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**APRIL 10, 2024**

On the Prospect website

TSMC Chips Deal Promotes the Logic of Biden's Industrial Policy

It rebuts the idea that a lack of skilled U.S. workers is an
impediment to manufacturing growth. BY DAVID DAYEN

The U.S.-Japan Summit and the Nippon Steel Deal

Will the Japanese enlist Biden to let the Nippon acquisition of U.S.
Steel proceed? BY ROBERT KUTTNER

Fascist State

There are degrees of political insanity. After its recent Republican
primary elections, Texas approaches a psychotic break. BY RICK PERLSTEIN

Kuttner on TAP

****

****

****

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**** The U.S.-Japan Summit and the Nippon
Steel Deal

Will the Japanese enlist Biden to let the Nippon acquisition of U.S.
Steel proceed?

President Biden is hosting a summit with Japanese Prime Minister Fumio
Kishida this week. The ceremonial dinner was last evening and the
working sessions begin today. The summit is primarily about defense
issues
,
but Nippon Steel is trying to crash the party.

Nippon has made a tentative deal to acquire U.S. Steel, which is to be
voted on Friday by USS shareholders. President Biden has already said
that he considers this purchase against the national interest, and he
has the power to block it after a review by the interagency Committee on
Foreign Investment in the U.S. (CFIUS). The steelworkers union (USW) is
also adamantly opposed.

At the working sessions of the summit, Nippon hopes to enlist Japan's
Minister of Economy, Trade and Industry, Ken Saito, to press his
American counterparts to support the deal. Saito will be meeting with
several top officials, including Commerce Secretary Gina Raimondo,
Treasury Secretary Janet Yellen, and National Economic Council Director
Lael Brainard.

Talking points obtained by the

**Prospect** suggest that Saito will tell these officials that
challenging the Nippon deal would give a "chilling signal" to Japanese
investors that they will "face unfair treatment" in the U.S., and that
Nippon's acquisition would "strengthen U.S. economic and national
security by bolstering domestic steel production, and reinforce both
countries' shared values and deepen the mutual reliance that benefits
our national interests."

Nippon has also gone on a charm offensive to try to enlist the
Steelworkers as an improbable ally. According to a draft letter
agreement also seen by the

**Prospect**, Nippon has offered to invest $1.4 billion in U.S.
Steel's older facilities that USS has been closing, and to refrain
from layoffs through the end of the Steelworkers' current contract in
2026. Nippon also offers to comply with regular pension contributions.

On April 5, U.S. Steel CEO David Burritt released a letter to employees
and shareholders endorsing Nippon's commitments.

But I had a long talk with Steelworkers president Dave McCall, who will
be Biden's guest at the summit, and McCall points out that every
single offer is full of loopholes. McCall told me that the parent
company, Nippon Steel of Japan, is not offering to sign anything.
Rather, it is proposing that its U.S. subsidiary and U.S. Steel, if its
acquisition goes forward, be the signatories, which has no legal force
if anything happens to either of them.

[link removed]

"This sets up years of litigation," McCall said. "They say, once the
U.S. Steel deal is complete, that there will be no reduction in force
through the end of our contract in 2026, unless it's a planned layoff
or idling, or closure, or change in their business plan. That's worth
nothing. They say they'll share tech with USS, unless they find it to
be economically adverse to their investment in their own strategy."

"We hope that the CFIUS process takes place sooner rather than later,"
McCall added, "so that the president can make a decision on
national-security issues. It's important that we maintain blast
furnaces in this country. [U.S. Steel has] already shut down three blast
furnaces in the past three years."

In response to President McCall's comments, a Nippon spokesperson,
Monika Driscoll, emailed me a prepared statement: "On March 27, Nippon
Steel Corporation delivered a set of written commitments to the
leadership of the USW that are not only above and beyond the obligations
contained in [U.S. Steel's] Basic Labor Agreement (BLA), but that will
also be legally binding and enforceable."

McCall obviously disagrees.

So if Nippon thinks they can co-opt the Steelworkers Union as an ally,
with loophole-ridden promises, they are underestimating their
opposition. "We recognize that Japan is a military ally," McCall said.
"That doesn't make them an economic ally. We already have 12 cases
against Nippon for dumping and other instances of unfair trade."

Nippon also has a long record of investing in China and helping the
Chinese develop their own steel industry, which dumps subsidized steel
worldwide. A recent investigative report by Horizon Advisory
documented
Nippon's extensive operations in China. Sen. Sherrod Brown (D-OH)
flagged the report in a letter to President Biden opposing the Nippon
USS takeover
.
"Nippon's connection to the Chinese steel ecosystem and industrial
policy agenda has concerning implications regarding ties to China's
military-civil fusion strategy and quest for global economic power,"
said Brown.

Despite Nippon's efforts to enlist the Japanese government to treat
Nippon as a national champion and a prime topic for this week's
summit, my sources say that the Japanese prime minister may well treat
the Nippon issue as a distraction from more important bilateral issues,
especially defense in the context of China's increasing military
aggressiveness.

Biden has already made clear that he is opposed to this takeover. It
would be very surprising if he reversed himself now; and the Japanese
government has to know that pressure on him to do so would be a waste of
diplomatic leverage.

~ ROBERT KUTTNER

Follow Robert Kuttner on Twitter

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