– Safeguards in third countries are not always imposed in accordance with WTO rules. Some industries report that they are regularly confronted with safeguard investigations or measures, sometimes of a retaliatory nature, in third countries. The EU should closely monitor the use of safeguards by third countries in consultation with industry and, in the event of new investigations, support the EU companies concerned in taking decisive action against obviously illegal and improper measures (for example, dispute settlement procedures). – The notification of safeguards to the WTO and the transparency this creates is of great importance to allow foreign trade to adapt to the changed situation and, if necessary, to participate in investigation proceedings as early as possible. BDI considers the notification of safeguards to the WTO to be necessary. It is in fact problematic that not all countries comply with their notification obligation. A more effective enforcement mechanism including stronger incentives for notification should be implemented by the WTO.
Investment Screening Status quo The German economy is globally interconnected through direct investments abroad. More than eight million employees work abroad for companies in which German investors hold significant shares. On the other hand, Germany as a business location also depends on the trust of investors from abroad. In Germany, 3.2 million employees work for 16,817 companies in which foreign investors are important shareholders (2018). However, investments and acquisitions from third countries in Germany have also led to controversial discussions in this country in recent years. In Germany, the takeover of the German robot manufacturer KUKA and the Chinese entry into companies in the automotive industry, among others, led to controversial discussions. According to UNCTAD, the volume of Chinese direct investment abroad has increased tenfold in the last ten years (2009 to 2019).30 Advocates of stricter state control of investment warn that foreign investment could endanger security and public order. They also see the competitiveness of the business location in danger if foreign investors acquire future technologies through acquisitions. They also consider how other states can be persuaded to give in on political issues by strengthening their own rights of intervention ("reciprocity"). In response to the debate, the German government expanded its options for screening and prohibiting foreign investments in 2017, 2018 and 2020, despite strong protests from business representatives. For example, a notification requirement was introduced for corporate acquisitions in critical infrastructure. In spring 2020, in response to the Covid-19 pandemic, the 15th amendment to the Foreign Trade and Payments Ordinance included companies in the industrial health sector. The participation threshold above which investments from third countries can be prohibited was also lowered from 25 percent to 10 percent for critical infrastructures. For the remainder of the year, further extensions of the state's rights to intervene in certain technology sectors have been introduced by the 17th amendment. The European Union is also working on stricter screenings of investments from third countries. In October 2020, an EU regulation on the Europe-wide handling of investment controls, which had already been adopted in 2019, came into force in the EU Member States. With this, the EU has created a
30
UNCTAD, <http://unctadstat.unctad.org> (accessed 1 September 2020). 29
