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Stephen Olson at Chinese Development Institute Conference

 

 Clyde Prestowitz giving presentation to CDI...

 

Steve Olson teaching trade negotiations at the Mekong Institute...

 

Stephen Olson to speak at upcoming workshop organized by the International Institute for Trade and Development on 

"Economics of GMS Agricultural trade in goods and services towards the world market"

Chiangmai, Thailand Sep 8-12.

(01/27/05) Clyde Prestowitz quoted in New York Times

Clyde Prestowitz quoted in New York Times (01/27/05)
TECHNOLOGY; I.B.M. Deal in China Faces Scrutiny Over Security Issue
by Steve Lohr
New York Times (NY)
Copyright (c) 2005 The New York Times. All rights reserved.
January 27, 2005
Section: C


I.B.M.'s plan to sell its personal computer business to Lenovo of China hit a political speed bump yesterday.The chairmen of three House committees urged the Bush administration to conduct a formal investigation of the deal to determine whether it poses a risk to national security.

In a letter to Treasury Secretary John W. Snow, the Republican committee leaders said they were concerned that the deal could give advanced technology to the Chinese government, and would leave a company controlled by China responsible for handling some United States government contracts.

The Lenovo Group, the parent company of Lenovo, China's biggest maker of personal computers, is owned mainly by public shareholders. But a government institution, the Chinese Academy of Sciences, holds 37 percent of the shares. If the acquisition is completed, the government's holding will fall below 30 percent, while I.B.M. will take an 18.9 percent stake in the company.

"Given the relationship between so-called private companies in communist states and their government, we believe it is manifestly in the public interest to extend the time for review" of the planned deal, the letter said.

The letter was signed by Representative Henry J. Hyde, chairman of the international relations committee; Representative Duncan Hunter, chairman of the armed services committee; and Representative Donald A. Manzullo, chairman of the small business committee.

The three men also requested a briefing by the administration on the deal's impact on national security, technology licensing and government contracts.

The appeal by the committee chairmen, trade specialists said, could prompt the administration to conduct an extended investigation of the deal. But they said that after the review, which could last about two months, the administration would almost surely approve the sale.

"The administration is not going to ignore some important House committee chairmen, but their concerns don't stand up to scrutiny," said William A. Reinsch, a former trade official in the Clinton administration who is president of the National Foreign Trade Council, a group that promotes free trade.

The majority of I.B.M.'s personal computers are already made in China, where the company employs more than 4,000 workers.

"I would be stunned if the administration turned this deal down," said Clyde V. Prestowitz Jr., president of the Economic Strategy Institute in Washington and a former trade negotiator in the Reagan administration.

Foreign purchases of American companies are routinely examined for their possible impact on national security by the Committee on Foreign Investment in the United States, an interagency group.

The committee includes representatives from the Homeland Security, Justice and Commerce Departments, among others. It is headed by the Treasury secretary.

I.B.M. filed its explanation of the transaction with the foreign investment committee at the end of December, three weeks after the announcement of the proposed $1.75 billion sale -- $1.25 billion in cash and stock, and $500 million in debt obligations Lenovo will assume.

Under the law, the foreign investment committee begins reviewing a proposed sale after it is formally notified. A formal investigation, if deemed necessary, must begin no later than 30 days after it receives notice of a proposed deal, so an investigation would have to start by the end of this month. Any investigation must be completed in 45 days. Then the administration has 15 days to decide whether to challenge a foreign purchase or approve it.

A spokeswoman for the Treasury Department, Molly Miller Wise, said the department "never comments on matters that may be pending" before the foreign investment committee.
 

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