Photo © Kati Molin – Fotolia
(BRUSSELS) – As part of its new trade package, the European Commission unveiled proposals Thursday to set up a European framework for screening foreign direct investment into the European Union.
In parallel, the Commission is to start a detailed analysis of the foreign direct investment flows into the EU and set up a coordination group with EU Member States to help identify joint strategic concerns and solutions in the area of foreign direct investment.
The EU is known as having one of the most open investment regimes in the world. Openness to foreign investment is even enshrined in EU Treaties. But “we are not naïve free traders,” Commission president Jean-Claude Juncker warned in his State of the Union speech to the European Parliament yesterday.
“Europe must always defend its strategic interests. This is why today we are proposing a new EU framework for investment screening. If a foreign, state-owned, company wants to purchase a European harbour, part of our energy infrastructure or a defence technology firm, this should only happen in transparency, with scrutiny and debate.”
The Commission is proposing a new legal framework to enable Europe to preserve its essential interests. This includes:
- A European framework for screening of foreign direct investments by Member States on grounds of security or public order, including transparency obligations, the rule of equal treatment among foreign investment of different origin, and the obligation to ensure adequate redress possibilities with regard to decisions adopted under these review mechanisms.
- A cooperation mechanism between Member States and the Commission. The mechanism can be activated when a specific foreign investment in one or several Member States may affect the security or public order of another.
- Commission screening on grounds of security or public order for cases in which foreign direct investment in Member States may affect projects or programmes of Union interest. This includes projects and programmes in the areas of research (Horizon 2020), space (Galileo), transport (Trans-European Networks for Transport, TEN-T), energy (TEN-E) and telecommunications.
The new EU-level investment screening framework will ensure transparency and predictability for investors and national governments, says the EU executive. It will build on national review mechanisms and will not affect EU countries’ ability to adopt any new review mechanisms or to remain without such national mechanisms. Member States keep the last word in any investment screening
The proposed Regulation on screening of foreign direct investments into the EU now needs the approval of the European Parliament and EU Member States in the Council (ordinary legislative procedure).
To facilitate speedy implementation, the Commission will set up a coordination group on inward foreign direct investments, to cover all issues under the scope of the proposed screening Regulation; and it will also carry out an in-depth analysis of foreign direct investment flows into the EU, focusing on strategic sectors (such as energy, space, transport) and assets (key technologies, critical infrastructure, sensitive data) whose control may raise concerns for security, or public order reasons.
