By Benjamin Goad - 07/10/13 08:15 PM EDT
The president of the world’s largest pork producer pledged Tuesday that the American company’s $4.7 billion takeover by a Chinese firm would boost the U.S. economy without threatening food safety or national security.
“There will be no noticeable impact on how we do business,” Smithfield Foods President and CEO Larry Pope said. “Except we plan to do more of it.”
In the weeks since the Virginia-based company announced the proposed acquisition by Shuanghui International, the deal has come under intense scrutiny by lawmakers, policy experts and scholars.
Wednesday’s hearing brought warnings of dire long-term consequences from members of the panel and witnesses, who argued that China would never allow an American acquisition of a Chinese company on such a large scale.
“They can buy our companies, but we can’t buy their companies,” said Daniel Slane, commissioner of the U.S.-China Economic and Security Review Commission at the U.S. Chamber of Commerce. “Their endgame is to dominate our markets.”
Slane and several members of the panel questioned the extent to which the Chinese government is involved with the blockbuster deal.
“It’s important to understand that the Chinese government is behind China’s global economic expansion,” Slane said.
The testimony prompted Sen. Pat Roberts (R-Kan.) to ask, apparently to Pope in jest, “Were you aware that you were the victim of a Chinese communist plot?”
Pope defended the deal, saying it would increase American exports overseas and add jobs with the planned expansion of the Smithfield operations currently in place.
But Usha Haley, director of the Robbins Center for Global Business and Strategy at West Virginia University, said those short-term benefits are outweighed by potential long-term costs — including a possible threat to American food safety.
In 2011, it was revealed that some Shuanghui products contained a hazardous and banned chemical used to make meat leaner. The case was just one part of an ongoing scandal involving tainted or fake Chinese meat.
“This deal will affect food safety,” Haley said.
The panel’s chairman, Sen. Debbie Stabenow (D-Mich.), and other members of the committee have appealed to the Committee on Foreign Investment in the United States (CFIUS) to examine the deal closely.
The interagency committee, led by Treasury Secretary Jacob Lew, is charged with determining whether purchases of U.S. businesses by foreign interests could threaten national security.
In particular, the lawmakers have urged the CFIUS to include officials from the Food and Drug Administration and the U.S. Department of Agriculture in the decision to block or allow the acquisition.
“I firmly believe that economic security is part of our national security, and that it should be considered when our government reviews foreign investment into the United States,” Stabenow said.
Immediately after the hearing, members of the committee were ushered into a closed-door briefing with Treasury Department officials to discuss the CFIUS process.