Lawmakers Have Concerns Over Chinese Takeover of Smithfield

WASHINGTON - The proposed acquisition of America’s largest pork producer by a Chinese company could result in the transfer of food-production technologies that endanger the United States economy and, perhaps, national security, two food and foreign-investment experts told the Senate Agriculture Committee on Wednesday.

Those technologies â€" including genetic strains of hogs, advanced meat processing technology and manure management techniques â€" were developed with the support of United States taxpayers and their transfer could result in long-term damage to American agriculture, the experts said.

The Senate Committee on Agriculture, Nutrition and Forestry summoned the witnesses to discuss the implications of the $4.7 billion offer for Smithfield Foods by Shuanghui International of China. The purchase would be the largest acquisition to date of a United States company by a Chinese company.

A third witness, however, played down the strategic concerns.

“There is nothing inherently worrisome or unusual” about the transaction, said Matthew J. Slaughter, a professor at the Dartmouth business school.

Smithfield’s president and chief executive, C. Larry Pope, said in his prepared testimony that the deal would have “no impact on U.S. food supply and therefore no impact on food security.” Nor, he said, would it results in in any imports of food to the United States from China, as some opponents of the deal have said.

“Shuanghai is committed to investing in Smithfield to produce more food, more jobs and more value in the U.S.,” Mr. Pope said.

The question of whether foreign acquisition of domestic companies affects national security is one that the United States has struggled with for years. In 2012, the Obama Administration blocked the purchase of four American wind-farm companies by a Chinese-owned firm, citing national security concerns. And in 2006, Congress effectively blocked a deal under which Dubai Ports World, owned by the Dubai government, was to take over the management of six United States ports.

The Committee on Foreign Investments in the United States, an interagency government panel, is reviewing the Smithfield acquisition.

Senator Debbie Stabenow, a Michigan Democrat and chairwoman of the Agriculture Committee, said in a statement that the premium offered by Shuanghui for Smithfield “raises questions about the economic motivations of the purchase,” including whether the United States would lose technological advantages in the deal.

“In the short term, I know this deal looks good for our producers,” Ms. Stabenow said. “But it’s our job to be thinking about the big picture and the long-term for American food security and economic security.”

Senator Thad Cochran of Mississippi, the committee’s ranking Republican, also called for a review of “the full range of national security interests, including food safety.”

Two witnesses called by the committee - Usha C.V. Haley of West Virginia University and Daniel Slane of the Chamber of Commerce - expressed multiple doubts about the transaction.

“The Chinese want Smithfield’s very valuable technology and hog genetics,” Mr. Slane said. “This deal has been promoted as a way to facilitate U.S. pork exports to China, but ultimately Shuanghui could export pork back to us.”

Ms. Haley said that pork is a “strategically important industry for China” as the growing tanks of the middle class demand more sources of high-quality protein. “The same patterns that occurred in other strategically important industries,” she said, “will repeat in this sector and the United States will lose its competitive edge in food, becoming dependent on China.”