Senator warns China on trade in review of oil deal

Fri Jul 27, 2012 7:23pm EDT
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By Roberta Rampton

WASHINGTON (Reuters) - Senator Charles Schumer said on Friday that the United States should use a bid by China's state-run CNOOC for Canadian oil company Nexen Inc as a chance to take China to task for long-standing trade and investment issues.

Schumer, who has made criticism of China's economic policies a hallmark of his career, laid out a powerful political warning that many U.S. lawmakers expect China to open its doors to reciprocal investments, even as he made it clear that he does not object to CNOOC's $15.1 billion bid on its merits.

In a letter to Treasury Secretary Timothy Geithner, Schumer suggested the United States should withhold its blessing for the deal unless China addresses complex disputes over government procurement, foreign investment reviews and intellectual property rights.

The Obama administration gets to weigh in on the U.S. portion of the deal because Nexen has about 10 percent of its assets in the U.S. Gulf of Mexico, and U.S. law requires a formal national security review when a foreign company buys energy and other sensitive assets.

"It is rare that we have so much leverage to exert upon China," said Schumer, the Senate's No. 3 Democrat, who has argued that China fixes the value of its currency too low, creating unfair trading conditions.

Schumer, of New York, was among the most vocal critics in Congress of a proposed 2005 merger between CNOOC and the oil company Unocal, which was withdrawn under pressure.

His statements have been the strongest criticism thus far of the CNOOC-Nexen deal, but overall the deal has not yet produced a reaction in Washington anywhere near the Unocal controversy.

On Friday, a federal court froze assets of traders the U.S. Securities and Exchange Commission said illegally reaped more than $13 million in Singapore and Hong Kong accounts trading on inside information, buying up Nexen shares ahead of CNOOC's announcement.   Continued...

A woman walks past the entrance of the headquarters of China National Offshore Oil Corp (CNOOC) in Beijing September 23, 2010. REUTERS/Petar Kujundzic