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OPINIONS
13 September 2017 the European Commission proposed In parallel to the screening framework, the Commission the creation of an unprecedented EU-wide framework is completing an in-depth analysis of foreign direct for screening foreign direct investments. On 28 May investment flows into the EU, focusing on strategic 2018, the European Parliament’s trade committee sectors and assets that may raise security or public order approved the proposal and drafted a list of critical concerns. In addition, the Commission has set up a sectors that should be screened, such as investment in coordination group with the member states to assist the media, election infrastruct ure, data analysis, Commission with advice and expertise on matters biomedicine, and car manufacturers. Shortly thereafter, relating to screening foreign investments. The European in June, permanent representatives of the EU member Parliament and the Council need to formally approve states agreed on the Council’s position and endorsed the proposed regulation, which was scheduled for March the proposed regulation for screening foreign 2019 (ahead of the EU elections in May 2019). investments. On this basis, the presidency commenced Even though the proposed mechanism is non-binding, negotiations with the parliament. The proposal for it has raised concerns among several member states, screening foreign investment had thus been identified such as Finland, Greece, Poland, and Sweden. These as a legislative priority by all three institutions. countries are concerned partly that a screening mechThe framework the European institutions have now anism would limit the EU’s so far open and free trade agreed upon sets out provisions for the EU and its stance, and in particular that it might damage their member states to protect their foreign investment relations national interests. It builds on with China. Recently, the new the national review mechanisms government in Italy also turned China has expressed that 13 of the member states on the previous government’s already maintain and does not efforts to scrutinize Chinese much concern about the require other member states to investment in Europe. Italy redevelopment regarding adopt a screening mechanism. versed its position in order to It prov ides the member states align itself as a trade and investforeign investment in and Comm ission with the opment partner to China. the EU, describing it as tion to screen foreign investChina has indeed expressed ment on the grounds of securimuch concer n about t he “protectionist trade policy ty or public order and sets out development regarding foreign basic requirements for screening investment in the EU, describing for short-term interests” investment, such as transparenit as “protectionist trade policy cy, non-discrimination, or judifor shor t-term i nterest s”. cial review. The proposed regulation includes a coopHowever, facing a long-term trade dispute with the eration component on foreign investment issues USA, and likely not wanting a conflict on two fronts, between the member states and the Commission, as the Chinese government has (as yet) refrained from well as between the member states. harsh criticism of the EU. In addition, the framework enables the Commission For the EU there is a momentum now to show both to review investment that might affect the ‘Union’s the doubting member states as well as foreign investors interests’, such as projects involving EU funding or that the proposed framework is an opportunity rather critical sectors. However, the Commission would not than a protectionist measure. A basic, common EU be able to block an investment or a takeover deal. The approach toward foreign investment in fact creates proposed screening mechanism is different from that more legal certainty and transparency not only for of other countries due to its non-binding nature. member states that maintain, or for those who intend Member states will have the option to screen, accept, to adopt, a screening mechanism but also for foreign or block investment either way. The framework investors. As Austria’s Minister for Digital and therefore reflects the diverging interests in foreign Economic Affairs Dr. Margarete Schramböck notes, investment, from high to non-existent, of the member “This is not about closing down our markets but about states and the attempt to balance these interests. acting responsibly.”
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