POSITION | EXTERNAL ECONOMIC POLICY
Screening Foreign Direct Investment? EU Regulation Establishing a Framework for Screening of Foreign Direct Investments into the European Union
12.12.2017 BDI Position at a Glance
Foreign direct investment (FDI) is an important source of economic growth, jobs, and innovation 23. Oktober 2017 in the European Union. It is indispensable for the future economic and social development in the EU. The EU thus needs to retain an open investment regime.
BDI welcomes that the EU is fulfilling its responsibility in defining a balanced European approach towards FDI. A common approach across the EU, while not requiring EU Member States to establish screening mechanisms, is welcomed.
If investments from third countries have an impact on public order and security of the European Union as a whole, it is justifiable for the European Commission to assess the possible detriment of such investments. However, these cases must be clearly and definitively delineated.
The proposed EU Regulation Establishing a Framework for Screening of Foreign Direct Investments into the European Union identifies a number of industries concerned. This list is too broad. A transparent and precise definition of what is to be understood by national order and security could improve the legal certainty for investors and benefit the EU as attractive destination for foreign investments.
A general and evaluative differentiation between state and private agents with reference to foreign direct investment faces serious difficulties. The regulation should suggest meaningful and applicable criteria on how national legislations can make such a distinction.
In a monitoring process, the European Commission could gather reliable data on investment activity in Europe. This monitoring should lead to an open-ended process of evaluation to identify possible adequate political measures. In particular, it would be important to know if investors are operating in their home market in a transparent, competitive environment. The regulation must ensure that commercially sensitive information does not fall into the hands of unauthorised persons.
BDI welcomes political initiatives to dismantle investment restrictions and combat protectionism. By concluding free trade agreements and international investment treaties, investment conditions in third countries can be improved. The European Commission should use its influence in the WTO and the G20 to drive open third markets for European companies.
Dr. Stormy-Annika Mildner | Dr. Christoph Sprich | External Economic Policy | www.bdi.eu