FMC Commissioners Urge 'Careful' CFIUS Review Over Canadian Purchase of Ports America

The U.S. should closely review the planned acquisition of Ports America by the Canada Pension Plan Investment Board, which would cede U.S. control over the largest terminal operator in North America, the Federal Maritime Commission said in a letter to Treasury Secretary Janet Yellen. The acquisition would allow minority investor CPP Investments to hold “exclusive interest in a strategic United States enterprise,” the FMC said, and could allow Canada to increase diversion of U.S.-bound cargo through Canadian ports.

“This concern is not borne out of nationalism or xenophobia but simple common sense,” the Nov. 12 letter said, signed by FMC commissioners Carl Bentzel and Louis Sola. “After an examination it may be determined that the reported acquisition is appropriate, however, to allow acquisition of such a significant portion of our national supply chain without review would be a dereliction of duty.”

The commissioners said the deal should be “carefully scrutinized” by the Committee on Foreign Investment in the U.S., which has reviewed similar deals before. They specifically pointed to CFIUS’s 2006 review of the proposed acquisition of the North American operations of P&O Ports by Dubai Ports World. DP World ultimately pulled out of the deal after members of Congress voted to block it.

The deal is potentially concerning because the FMC has seen “substantial deviation of cargo bound for the U.S. markets being transported through Canadian ports,” which could increase if CPP Investments controls Ports America. The commissioners also pointed to the Canadian Pacific Railroad’s bid to acquire the Kansas City Southern Railroad, which has been notified to CFIUS, according to a Canadian Pacific Railroad Securities and Exchange Commission filing.

“We question whether the efforts of the Canadian Pacific Railroad to purchase the Kansas City Southern are intended to increase cargo diversion,” the letter said, “and we question whether CPP Investments is in fact committed to growth of U.S. based maritime infrastructure.” The commissioners added that the acquisition would be an “all too familiar repetition of a U.S. transportation and supply chain asset” being acquired by a foreign investor. “If the current pandemic has illustrated anything it is just how vital our global and domestic supply chain is to our way of life,” the letter said. “We therefore request CFIUS exercise its authority and launch a full and thorough review of the national security implications.”

Although CPP Investments is “managed independently” of the Canada Pension Plan and “at arm’s length from governments,” it is still a “foreign enterprise with a vested interest in the welfare of foreign nationals,” the commissioners said. “A review is warranted,” they said. “We grant you that the foreign interest involved comes from our trusted northern neighbor and close trading partner, still, its ultimate loyalty does not lie with the United States.” A Treasury spokesperson and CPP Investments didn’t comment.