Canada may not be Dubai, but two Federal Maritime Commissioners, Carl Bentzel and Louis E. Sola, have concerns about the planned acquisition of Ports America, the largest marine terminal operator and stevedore in North America by Canada Pension Plan Investment Board (CPP Investments), which has previously been a minority investor in the company.
They are seeking the same sort of review of the deal as one that led to Congress blocking a 2006 attempt to acquire the same assets by Dubai-based DP World.
They have written Secretary of the Treasury Janet Yellen calling the proposed acquisition “an all too familiar repetition of a U.S. transportation and supply chain asset being acquired by foreign investors.”
“Our supply chain assets directly impact our domestic economy and our national security,” they write. :They should not be treated as an ordinary resource to be sold to whomever can pay the highest price. By water, the U.S. global shipping market is served almost entirely by foreign flagged vessels. Currently, by rail, the Canadian Pacific Railroad is attempting to acquire the Kansas City Southern railroad, which could have severe impacts on port competitiveness in the Pacific Northwest.”
The two commissioners are seeking a review of the acquisition, noting that this would not be without precedent.
“In 2006,” they say, “the Committee on Foreign Investment in the United States (CFIUS) recognized the strategic importance of port terminal management and stevedoring operations and asserted its authority reviewing the acquisition of the North American operations of P&O Ports by DP World. Congress voted to block the Dubai based Dubai Ports World’s attempted control of P&O Ports North America’s marine terminal and stevedoring concessions at various U.S. ports. It was this action that led to the creation of Ports America.”
TRUSTED NORTHERN NEIGHBOR
The commissioners write that while the foreign interest involved in the Ports Anerica acquisition “comes from our trusted northern neighbor and close trading partner, still, its ultimate loyalty does not lie with the United States.”
“For many years the Canadian government has implemented policies and made substantial investments to stimulate utilization of one or two major ports on both the Pacific and Atlantic Coasts of Canada,” the commissioners write. “In the United States, because of the volume of strategic ports, and Constitutional protections that prevent the federal government from favoring particular ports, we have not invested the level of resources into port development of particular ports. As a result, we have seen substantial deviation of cargo bound for the U.S. markets being transported through Canadian ports. We question whether the efforts of the Canadian Pacific Railroad to purchase the Kansas City Southern are intended to increase cargo diversion, and we question whether CPP Investments is in fact committed to growth of U.S. based maritime infrastructure.
“If the current pandemic has illustrated anything it is just how vital our global and domestic supply chain is to our way of life. We therefore request CFIUS exercise its authority and launch a full and thorough review of the national security implications of Ports America’s acquisition by the Canada Pension Plan Investment Board.”
Read the letter