[Congressional Record Volume 151, Number 96 (Friday, July 15, 2005)]
[Senate]
[Pages S8386-S8387]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DORGAN:
  S. 1412. A bill to prohibit the merger, acquisition, or takeover of 
Unocal Corporation by CNOOC Ltd. of China; to the Committee on the 
Judiciary.
  Mr. DORGAN. Mr. President, today I am introducing a piece of 
legislation that deals with the issue of a Chinese oil company called 
CNOOC, a state-owned corporation that has proposed to acquire a United 
States oil company called Unocal.
  The purpose of my legislation--and I may well also offer it as an 
amendment to the Foreign Operations appropriations bill we will 
consider today and next week--is to prohibit the sale of Unocal 
Corporation to CNOOC. The legislation provides that notwithstanding any 
other provision in the law, the merger, acquisition, or takeover of 
Unocal Corporation by CNOOC is prohibited. Let me explain why I am 
introducing.
  I bear no ill will toward the Chinese. China is an extraordinarily 
large country. The Chinese have an extraordinary rate of economic 
growth. They are very involved in the world economy. We have a large 
trade deficit, regrettably, with the Chinese. That has to do with a 
range of unfair trade practices and other things. We had a $162 billion 
trade deficit with the Chinese in the past year. This year it is on 
track to top $200 billion.
  I understand what the Chinese are trying to do. They are trying to 
meet their future energy needs. They have four large state-owned energy 
companies. Their companies, including CNOOC, are attempting to acquire 
in many different ways opportunities to satisfy their energy needs. In 
attempting to acquire Unocal, they are attempting to acquire a U.S. 
corporation with substantial strategically important oil assets for our 
country.
  The reason I believe we ought to prohibit the sale of an American oil 
company to a Chinese state-owned oil company is this: There is not and 
would not be reciprocal treatment. If a United States oil company or a 
United States company wanted to buy a Chinese oil company, it wouldn't 
happen. The Chinese Government wouldn't approve it. The four large 
oil companies in China are all state controlled, and as

[[Page S8387]]

a practical matter, the Chinese government is not about to approve that 
any of those companies be purchased by a foreign government or foreign 
company. There is no reciprocal opportunity for a United States 
corporation to acquire an oil company in China.

  The Chinese Government is a Communist government. Its economy is 
emerging as market-driven economy under the umbrella of the Chinese 
Government. That causes a lot of tensions and interesting 
circumstances. The Chinese have joined the WTO. They have made all 
kinds of representations about opening their marketplace. But the fact 
is, once again, the largest oil companies, like most other major 
enterprises in China, are state controlled. It makes no sense that we 
would allow a Chinese state-controlled oil company to acquire, in this 
case Unocal, a United States oil company at a time when we would not be 
able to reciprocate and we would be prevented from acquiring a Chinese 
oil company if we wished to do so.
  I don't know what the administration's position would be on this. 
They have a review process. To the extent that the review process takes 
place, I believe that review process ought to be expanded. But I hope 
we can avoid all of that by simply deciding as a Congress this is not 
something that meets our national interest. Our strategic, security, 
and economic national interest is not served by allowing this to 
happen.
  I am introducing this legislation today, and I know that there are 
many Members of Congress who share my view that this is not a 
transaction that meets the strategic, security, and economic interests 
of this country. We must trade with China. China is an emerging nation 
with a very substantial imprint on the world economy. The free flow of 
commerce and market capital is important. I understand that. This 
legislation that I am offering is not in any way an attempt to send a 
message that we do not want good trade relations with China. But it is 
very much intended to send this message: reciprocal opportunities ought 
to exist in these transactions, and they would not and do not in this 
case involving CNOOC and Unocal.
  It is also important to point out that the money with which CNOOC, a 
Chinese state-controlled oil company, would purchase a United States 
oil corporation would be in many ways attributable to deep subsidies by 
the Government of China for a state-owned enterprise in China that 
wishes to acquire a United States oil company.
  For that reason I will introduce this bill today. I may well also 
offer it as an amendment to the appropriations bill on Monday.
                                 ______