals and tree nuts. The United States imported $1.1 billion worth of goods from the United Arab Emirates in the same year, including mineral fuel, woven and knit apparel.
A Trade and Investment Framework Agreement (TIFA) with the United Arab Emirates is just one of the many ways the United States is moving forward to strengthen trade relationships bilaterally. In 2001, the U.S. FTA with Jordan was approved, and FTA's with Singapore and Chile went into effect January 1, 2004. In recent months, the U.S. completed free trade agreements with five Central American countries and with Australia. New and pending FTA's, taken together, constitute America's third largest export market and the sixth largest in the world. ...
Frankly, I'm more concerned about the inadequate resources allocated by the Bush Administration to border and port security than I am about the DP World investment.
Furthermore, I think the national security risk is minor compared to the downsizing and outsourcing of technology that has been routinely rubberstamped by CFIUS under this administration.
For Immediate Release
February 25, 2006
Fact Sheet: DP World: Myth Vs. Fact
MYTH: The Bush Administration is outsourcing the security of our ports to a company owned by the Government of Dubai in the United Arab Emirates (UAE).
FACT: The United States government is in charge of U.S. port security. We will never outsource the security of our ports. The U.S. Coast Guard and Customs and Border Protection are in charge of security of our ports.
MYTH: UAE is a haven for terrorists and allowing a UAE-owned company to control our ports will endanger our national security.
FACT: UAE is a friend and ally of the United States, a partner in the Global War on Terror, and a strong partner in global port security. Partners like the UAE are siding with the international community in the fight against terror. The UAE has been very helpful in the fight against terrorism, especially intelligence sharing and cutting off terrorist financing. The UAE has worked with us to stop terrorist financing and money laundering, including by freezing accounts, enacting aggressive anti-money-laundering and counter-terrorist-financing laws and regulations, and exchanging information on people and entities suspected of being involved in these activities. The UAE has a world class carrier port, and we have more U.S. Navy ships in UAE ports than in any other port outside the United States. The UAE services our ships while in port, refueling them, providing them with food and water, and doing small repairs, among other services. Dubai was the first Middle Eastern entity to join the Container Security Initiative - a multinational program to protect global trade from terrorism.
- General Peter Pace, Chairman Of The Joint Chiefs of Staff: "[T]he military-to-military relationship with the United Arab Emirates is superb. ... They've got airfields that they allow us to use, and their airspace, their logistics support. They've got a world-class air-to-air training facility that they let us use and cooperate with them in the training of our pilots. In everything that we have asked and work with them on, they have proven to be very, very solid partners." (U.S. Department Of Defense, Press Briefing, 2/21/06)
- General Tommy Franks, Former CENTCOM Commander: "I personally believe that we have had no greater ally in seeking a resolution of problems in the Middle East, the Palestinian issue, the Israeli issue, than we have found in the United Arab Emirates." (Fox News' "Hannity & Colmes," 2/22/06)
MYTH: This transaction will make it easier for terrorists to infiltrate America's ports.
FACT: America's ports will be just as secure after the DP World transaction as they were before. First, the workers unloading cargo at the Nation's ports will remain the same ones working today. Any management or other personnel from outside the country will still have to go through the normal visa application process, which includes a very rigorous vetting process that not only does systems checks, but also other background and fingerprint checks. Once in the United States, visa recipients are put through another set of checks to make sure no critical information has changed since the visa was issued. The visa process has been strengthened and improved by the Federal government since the terrorist attacks of September 11, 2001.
MYTH: Because DP World is a state-owned firm, a foreign country will own the ports of six major U.S. cities.
FACT: The ports will remain under the ownership and control of state and local authorities, not DP World. As a port operator, not owner, DP World will manage the physical equipment and movement of containers on and off of ships, not the security related to the shipped containers, which is the responsibility of U.S. Customs and Border Protection. As a result of the transaction, DP World will own and operate terminals at some U.S. ports, which means they will be responsible for physically operating the cranes that move cargo. Ports are publicly owned facilities, typically by State or local authorities. Like all port operators, foreign or domestic-owned, DP World will have to comply with Coast Guard and Customs security regulations. In addition to meeting all these standards, DP World has committed to additional security measures requested by the Department of Homeland Security and signed a letter of assurances making commitments to meet and maintain stringent security standards for the port terminals that they will operate in the United States.
MYTH: No foreign-state-owned firms operate terminals in U.S. ports.
FACT: Several terminal operating companies at U.S. ports are joint ventures or are owned by foreign-state-owned firms. The China Overseas Shipping Company (COSCO), a state-owned firm, has a joint operating agreement with a U.S. stevedoring company at Long Beach, California. Eagle Marine Services - which operates terminals in Seattle, Los Angeles, and Oakland - is owned in part by the government of Singapore. The Yang Ming Marine Transport Company - which operates terminals at Tacoma and Los Angeles - is owned, in part, by the Taiwanese.
MYTH: The CFIUS review process was merely a rubber stamp.
FACT: The CFIUS review process was a rigorous and thorough analysis of the national security implications of the transaction. Well before the transaction was publicly announced, both DP World and Peninsular and Oriental Steam Navigation Company (P&O), a British private company, contacted the Committee on Foreign Investment in the United States (CFIUS) on October 17, 2005, and notified the Committee that they intended to file for a national security review. In reviewing a foreign transaction, CFIUS brings together 12 Federal agencies, including the Department of Defense, the Department of Homeland Security, and the Department of Justice to consider transactions from a variety of perspectives and identify and analyze all national security issues. Each Federal agency conducts its own internal analysis, and in this case, the Departments of Transportation and Energy were also brought in to review the process.
On November 2, an intelligence assessment was requested and a little more than 30 days later, the intelligence community concluded that DP World's transaction does not pose a threat to the U.S. national security. This assessment was completed before CFIUS's official review began.
On December 16, the companies made their official filing with CFIUS that began the 30-day review process. During this 30-day period, the Department of Homeland Security negotiated an assurances letter with the companies. Roughly 90 days after first being approached about the transaction and 75 days after thorough review of the transaction began, the CFIUS members decided not to oppose the transaction, and the review closed on January 17. As with any CFIUS decision not to pursue further investigation, the decision was made by consensus. The review process requires any agency that sees a potential credible threat to the national security to raise those concerns.
MYTH: The Administration is ignoring the law.
FACT: Just as was the case under the first Bush and Clinton administrations, the CFIUS process has required a Federal agency to register a security concern before a further investigation can be launched. When there is a consensus of CFIUS members, the transaction does not proceed to an extended investigation. A Committee consensus means that no member saw any national security threat, or there were no unresolved national security concerns to prevent the transaction from going forward.
MYTH: This transaction is only now being made public.
FACT: DP World announced its intent to purchase P&O on November 29, 2005. Even before the official announcement, the press was reporting on the possible transaction as early as October 30. Between October 2005 and January 2006, there were at least 162 mentions of the transaction in the press.
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