(Bloomberg) -- Top economic aides for President Joe Biden said he aims to preserve union jobs and domestic manufacturing in the US steel sector, a signal Nippon Steel Corp. may have to bolster its accommodation of organized labor to seal its takeover of United States Steel Corp.
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The $14.1 billion deal to create the world’s second-largest steel company will be reviewed by the Committee on Foreign Investment in the United States, or CFIUS, a process shrouded in secrecy. The remarks Friday were not explicitly about Nippon Steel’s case, but came in response to questions about it and publicly hint at the administration’s priorities and the potential scope of a review that has ramifications for Biden’s reelection bid.
The companies have promised to honor agreements in place with the United Steelworkers union. But the labor group has raised objections, and some Biden political allies — including both senators in Pennsylvania, the home of US Steel and a key 2024 battleground — want the president to kill the deal to protect jobs.
National Economic Council Director Lael Brainard, speaking to reporters at the White House, declined to comment on the specifics of the review, but said the welfare of workers is a pillar for any assessment.
The president “continues to believe very strongly that steel is an important industry, a backbone of the transition we are driving in the economy,” Brainard said. She said the president, as he considers national security and supply chain issues, will “be very vigilant on making sure that steel is made in the US by American steel workers.”
“What we want to see is more companies like US Steel in the United States that have union workers that are paid a good living wage,” Deputy Treasury Secretary Wally Adeyemo told Bloomberg Television earlier Friday, while adding that he could not comment on the specifics of the case. He said the administration believes in “the importance of a strong US steel industry.”
The CFIUS panel, led by Treasury Secretary Janet Yellen, can approve, amend or block the deal on national security grounds — or send it to Biden’s desk for a decision. Friday’s comments highlight the election-year sensitivities surrounding the review ahead of Biden’s likely November rematch with former President Donald Trump, the Republican frontrunner.
Nippon Steel in a letter to the president of the United Steelworkers the day the deal was announced said it will continue to honor all commitments in all USW agreements. Language in the regulatory filing for the deal also states that Nippon Steel has agreed to honor the existing contracts with the union. Still, the USW has hammered the proposal and questioned the sale of an iconic American firm to a Japanese buyer.
The companies say they expect the deal to close in the second or third quarter, while people familiar with the process have said it could take a year.
“The CFIUS process is one that we’ll work through, and take some time,” Adeyemo said Friday, declining to offer a timeline.
--With assistance from Annmarie Hordern.
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