The global economy is adjusting to more numerous and emboldened multinational companies hailing from the Chinese mainland. One of the more compelling stories from the last year involved Ralls Corporation, a subsidiary of SANY, China’s largest heavy machinery manufacturer. Ralls sued President Obama and Treasury Secretary Geithner after a plan to build a wind plant in Oregon was squashed by executive order in October of 2012. Ralls has claimed that the executive order violates their constitutional rights. The Obama administration nixed the plan because the proposed plant would have been in the vicinity of a ‘secret’ naval base. Ralls has claimed twenty million dollars in losses from the issue. The casual American observer might dismiss a Chinese company suing a sitting U.S. President as bluster, but this is probably the start of a very serious and long conversation that will be had concerning Chinese companies and their interests in other nation’s strategic industries.
There is reason to believe the executive order was handed down for political reasons instead of genuine concern for national security. The decision was made in the weeks leading up to the Presidential Election, and Republican candidate Mitt Romney consistently called President Obama’s China Policy into question. This desire to appear tough on China may have influenced Obama’s Asia pivot since re-election as well. In the case concerning SANY, Obama has looked for cover behind a recommendation from The Committee on Foreign Investment in the United States (CFIUS), which asked the president for direction on the matter. The proposed plants would have been within five miles of a naval testing facility. The executive order claimed the plant “threatens to impair the national security of the United States.” Ralls’ suit asked for credible evidence to this claim and questioned the constitutionality of the executive order.
In the past these sorts of complaints would have been quickly dismissed by the White House, but Ralls found a powerful ally in Paul D. Clement. Clement was U.S. Solicitor General under George W. Bush and had previously tangled with the Obama administration during the debate over Obama’s health care plan. By aligning with a well-connected lawyer with D.C. experience, Ralls ensured that their case would be taken seriously.
The rhetoric has also been ratcheted up in this case, with Chinese spokespeople unafraid to use constitutional language to oppose Obama’s decision. These spokespeople are surprisingly well versed in the U.S. legal system. Wu Jialing, CEO of Ralls Corporation, publicly claimed Obama’s decision violated the standard of innocent until proven guilty. Ralls, and SANY behind them, seems willing to make this a public issue, and they have taken measures to make their case as high profile as possible. Zhang Guoqing, a research fellow of the Institute of American Studies under the Chinese Academy of Social Sciences, believes that if Ralls’ rights under U.S. law are not ensured, there will likely be blow back against major American brands doing business on the Chinese mainland.
On February 22nd, U.S. District Judge Amy Berman Jackson ruled that regulations regarding executive orders clearly state such decisions are not subject to judicial review. This means it should be impossible for any court to overturn Obama’s decision. However she did not close the door on another issue in the suit, in which Ralls claims that Obama did not follow the correct procedures when issuing his order. Even if Ralls does win a victory concerning Obama’s process, it is unlikely that they will recoup any of their claimed losses. However a victory here would likely force the administration to more clearly explain its opposition to the Oregon wind farm. Forcing a sitting U.S. President to explain himself would definitely be seen as a moral victory, not only for Ralls and SANY, but for every Chinese multi-national operating in North America.