Review of A123 sale critical to national interest

The United States is once again facing the risk of a U.S. born and bred company falling into the hands of a foreign competitor, and this time with significant implications for our national interests. Massachusetts-based A123 Systems is a leader in advanced battery technologies for hybrid vehicles and energy storage, and a major supplier to our military and national energy industry. Its forthcoming sale – potentially to a Chinese company – may put our national and economic security at risk unless the Obama Administration takes immediate action to protect it. 
A123 Systems was born in the American tradition of innovation: the company was the brainchild of an entrepreneur and an MIT scientist who joined forces to make critical advances in energy technology. The company has developed essential – and sensitive – technology that is used in several applications for the U.S. Defense Department. While the company has reached a tentative agreement that would keep its technology in U.S. hands, a Chinese company, Wanxiang, is pressing to top that offer in order to gain control of this key intellectual property.

The Obama Administration, through a body known as the Committee on Foreign Investment in the United States (CFIUS), can – and should – block the sale to Wanxiang on the grounds that it would harm U.S. interests. Once A123 Systems’ assets are in the hands of a foreign company, we simply can’t control who else is privy to its innovations. It’s not impossible to consider that the Chinese state – and its military leaders – would soon have access to the technology that supports our electrical and telecommunications grids as well as our troops. And, with A123 receiving government stimulus funding under the American Recovery and Reinvestment Act (ARRA), sale to a Chinese company represents an irresponsible use of American taxpayer dollars.

On the military front, A123 Systems’ contracts with the Defense Department provide automotive batteries and durable energy supplies for deployed U.S. combat troops. For example, A123 Systems’ equipment and technology are used in unmanned aerial and underwater vehicles and portable energy grid systems at forward operating bases. Already a group of former senior U.S. military leaders and industry experts, the Strategic Materials Advisory Council, has expressed grave concerns about the security risks of an acquisition by Wanxiang. As the United States re-balances its global force posture and increases its focus on the Asia Pacific region, it would be the height of folly to allow a Chinese company – and potentially the Chinese military – to gain insight into, and access to, critical U.S.energy-related capabilities.

A123 Systems also works hand-in-hand with U.S. power plants on energy storage and efficiency improvements. Its products and technology serve the telecommunications markets through battery backup systems that support telecommunications controllers and internet servers, transceiver stations and central hubs. Allowing Wanxiang to acquire this company’s technology could leave us vulnerable to cyber attacks. This risk mirrors concerns that emerged and ultimately endedanother Chinese acquisition of U.S. technology: Huawei/3Leaf. The Obama administration should prioritize the security and integrity of our critical infrastructure.

And finally, A123 Systems received almost $250 million from the American Recovery and Reinvestment Act for its efforts to reduce U.S. reliance on foreign oil. A sale of assets to Wanxiang would transfer A123 Systems’ taxpayer-funded intellectual property to a foreign company. That should outrage U.S. taxpayers and, to the point of CFIUS considerations, put American energy firms and workers at a significant disadvantage.

As the U.S. government’s panel for reviewing foreign transactions involving critically sensitive technology, CFIUS must view any A123 Systems deal involving Wanxiang with significant skepticism. There are no protections, assurances or carve-outs that Wanxiang could offer as part of its offer that would ensure this technology would not benefit Chinese industries and military – to the detriment of those in the United States. One cannot separate or compartmentalize A123's core battery technology which is used in all lines of its business: military, critical infrastructure and automotive.

The writing is on the wall. The administration must review and then reject any deal involving Wanxiang. A123 Systems was born out of American innovation, and we must ensure that it stays here – for our national and economic security.

Blackburn is the new vice chairman of the House Energy and Commerce Committee.

---