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Public Papers - 1989 - August

Statement by Press Secretary Fitzwater on the Proposed Foreign Acquisition of Three Divisions of Fairchild Industries

1989-08-18

The President has decided against intervening in the proposed acquisition by Matra, S.A., a French firm, of three divisions of Fairchild Industries: Fairchild Communications   Electronics Co., Fairchild Control Systems Co., and Fairchild Space Co. These companies produce hardware and software for aerospace systems and spacecraft.

The President based his decision on the results of the investigation by the Committee on Foreign Investment in the United States (CFIUS), chaired by Treasury Secretary Nicholas F. Brady. That investigation was undertaken to give the U.S. Department of Commerce time to assess Matra's system for controlling the export of sensitive technologies. In consultation with the Department of Commerce, Matra developed a comprehensive export control management system that was deemed satisfactory. The President decided that these steps provide adequate safeguards to protect sensitive technologies from unauthorized transfer outside the United States.

The Matra-Fairchild investigation was conducted pursuant to section 5021 of the Omnibus Trade and Competitiveness Act of 1988. That provision, known as the Exon-Florio provision, authorizes the President to investigate and, if necessary, to suspend or prohibit a proposed foreign acquisition of a U.S. business engaged in U.S. interstate commerce. The criteria to suspend or prohibit a transaction are that the President must find:

-- credible evidence to believe that the foreign investor might take actions that threaten to impair the national security;

-- that existing laws, other than the International Emergency Economic Powers Act and the Exon-Florio provision itself, are inadequate and inappropriate to deal with the national security threat.

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