Keep China out of U.S. agriculture, say House lawmakers
A week after a House committee voted to prohibit China from purchasing U.S. agricultural land, the No. 3 House Republican leader cited national security concerns in spearheading legislation to block China from acquiring U.S. agricultural companies. The restrictions were proposed at the same time business groups sought removal of U.S. tariffs on Chinese goods, remnants of the Sino-U.S. trade war.
The Biden administration announced last October that it would prod China to live up to its commitments under the “phase one” agreement that de-escalated the trade war started by President Trump, and press for Chinese reform of “anti-competitive behavior and subsidies,” including theft of intellectual property. The administration said it would consider tariff exclusions if the duties raised costs on consumers.
“Food security is national security and I am proud to stand up against our foreign adversaries as they attempt to exploit any potential vulnerability and assert control over our agriculture industry,” said New York Rep. Elise Stefanik, who ranks third in House Republican leadership. Arkansas Rep. Rick Crawford was co-sponsor.
China, the top customer for for U.S. food and ag exports, was forecast to buy a record $36 billion of the goods in the trade year that ends Sept. 30, nearly $1 of every $5 in exports.
Chinese investors own relatively small amounts of U.S. agricultural land at present. The 2013 purchase of Smithfield Foods for $4.7 billion by Shuanghui Group, now known as WH Holdings, was the largest entry into the U.S. business world by a Chinese company. Smithfield is the largest U.S. pork producer.
The transaction was approved by the interagency Committee on Foreign Investment in the United States (CFIUS), chaired by the Treasury Department, despite some uneasiness in the agricultural sector. The little-known committee has the duty to review investments and real estate purchases by foreigners “in order to determine the effect of such transactions on the national security of the United States.”
“Investing in a major foreign pork operation like Smithfield allows China to hedge against uncertainty in its domestic pork production,” as well as gain access to high-quality breeding stock and U.S.-developed technology, said the U.S.-China Economic and Security Review Commission, an independent agency, in a May report. WH Group is based in Hong Kong and a publicly traded company, says Smithfield: “It is not a Chinese state-owned enterprise and does not undertake commercial activities on behalf of the Chinese government.”
The Promoting Agriculture Safeguards and Security Act sponsored by Stefanik and Crawford would ban Russia, Iran and North Korea, as well as China, from “any merger, acquisition or takeover that would result in foreign control of a U.S. agricultural company.” It would designate agriculture and agricultural biotechnology as critical U.S. infrastructure and add the Agriculture Department to the nine existing members of CFIUS. Farm-state lawmakers and ag groups have pushed from time to time for USDA membership in CFIUS.
The list of countries targeted in the Stefanik-Crawford bill is the same as those that would be barred from owning farmland in the bill approved by the House Appropriations Committee in late June. “As many members of this committee know, China, Russia, North Korea and Iran are not our allies,” said Rep. Dan Newhouse, Republican from Washington State, sponsor of the prohibition.
In 2013, the government prosecuted Chinese scientist Mo Hailong on national security charges as part of stealing U.S.-developed GMO corn seeds and shipping them to his homeland. Mo was sentenced in 2016 to three years in prison in the case of economic espionage. “And though the FBI suspected the Chinese government was involved in the thefts, it was never able to prove the link,” said the Los Angeles Times.
The U.S.-China review commission highlighted a corn wet mill to be built by Fufeng Group in Grand Forks, North Dakota, in a section of its report titled “How U.S. agriculture assets assist China.” The mill would be 12 miles from an Air Force base and would be “particularly convenient for monitoring air traffic flows in and out of the base, among other security-related concerns.” Based in Shandong, China, Fufeng is not a state-owned enterprise but its chairman has been praised as a “model laborer,” said the report.
According to CNBC, the Grand Forks air base is “home to some of the nation’s most sensitive military drone technology” and a space networking center. “It’s an only-in-America kind of fight — pitting the property and economic rights of a community against national security warnings from high-ranking officials in the nation’s capital.”
Also backing the Stefanik-Crawford bill were Republicans Brad Westrup of Ohio, Austin Scott of Georgia and Dusty Johnson of South Dakota. Crawford, Scott and Johnson are members of the House Agriculture Committee. Stefanik and Westrup serve on House Intelligence.