Ag Policy Blog

Grassley Quizzing ChemChina on Legal Immunity Issue

Chris Clayton , DTN Ag Policy Editor

Iowa Sen. Charles Grassley continues to prod executives in the ChemChina-Syngenta merger over whether the final merged company would attempt to declare sovereign immunity if it ever faced a major legal battle in the U.S.

Regarding all of the various mergers going on in the seed and agri-chemcal industry, Grassley said farmers and consumers could see major changes if all of the proposed deals end up go forward. The risk is that seed and chemical prices could go up as competitors join forces.

Following a Senate Judiciary Committee hearing on the topic in September, companies responded to other written questions from senators. Grassley, chairman of the committee, posted the replies on the committee website.…

Grassley noted in Tuesday's weekly call with reporters that China's state-owned corporations are increasingly buying more global businesses. At the same time -- as DTN has reported -- at least some of China's state-owned entities have gotten legal cases in the U.S. dismissed by citing that the corporations are part of the Chinese government and thus fall under protection of the Foreign Sovereign Immunity Act, known as FSIA.…

This topic has become a bone of contention regarding the ChemChina-Syngenta merger and was raised at the hearing. This issue is highlighted over the various class-action litigation cases against Syngenta over MIR 162 corn shipments to China.

Erik Fyrwald, chief executive officer for Syngenta International AG, was among those who responded to the senators' queries. Fyrwald reiterated statements from the hearing that Syngenta would not raise the issue of foreign sovereign immunity in either current or future ligation in the U.S. Fyrwald also stated Syngenta would remain a Swiss company.

"FSIA immunity does not and will not extend to the commercial activities of our U.S. business," Syngenta's commented back to senators.

Further, Fyrwald added that ChemChina has been doing business for the past 10 years in the U.S. and has never invoked FSIA.

Yet the senators asked if ChemChina would sign a consent decree with the U.S. Department of Justice declaring Syngenta would not invoke such a defense in U.S. courts. Fyrwald and Syngenta replied, "That is a question for ChemChina, and I cannot speak on its behalf."

That spurred Grassley to write ChemChina's chairman, Ren Jianxin on Tuesday, asking him to clarify where ChemChina stands on this topic.

"If they fail to answer my questions it ought to raise a big red flag with our regulators checking the antitrust laws against the mergers," Grassley said.

Grassley also wants to know about Chinese regulations for biotechnology and how those will be carried out once Syngenta becomes part of ChemChina.

ChemChina had declined Grassley's invitation to testify at the Senate Judiciary Committee hearing.

Grassley was asked Tuesday why he is continuing to press both the companies and Department of Justice on the mergers. He reiterated that the mergers could translate into higher costs for both farmers and consumers.

"Let's go back to my basic premise that with the fewer companies you have, (less) competition and higher prices, and with corn being a $1 to $1.50 below the costs of production, I don’t want to saddle farmers with more costs."

Grassley said he doesn't believe the antitrust issues could get lost in the shuffle as presidents and top leaders change at the Department of Justice in the coming months. That's largely because both Hillary Clinton and Donald Trump have indicated that mergers will get more vigorous scrutiny under either presidencies.


Grassley said he believes there is a better chance the Trans Pacific Partnership could come to a congressional vote and possible approval after the next administration takes over. Conventional wisdom has been that proponents of the trade deal better bring TPP to a vote in the lame duck of this Congress, but Grassley said he thinks the next president will walk back some of the anti-trade rhetoric.

"Whosever president, they are going to have to change their mind totally or there is going to have to be some face-saving way of doing it."

That would likely require some changes in TPP, which Grassley acknowledged may be impossible to get the other 11 countries to go along.

"So I don't see a way forward unless there is a complete, 180-degree turn on the part of Hillary Clinton or Donald Trump."

Grassley agreed that a strategic pivot to focus more foreign policy on the Pacific is in trouble without TPP. "I guess I completely agree with that point of view."

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Chris Clayton