United States Shouldn't Hand Over Battery Technology to China

The bankruptcy transaction of a U.S. battery company should be reviewed very thoroughly.

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Ike Skelton was a Democratic member of Congress and chairman of the U.S. House Armed Services Committee from 2007 to 2010 and Duncan Hunter was a Republican member and chairman from 2002 to 2006.

As the United States sinks deeper and deeper into debt to China, a cautionary tale is being told in a U.S. bankruptcy court in Delaware, where—unless the government acts quickly—over a decade of advanced American technology is about to be handed to the Chinese at a creditors' sale.

As a practical matter, few things are more important to America's future than batteries. These are not your father's 'C' batteries, or even the more advanced consumer-grade lithium-ion batteries that power your cell phone without having to carry it in a suitcase. Rather, these are ultra-light batteries originally developed by NASA's Jet Propulsion Laboratories. They are less susceptible to explosion and capable of performing at peak levels even in the extreme temperatures of outer space.

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Known as advanced lithium-ion phosphate batteries, they are expected to play a major role in modernizing the complex system by which 21st century electricity will be generated and distributed. The technology is also promising for hybrid and electric vehicles that Washington hopes will reduce our dependence on foreign oil in the decades ahead.

Although developed for use in outer space, this unprecedented technology is also helpful to America's men and women in uniform. Our battlefield advantage depends on a dizzying array of high-technology equipment that soldiers must carry, including night vision goggles, digital radios, encryption gear and global positioning systems.

Under a decision of a federal bankruptcy judge the company whose patents comprise the cutting edge of this technology, A123 Systems, Inc., will soon become the property of China's Wanxiang Group, a leading Chinese manufacturer, for the relative bargain price of $250 million. Their president is one of China's wealthiest men, and he has served on the annual National Communist Party Congress for 44 years.

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Like all sales of critical technology to foreign entities, the bankruptcy court's auction is subject to approval by a powerful but obscure federal interagency panel known as the Committee on Foreign Investment in the United States.

Wangxiang has sought to win approval of the deal by agreeing to split off A123 Systems' existing military contracts to an American corporation, but that is hardly reassuring. It is A123 Systems' technology that is the issue, not its contracts. The trade secrets and patents that would be controlled by the Wanxiang Group resulted from a decade of trial and error by some of America's finest scientists, with much of the work funded by U.S. taxpayers.

If the Committee on Foreign Investment has any doubt about what's going on here, it need only look at its own annual report to Congress, which it filed last month. For the first time in the history of the committee, it warned that "there is likely a coordinated strategy" underway by unnamed foreign powers "to acquire U.S. companies involved in research, development, or production of critical technologies for which the United States is a leading producer."

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Since it was created during the Ford administration, the Committee on Foreign Investment in the United States (a high-level interagency panel chaired by the treasury secretary that also includes representatives from the Departments of Commerce, Defense, Energy, Homeland Security, Justice and State, plus no fewer than 16 members of the intelligence community) has been reluctant to intervene in sales of critical technology. Generally, limited interference with international commerce is desirable. But a fair look at the future value of these technological advances to our national security dictate that this transaction be reviewed very thoroughly, taking into account our national investment in the research that produced them.