NATIONAL SECURITY FOREIGN INVESTMENT REFORM AND STRENGTHENED TRANSPARENCY ACT OF 2007
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Mr. MARKEY. Mr. Chairman, I rise in strong support of H.R. 556, the National Security FIRST Act, introduced by the Gentlelady from New York, Congresswoman CAROLYN MALONEY.
A year ago, a secretive committee at the Treasury Department that most Americans had never heard of approved a transaction to give a company owned by the United Arab Emirates control over terminal operations at 6 major U.S. ports.
The decision by the Committee on Foreign Investment in the United States--or CFIUS--to approve this purchase by Dubai Ports World shined a bright light on an obscure committee and the process it uses to make decisions that can have important consequences for the security of our country.
Clearly, the Dubai Ports World transaction did not receive the scrutiny it deserved. The 9/11 Commission had identified the government of the UAE--the same entity that would own the terminals at major U.S. ports--as a ``persistent counterterrorism problem'. Two of the 9/11 hijackers were from the UAE. The 9/11 Commission concluded that the UAE banking system was used as a conduit for funds for the September 11th attacks.
Moreover, the UAE was a key transfer point for illegal shipments of nuclear components to Iran, North Korea and Libya. The UAE was one of only three nations to recognize the legitimacy of the Taliban government and still does not recognize the State of Israel.
Despite all of these warning signs, the proposed port deal did not even lead the Bush Administration to conduct a 45-day investigation, which is provided in current law and should have been interpreted as being mandatory when foreign governments--whether involving the UAE, the UK, the Ukraine or any other nation--seek mergers, acquisitions or similar transactions that could affect U.S. national security.
Public outrage ultimately sunk the Dubai deal. Last March, Dubai Ports World agreed to divest itself of the U.S. port operations involved in the transaction, and AIG purchased these assets earlier this month.
I commend Congresswoman MALONEY for crafting this strong legislation. It closes the loopholes that had, unbelievably, allowed commerce to trump commonsense. Specifically, this bill requires that a transaction involving foreign governments receive extra scrutiny by mandating that the chairman and vice-chairman of CFIUS certify that the transaction poses no national security threat or the transaction must be subjected to a second-stage 45-day national security investigation; ensures that senior level officials are held accountable for CFIUS decisions by requiring that the chairman and vice chairman of CFIUS approve all transactions where CFIUS consideration is completed within the 30-day review period and mandating that the president approve all transactions that have been subjected to the second-stage 45-day national security investigation; and provides for much-needed congressional oversight by requiring CFIUS to report to the congressional committees of jurisdiction within five days after the final action on a CFIUS investigation. CFIUS also must file semi-annual reports to Congress that contain information on transactions handled by the committee during the previous six months.
Passage of this bill is an important step towards making our country safer. As we continue to learn the lessons of the Dubai Ports World transaction, we also must push forward with efforts to require that all shipping containers are scanned for nuclear bombs before they leave foreign countries bound for our shores and sealed to prevent tampering en route.
The 100 percent scanning mandate was included in the 9/11 Commission recommendations bill that passed the House last month on a bi-partisan basis. As the other body considers its version of the bill, this vital provision should be retained. In New York Times columnist Frank Rich's piece last Sunday, he reported that the former head of the C.I.A. bin Laden unit, Michael Scheuer has stated that the Taliban and Al Qaeda, having regrouped in Afghanistan and Pakistan, are ``going to detonate a nuclear device inside the United States.'
Mr. Scheuer is not alone in making this assessment. Harvard University arms control expert Graham Allison has said that ``more likely than not' there will be a terrorist attack using a nuclear bomb in our country. He has described the detonation of a nuclear explosive device in a cargo container in one of our ports as a nightmare scenario for our nation.
Port security expert and former Coast Guard officer Stephen Flynn has written about the ``catastrophic consequences of terror in a box' that would result if a nuclear device hidden in a cargo container were donated in our country. Admiral James Loy, the former Coast Guard commandant and former Deputy Secretary of Homeland Security, has said that there is evidence that al Qaeda terrorists are already involved in the maritime trades.
Through the Secure Freight Initiative, the Bush Administration has begun the process of establishing pilot programs overseas to test the feasibility and effectiveness of scanning all U.S.-bound containers before they are loaded onto container ships headed to our country.
The provision in the 9/11 Recommendations bill that Congressman NADLER and I authored would require that lessons learned during the Secure Freight Initiative are incorporated into a comprehensive 100 percent scanning and sealing policy for every container headed to our country. Our provision contains a sensible time frame--3 years for large overseas ports and 5 years for smaller ones--to implement the 100 percent scanning mandate.
Dubai Ports World--the same company that triggered the reform process that led us to consideration of the legislation before us today--is planning to incorporate the capability to perform 100 percent scanning at its operations overseas.
We have the technology. We know the risks. We need to take action to require 100 percent scanning and sealing of all U.S. bound cargo containers OVERSEAS, before they arrive at our shores. If we detect a nuclear bomb in a container once it arrives at a U.S. port, it's too late. Once again, I commend the gentlelady from New York for her leadership on this important issue, and I urge an ``aye' vote.
Mr. DAVIS of Kentucky. Mr. Chairman, first I would like to commend Chairman FRANK, Ranking Member BACHUS and Congresswoman MALONEY for putting together this important bill that exemplifies the bipartisan work of the Financial Services Committee. H.R. 556 succeeds in striking a balance that ensures neither the national security of the United States nor the investment climate will be compromised.
This bill was originally introduced in the 109th Congress in response to the public outcry after the Dubai Ports World case. H.R. 556 formalizes the role of the Director of National Intelligence in the CFIUS process, establishes accountability in CFIUS by ensuring senior officials are involved in clearing transactions and establishes better communication with Congress so that we can perform our oversight function.
However, I am a strong believer in simplifying processes to achieve the best possible outcome. I do not think we should make CFIUS an overly complicated and burdensome process for foreign investment. The goal is to maintain the attractiveness of the U.S. markets as a destination for foreign investment, while protecting our national security.
While I submitted three amendments to H.R. 556 that I was unable to offer today, they address important issues that deserve consideration as the bill moves through the Senate and into a conference committee.
Two of my amendments would eliminate the roll call requirement for both the approval of a deal and as recorded in the annual report. As we have gone through the Committee process in the 109th Congress and in the 110th, I have learned a great deal about how the CFIUS process works. I think it is important that we incorporate this suggestion from the Administration on CFIUS. Currently, the different agencies that make up the CFIUS committee work as a team until they arrive at a consensus view. It is my understanding that the committee does not take roll call votes agency-by-agency on each transaction deal that is examined. The current CFIUS approach is much more holistic and fosters a team effort.
I have concerns that requiring a roll call vote on each deal could discourage one agency from raising an issue if all the others are prepared to sign off. I would not want a roll call vote to have any unintended consequences.
I do not believe we should override the way CFIUS currently works as a team. It is effective and encourages the agencies to interact and communicate throughout the examination of the deal.
The third amendment I submitted would eliminate unnecessary bureaucracy for the transaction deals that are relatively easy to approve by allowing the actual signing off process to be accomplished by a Senate confirmed official. This of course does not mean the Secretary and Deputy Secretary are unaware of the deal or left out of the loop on CFIUS matters. They are briefed on every deal on a regular basis. And they will still be required to sign off on certain cases that are of concern to Congress. However, this amendment would provide for a more expedient CFIUS process for the majority of transactions that pose no threat to national security.
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