Exon-Florio

The Exon-Florio National Security Test for Foreign is an American amendment with “Defense Act Production of 1950” (Section 721) adopted in 1988 and aiming at blocking the possible acquisition of a strategic company by foreign interests. The development of this amendment fits in a wave of hostility with regard to Japan (see the report/ratio Japan 2000, returned public in July 1991 by the CIA).

" Exon-Florio"

Exon-Florio is an amendment with an American law adoptee in 1988 and authorizing the Comité for the overseas investment in the United States to analyze the impact on the national security of certain acquisitions states-uniennes by the foreign interests. Consecutively with this analysis, the president of the United States has to suspend or not the acquisition of a firm states-unienne, if this last recognizes that the foreigner could threaten the national security. As, the law Exon-Florio specifies as if the president of the United States finds the “proof credible that an foreign interest could take measures threatening safety national” that certain provisions of the federal law do not protect, this last can take a series of action to put in failure this attempt at foreign takeover.

The operation of Exon-Florio

How does the Exon-Florio device function? This last is managed by the Comité on the overseas investment in the United States, whose members include the secretary with the trade, the Secretary of State, the secretary with Defense and the public prosecutor, the representative with the Foreign trade, the administrator of the economic Safety advice, the director of the Office to management and the budget and finally the secretary with the Treasury. Operating by the means of the Office on the international investment at the department of the Treasury, the Committee on the overseas investment in the United States thus leads investigations and fact of the recommendations to the president of the United States, who makes in a discrétionnaire way the final decision so blocking or not foreign acquisition.

Context of emergence of Exon-Florio

The Exon-Florio amendment falls under a particular context, that of the Japanese invasion of the US market. This form of “economic Pearl Harbor” does nothing but crystallize one current already present at the United States, the economic patriotism and an official pre-culture of the economic intelligence. The report/ratio Japan 2000, returned public in July 1991 by the CIA, is all in all only the visible acme of this feeling of aggression and the entry for the United States in the post-bipolar context of a tacit economic war. This amendment allowed inter alia blocking attempts at penetration of capital of strategic companies producing of aircraft, semiconductors or specialized in manufacture of processors, and further related to industry from the armament, by Japanese companies.

Other procedures of national security of the economy in the United States

Also, there exist other general laws intended to protect the national security. For example, under the international law urgently economic, the president of the United States, after having stated “an urgency national”, can start a series of measurement so “certain foreign entities cause an unusual and extraordinary threat with the national security, the foreign politics or the economy states-unienne”. The president used in particular this law in order to freeze the Iranian assets in the United States, to put the embargo on Nicaragua and Libya, to block the transfers of funds in Panama, and finally to freeze the Iraqi assets in the United States. Lastly, the recourse to the anti-monopoly acts makes it possible to block acquisitions which could restrict the competition and would create an anti-competitive monopoly. These tools, joint with the pressure congressman and the capacities inherent in the presidency, dissuaded several foreign purchasers from discussed acquisitions or persuaded them to adopt a different strategy.

Dysfunctions of Exon-Florio

However, one of the main issues which the Exon-Florio amendment can induce an economic form of nationalism. Indeed, the law at all does not define the concept of “national security” nor does not provide for a precise list with the industrial sectors free of the field of application of Exon-Florio. The national security can thus be defined in a very broad way. In the past, of the producers of peanut, shoes, papers, etc tried to justify the protection of the government by calling upon the concept of “national security”… After the attacks of September 11th, 2001, the development of the feeling of insecurity and the multiplication of “patriotic laws”, the spectrum of interpretation of the Exon-Florio amendment widened even more. If the Exon-Florio amendment can be faded for a good number of reasons for an aggressive industrial policy, it is politicized also more and more, Congressmen having to answer the pressures of their voters by relaying their positions and being thus opposed to certain acquisitions. The French example of the Company of Saint-Gobain débouté because of a powerful lobbying of Congressmen to the beginning of the year 1990, and this, while at the same time it presented the “objective” best offer of purchase compared to its alter American ego BTR on an unspecified firm, is convincing for this reason. In the same way, the example of the French company Thomson, which launched an attempt at acquisition on the industry of armament LTV, specialized in the production of missiles, is a traditional example. LTV had made bankruptcy and was forced to sell its specialized subsidiaries in the aeronautics and the production of missiles. Thomson proposed the most advantageous offer with 450 million dollars. But because the French State is the principal shareholder, Exon-Florio was called upon, the committee delivered an negative opinion and acquisition offers was rejected.

External bonds

IE-Lobbying: blog of Pierre-Antoine Rousseau, from where this article is partly recovered

Page of the CFIUS on the site of the American Treasury

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