Expressing the sense of the House of Representatives that a Chinese state-owned energy company exercising control of critical United States energy infrastructure and energy production capacity could take action that would threaten to impair the national security of the United States.

Mr. Speaker, I will enter into the Record a letter that a number of us in this House wrote to the Secretary of the Treasury with respect to this transaction.

I am one who has supported free trade since I have been in the Congress and I support it today. If it were true that this were a market-based transaction, as the preceding speaker has said, I would not be standing here talking about this issue whatsoever. The fact of this is this is not a free market transaction. This is a transaction by a government-owned company, financed by the government of China, financed with subsidies with the government of China and it puts every other competitor for the assets that they are seeking to acquire at a disadvantage.

There are substantial questions here about the motives of the Chinese as well. I have been dealing with oil and gas issues for a very long time as a representative from Louisiana, and ordinarily one thinks of the oil and gas market as one where free commodities move and oil is a very fungible commodity. But what we have here is a Chinese government with an accelerating demand for oil and gas trying to find a way to corner a market here and to put it to their exclusive use. This is unheard of in the oil and gas commodities market.

No one ever thinks that one explores for oil and then uses the oil only in the place where they have their own demand and not make it available to the rest of the world. That is the scary part of what is happening here.

As China seeks more and more assets that they themselves control and they themselves corner, it makes it much more difficult for us to argue that this is a free economy, a market-based economy. That is the real reason I have come to this microphone tonight.

I think it is important to support this resolution, and I think the actions we are taking today by the Congress were appropriate to be taken. I think the warning signs that are going up from this House about the Chinese government's interest in cornering the market on a strategic asset such as petroleum today, is a dire warning indeed and one we should take heed of.

So I urge the Members of the House and all who are within the sound of our voice to take heed of this warning and to support this important resolution.

Congress of the United States,

Washington, DC, June 24, 2005.

Hon. John W. Snow,

Secretary of the Treasury, Department of the Treasury,

Washington, DC.

Dear Mr. Secretary, Energy security is a matter of

significant and ever increasing importance for the United

States. In particular, we are very concerned about China's

ongoing and proposed acquisition of energy assets around the

world, including assets of U.S.-based energy and oil

companies.

China is now the second largest consumer of energy in the

world, right behind the United States. In order to fulfill

the energy consumption requirements of its growing

population, China has developed an aggressive strategy to

acquire offshore assets to supplement its limited domestice

supply of resources. It will become increasingly difficult

for U.S.-based companies to compete for scarce energy

resoures on the world market against China's state-owned and/

or controlled energy companies.

To that end, we are very concerned to read reports that the

China National Offshore Oil Corporation (CNOOC)--whose

majority owner is the Chinese government--is planning to make

an offer to acquire one of America's leading independent

natural gas and crude oil exploration and production

companies. Moreover, it is our understanding that two

influential Chinise government agencies have reportedly given

tentative approval to this acquisition by CNOOC.

As you are aware, the Committee on Foreign Investment in

the United States (CFIUS) was established to monitor the

impact of foreign investment in the United States and to

coordinate the implementation of U.S. policy on foreign

investment. In 1988, CFIUS was given additional authority

under Section 721 of the Defense Production Act of 1950 (the

Exon-Florio Amendment) to authorize the President to conduct

investigations to determine the impact of foreign

acquisitions of U.S. companies on national security.

Given what we know about CNOOC to date, we think this

potential transaction should be reviewed immediately by CFIUS

to investigate the implications of the acquisition of U.S.

energy companies and assets by CNOOC and other government

controlled Chinese energy companies. As the official chair of

CIFUS, we would request that the Treasury Department look

into this proposed acquisition to determine whether an

official CFISUS investigation should be undertaken should an

official offer come from CNOOC. Specifically, the CFIUS

should review the following issues, among others:

Whether and to what extent the Chinese government is

involved in financing any potential acquisitions by CNOOC;

Whether such investments by CNOOC are market-based and free

of subsidies;

Whether there are technology transfer implications of these

investments that present national security concerns; and

How CNOOC investments in the U.S. energy sector and

acquisitions of U.S.-based energy and oil companies advance

China's energy agenda to the detriment of U.S. national

security objectives.

Mr. Secretary, we know that you understand well the

critical importance of ensuring U.S. energy security and the

critical need to secure the future availability of energy

resources for American consumers. We ask that you treat this

matter with the utmost urgency and report back to us with

yout findings.

Sincerely,

William J. Jefferson, Al Green, Dana Rohrabacher,

Edolphus Towns, Sheila Jackson-Lee, Roger Wicker, Bobby

Jindal, Kevin Brady, Michael Rogers of Michigan, Joseph

Crowley, Devin Nunes, Ginny Brown-Waite, Richard Baker,

George Radanovich, Ellen Tauscher, Gary Miller.

Gregory Meeks, Gene Green, Darrell Issa, Frank Wolf,

Barbara Cubin, Charlie Melancon, Ted Strickland, Geoff

Davis, Gene Taylor, Ralph Hall, Bill Jenkins, Wally

Herger, Charles Boustany, Walter Jones, John Tanner,

Bart Gordon.

John Shimkus, Michael Burgess, Paul Gillmor, Lincoln

Davis, Ted Poe, J.D. Hayworth, Jim Walsh, Bob

Goodlatte, Donald Manzullo, Roy Blunt, John Sullivan,

Bernard Sanders, Collin C. Peterson, Roscoe G.

Bartlett, John Doolittle, Peter T. King.

John J. Duncan, Jr., Bart Stupak, Dennis Cardoza, Thomas

Reynolds, Eric Cantor, Carolyn Kilpatrick, Darlene

Hooley, Mary Bono, Mark Foley, Robin Hayes, Tom

Tancredo, Ken Calvert, Melissa Hart, Mark Souder, Jo

Ann Davis, Michael Rogers of Alabama.

Mr. Speaker, I move to suspend the rules and agree to the resolution (H. Res. 344) expressing the sense of the House of Representatives that a Chinese state-owned energy company exercising control of critical United States energy infrastructure and energy production capacity could take action that would threaten to impair the national security of the United States.

Mr. Speaker, I yield myself 3 minutes.

Mr. Speaker, I rise today in support of House Resolution 344, introduced by the gentleman from California (Mr. Pombo), and urge its immediate adoption.

Briefly, this resolution asks that the President initiate a thorough review of any potential takeover of Unocal Corporation by the Chinese National Offshore Oil Company as soon as any agreement of such a takeover is announced, on the grounds that such a purchase could threaten the national security of the United States.

Mr. Speaker, at a time of rising prices on global oil supplies, ready access to energy resources is a vital element to our economic security. It is imperative that the United States protect its access to Unocal's energy resources in order to protect our economy and our national security.

Just as importantly, Mr. Speaker, I and many Members are extremely skeptical of assurances that the Chinese oil company executives have sought to offer that they would dedicate any oil production from this region to consumption in the United States.

Mr. Speaker, we know from a number of past experiences that the Chinese do not look at trade the same way we do, that agreements made or treaties signed are more of a starting point for negotiation than documents that must be adhered to. Especially in this purchase, the Chinese company and the Chinese government are not playing fair. This company is 70 percent owned by the Chinese government, is said to be receiving more than a quarter of the funding of its bid for Unocal at zero percent or at highly subsidized interest rates.

Mr. Speaker, American companies who are interested in buying Unocal cannot get funding deals like that. They borrow on the open, nonsubsidized credit market, or they would be able to offer a few billion dollars more in an instance like this. I call that an unfair trade practice, and a good enough reason for the deal to be waved off all by itself.

But, Mr. Speaker, there is a much more serious reason to be skeptical of this proposed purchase, and it is for that reason I support this resolution.

In my view, a purchase of Unocal by a company that the Communist government of China controls, a government that is one of our major trading partners but also one of our major trade competitors, threatens the national security of this country by holding out the prospect that every drop of oil, every unit of natural gas produced by that company could end up being shipped to China.

We are all reminded every time we go to the gas pump what has happened to the price of oil recently, and if the Chinese shut off the Unocal tap, the United States supply of oil would be that more scarce and a gallon of gas or heating oil that much more expensive.

You only need 2 numbers to understand how serious this problem potentially could become: the global excess capacity of oil production right now is estimated to be just 1.5 to 2 million barrels of oil a day, the lowest in the past several decades. Compare that to this: last year, China's increase in demand for crude oil is said to have been 850,000 barrels a day, with the demand expected to grow another 7.5 percent this year alone.

Mr. Speaker, the Chinese economy is inhaling oil, and a lot of other commodities, at a staggering rate. How can we imagine that a government-owned oil company will not send its fuel to feed that government's economy, and not our own?

Mr. Speaker, I urge support of this resolution that is so needed.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 2 minutes to the Chairman of the Committee on Energy and Commerce, the gentleman from Texas (Mr. Barton).

(Mr. BARTON of Texas asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield 1 minute to the gentleman from California (Mr. Hunter), the chairman of the Committee on Armed Services.

Mr. Speaker, I yield 1 minute to the gentleman from North Carolina (Mr. Hayes).

Mr. Speaker, I yield 3 minutes to the gentleman from Arizona (Mr. Hayworth).

(Mr. HAYWORTH asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield 1 minute to the gentleman from Illinois (Mr. Kirk).

Mr. Speaker, I yield 6 minutes to the gentleman from California (Mr. Pombo), the chairman of the Committee on Resources.

Mr. Chairman, I reserve the balance of my time.

Mr. Speaker, I yield myself the time remaining.

Mr. Speaker, I want to thank the gentlewoman from Michigan for standing up tonight for this resolution, standing up for the American people.

I want to thank the gentleman from California (Chairman Pombo) for this resolution and also the gentleman from Ohio (Chairman Oxley) for expediting this, also being a cosponsor, but expediting this to the floor.

Mr. Speaker, national security has to include economic security. This is an important resolution. Never in a million years would China let us do this type of deal over there, and do not fool yourselves about that.

This deal is not good for America. It is not good for American workers. As we near our birthday of this country, let us not give a gift to the Chinese Government. Let us give a gift to the American people and support this important resolution.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, I rise in strong support of the resolution authored by the gentleman from California concerning the bid by CNOOC Ltd. to purchase Unocal Corp.

Mr. Speaker, I remain fully committed to free and fair trade. However, I don't believe that this offer constitutes free and fair trade. The offer also could threaten our national security. This resolution would encourage immediate review of a merger agreement, which is authorized by the statute already, rather than waiting for bureaucratic processes to kick in. Acting quickly is important because national security reviews of proposed merger transactions often take months and can last over a year.

Mr. Speaker, a review of any Unocal merger agreement with CNOOC would be done by the Committee on Foreign Investment in the United States, known as CFIUS, which was created pursuant to language inserted into the Defense Production Act (DPA) nearly two decades ago. It is chaired by the Department of the Treasury and includes Commerce, Homeland Security, Defense, State, the U.S. Trade Representative and other parts of the government.

The DPA is solely in the jurisdiction of the Committee on Financial Services because it seeks to identify, stop or mitigate negative effects on the economy from our efforts to protect the Nation's security. As Chairman of the Committee of jurisdiction, I believe it is critically important that the Administration act quickly to review any merger agreement so that shareholders who would need to review potentially competing bids would have all relevant information at their disposal.

Mr. Speaker, the national security implications of a proposed merger between CNOOC and Unocal are unmistakable. China's appetite for energy is enormous. I agree with the gentleman from Ohio, Mr. Ney, that national security includes economic security here. It is important for CFIUS to review the possibility that the Chinese might divert from the United States all of Unocal's energy production to China to feed its energy appetites if a merger with Unocal were to be completed. I think we

can all agree that this would be a blow to the U.S. economy.

Please consider the following facts:

China's consumption of crude oil is expected to double within the next two decades.

World production of oil exceeds capacity by the smallest margin in decades.

China's need for energy is so great that electricity has been rationed to some factories, and the Chinese are reported to be investing in technology to ``cook'' low-quality coal into gasoline. This is costly, inefficient and has environmental problems.

China is the world's largest economy without a meaningful strategic petroleum reserve.

The U.S.-China Commission's 2004 Report to Congress indicated that China's strategy for securing oil supplies ``is still focused on owning the import oil at the production point . . . The Chinese policy is to own the barrel that they import . . . to gain control of the oil at the source. Geopolitically, this could soon bring the United States and Chinese energy interests into conflict.' '' The United States, in contrast, has a free market strategy ``based on global market supply and pricing.''

The same report indicates that China ``plans to expand its strategic reserve to fifty to fifty-five days worth of oil imports by 2005 and sixty-eight to seventy days by 2010.''

So, as today's Washington Post points out, it makes perfect sense that a majority-owned Chinese oil company seeks to acquire control of oil and gas production and reserves.

Make no mistake about it, Mr. Speaker, this offer comes from the Chinese government. CNOOC is 70 percent owned by the Chinese government. One quarter of the funding for its cash offer comes at no or minimal interest rates. If that is not a subsidy, Mr. Chairman, I do not know what a subsidy is. News reports indicate that more than $5 billion of the Unocal offer is available at no interest--more than $2 billion of the bid--or at 3.5 percent interest. These are not market rates.

I absolutely agree with a spokesman for China's Foreign Ministry, who is quoted in the Post article as saying: ``We think that these commercial activities should not be interfered in or disturbed by political elements.'' By that I mean: without a Chinese government subsidy.

Mr. Speaker, I would like to add that I doubt whether the CNOOC proposal will result in a deal which would trigger CFIUS review. The Chevron offer will go to Unocal shareholders August 10. The Chevron offer now has all of the appropriate regulatory approval. The CNOOC offer comes late in the process and has not received any regulatory approvals to date. It is far from clear, even with the Chinese government subsidies, that the CNOOC bid would be competitive with the Chevron bid . . . but that is a decision for Unocal shareholders to make, not us.

Mr. Speaker, I urge immediate approval of this resolution and immediate review of any accepted CNOOC offer for Unocal.

As well, Mr. Speaker, I urge swift convening of a conference committee on a comprehensive energy bill for the United States, an adoption of the President's comprehensive energy program for the U.S. and swift adoption of the conference report.

Mr. Chairman, I thank the gentleman for yielding me time.

First of all, I want to thank the gentleman from Louisiana (Mr. Jefferson) for the work he has put in to this issue and for the tone that he used in this debate. This is an important issue and it never ceases to amaze me to see that Members come to the floor and try to make it a partisan issue and try to complicate what is already a very complicated issue.

This is not about free trade or free markets. If it was it would be a very different debate. If we were talking about Exxon and Chevron or BP competing to buy Unocal, that would be a completely different debate.

What we are talking about is a company that is 70 percent owned by the Communist government of China, competing against a U.S. company to purchase a U.S.-based energy company. That is not free market. And no matter how you twist or turn or try to make this sound good, that is not free market. That is free market competing against the Communist- financed company. That raises concerns just because of that.

But let us look at it a little bit more and look at the assets of the company they are trying to buy. They are trying to buy a major U.S. energy provider. That is a major concern. In the world today, in the world market today we are near an energy crisis. We are almost equal in terms of supply and demand, and that is why the price of oil has gone up dramatically. The U.S. economy is growing. The Chinese economy is growing. The Indian economy is growing. The Brazilian economy is growing. All of these different economies are growing and they are competing for the same source of energy. And that has caused energy prices to go up worldwide.

Now, I tell my colleagues, you have got to wake up here. This is a wake-up call to all of us, to America and to us here, the Chinese have figured out that in order for their economy to grow, they need a safe, dependable supply of energy, primarily oil, coming into their market, in order for their economy to continue to grow. That is how you grow your economy. It is based on energy.

What are we doing to increase our domestic energy supplies? What are we

doing to provide a greater amounts of a safe, dependable supply of energy into this country? We have been trying to pass an energy bill for 5 years. Wake up. It is time for us to get together and figure out what our energy future is. We cannot, in my opinion, we cannot afford to have a major U.S. energy supplier controlled by the Communist Chinese. But what we are asking for in this resolution is for the President, for the administration to convene the Commission on Foreign Investment into the United States and investigate this possible sale, to look at it and determine whether or not this is in the best economic and national security interests of the United States. That is the purpose of the Commission on Foreign Investment. That is what we are asking them to do.

We are asking them to step forward and look at this and report whether or not this is in our best interest. It is my opinion it is not. It is my opinion that it is a huge risk that we run to allow a foreign government to own one of our major U.S. energy producers. That is a huge risk that we are running. At a time like this when we are looking at international shortages on energy, skyrocketing prices, we need to do what we can to increase domestic supplies and to hold on to what we have got. And at the same time I would encourage my colleagues to begin to put enough pressure so that we finally get an energy bill passed.

I heard one of the previous speakers talk about alternatives and solar and wind and fuel cells. I would just suggest read the energy bill. That is in it. But it also has the realistic view that in the short term, we are dependent on fossil fuels which are oil, gas and coal. That is the reality. That is what fuels the U.S. economy today.

We need to do both. Part of it is increasing domestic production of our fossil fuels and making that competitive in this market. The other part of it is looking at the future and how are we going to replace our dependence on current technology. That is the direction we are going. If we allow this sale to go forward, we are taking a huge risk. And I would encourage my colleagues to support this resolution. It is the right policy, the right thing for this country, and the right thing for Congress to do.

Mr. Speaker, I yield myself such time as I may consume.

I rise in support of the resolution. The House went on record earlier today in a strong, bipartisan way, to support that we would, first of all, make sure that CFIUS, which is the Committee on Investments in the United States chaired by the Secretary of the Treasury Snow, that we go on record making sure that we not spend money at this time for a Chinese company that is Communist-owned by the Communist government to take over our ninth largest oil company. The Congress has spoken, and we are happy that we did so in a loud, strong voice.

The sense of the Congress resolution before us is one that we also support. General Motors is losing technology to China, and it is costing the company $12 billion a year. Intellectual property rights are not being protected, and China has been abusing those rights.

We must protect American business, and we must do what is necessary. So, I am proud of the Congress and the gentleman from California (Mr. Pombo) for introducing this resolution that we also further state our strong support for not allowing the sale to go through.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, at this time, I yield 3 minutes to the gentleman from Virginia (Mr. Moran).

Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from Massachusetts (Mr. Capuano), a member of the committee.

Mr. Speaker, I yield 3 minutes to the gentleman from Oregon (Mr. Blumenauer).

Mr. Speaker, I yield 3 minutes to the gentlewoman from Ohio (Ms. Kaptur).

Mr. Speaker, I yield 3 minutes to the gentleman from Louisiana (Mr. Jefferson).

(Mr. JEFFERSON asked and was given permission to revise and extend his remarks.)

Mr. Speaker, how much time remains on each side?

Mr. Speaker, I yield 3 minutes to the gentlewoman from Texas (Ms. Jackson-Lee).

(Ms. JACKSON-LEE of Texas asked and was given permission to revise and extend her remarks.)

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, thank you for allowing us to have this debate. I believe it has been a good debate and we do support the amendment, many of us on this side of the aisle, although a couple who spoke do not support it.

It is important as we talked about it earlier today that we remembered that 53 percent of America's private debt is held by foreign countries, 53 percent. That means many of our debt and the two owners of those debts are Japan first, and China second. 53 percent of our private debt is owned by foreign countries. I think that is not good for our country, for our grandchildren. We have got to strengthen America, calling those debts when we are able to pay them off, and give America back to Americans.

Should we have work with China? And I said this earlier, yes, we should, and other foreign markets. This is an international, global community that we live in. But we should always put America first, and I think the debate that we have had today, and I thank the gentleman from California (Mr. Pombo) for some of his remarks and for the resolution, the sense of the Congress, again, will reinforce what we have done earlier today.

We have got to make sure that American companies stay strong so that Americans can continue to work, so they can take care of their families, pay taxes, help cities, towns and villages maintain themselves with the revenue that it gets from them.

So trade, yes, and this is free trade. Somebody said free trade. This is not that deal. This is something less than that. As the gentleman from Louisiana (Mr. Jefferson) spoke, it is getting the corner of the market because you can pay $18.5 billion in cash at a time when our country has $160 billion trade deficit and then you turn some of that money back and want to buy our company. It is not a good deal.

We call on CFIUS, the Committee on Foreign Investment in the United States, Secretary Snowe and his 12-member committee to look closely at what is before them, to do the proper investigation and then not to recommend to the President that we go forward with this sale.

It is not the right time for America. It will weaken our economy. And our national security interests as well as our economic interests, as well as our energy interests are at stake.

So, Mr. Speaker, let us not do this sale. Let us continue to build America and keep America strong.

Mr. Speaker, I yield back the balance of my time.