USDA review of Syngenta deal sought

Political headwinds in Washington may be circling China National Chemical Corp's proposed $43 billion acquisition of Swiss agriculture company Syngenta AG after a US senator from a major farm state suggested the US examine any potential food safety concerns from the transaction.

Senator Charles Grassley of Iowa, a Republican member of the Senate Committee on Agriculture, Nutrition and Forestry, said a bipartisan group of senators would seek a formal role for the US Agriculture Department as the Committee on Foreign Investment in the United States (CFIUS) carries out a national security review of the China National (ChemChina)-Syngenta deal.

Lawmakers want food security and safety implications analyzed, Grassley said in a Wall Street Journal story published on Thursday. Grassley said he was concerned about the increasing consolidation in the seed industry and what that meant for Iowa farmers. But a ChemChina acquisition of Syngenta would also give China even more control over the global market for genetically modified corn, soybean and other seeds than it already has, he said.

In a radio interview broadcast on Wednesday, Grassley said he was concerned that state-owned ChemChina's bid for Syngenta would give Beijing ownership of a vital part of the US agricultural infrastructure.

"Because the food and agriculture sectors are part of the nation's critical infrastructure this merger raises questions about the potential national security implications," he told an Iowa radio station

Earlier this month, US Agriculture Secretary Tom Vilsack said he had reservations about the transaction and its impact on US competitors trying to get into the Chinese market.

CFIUS is tasked with reviewing foreign acquisitions of US companies and consists of representatives from 16 agencies, including Treasury, Homeland Security and Defense. Grassley's comments are part of a growing trend among some US lawmakers to have CFIUS play an expanded role in reviewing transactions, particularly from China.

CFIUS has never rejected a deal on the grounds of food security. Nevertheless, it will be subjected to an obligatory 75-day review because ChemChina is state-owned.

Although based in Switzerland, Syngenta is the biggest seller of pesticides in North America, from where it gets nearly a quarter of its revenue, and a major seller of seeds. Its US headquarters are in North Carolina, and it has other facilities in several states, including California, Delaware, Iowa, Louisiana, Nebraska and Minnesota.

Michael Wessel, a member of the US-China Economic and Security Review Commission, said there are food safety risks for the US to consider in the ChemChina-Syngenta deal.

"The potential risks to US food safety from the Syngenta transaction send a strong signal that the USDA (US Department of Agriculture) needs to be integrated into CFIUS's review of this transaction. Syngenta's leading role in the seed-technology sector requires a thorough review. Food security is a national security issue," Wessel wrote in an e-mail.

However, David Miller, director of research and commodity services for the Iowa Farm Bureau Federation, doesn't believe a change in ownership should raise food-safety issues.

"Syngenta is a European-based company and changing their base of ownership to China should not lead to changes in their food-safety protocols," Miller said in an e-mail.

Syngenta Chairman Michael Demare noted that his company was not required to file for a CFIUS review but did so in accordance with good corporate governance principles.

paulwelitzkin@chinadailyusa.com