MEPs from the EPP, S&D and Greens/EFA Groups at the European Parliament asked, during a debate in plenary on Wednesday 14 June, for a European Commission measure to control at EU level foreign investment in strategic EU sectors – especially because the countries from which these investments are made tend to restrict or ban access by European investors to their own markets.
"Foreign investment remains a key principle for the EU. We need investment as an engine for growth and job creation. We encourage others to invest in the European Union and our investors are very successful abroad. But clearly in the last year some reasons for concern have emerged and these are related to the sharp increase in foreign acquisitions of significant value in key EU economic sectors. I am thinking of industrial machinery and equipment, ICT, utilities, infrastructure or energy", Maltese minister Helena Dalli stated on behalf of the Maltese Presidency of the Council of the EU. "The surge in foreign investment appears less as a result of market forces and more as a consequence of strategic industrial policies by other states. This could compromise fair competitive conditions across the EU and put into question our access to technological know-how. As such, these acquisitions could be deemed not to be in the EU’s long-term interest", she said.
Dalli went on to explain: "In this regard, we welcome the debate launched in February by the economic ministers of Germany, France and Italy, who in their joint letter to EU commissioner for trade, Cecilia Malmström, outlined their concern that partner countries do not match the EU level of market openness when it comes to investment and public procurement (see EUROPE 11726). They pointed out that the EU was losing its advantage in technological expertise due to mass acquisitions from non-EU investors. The three countries asked for more scope to investigate individual takeovers and, where applicable, to block them."
The Maltese Presidency also welcomed the proposal from the EPP Group at the European Parliament calling for EU intervention when foreign investment breaks the rules of the market or is facilitated by state subsidies (see EUROPE 11750).
In addition, Dalli welcomed the fact that the Commission’s reflection paper on harnessing globalisation noted the concerns recently voiced about foreign investors, notably state-owned enterprises, taking over European companies with key technologies "for strategic reasons", while EU investors often do not enjoy the same rights to invest in the country from which the investment originated (see EUROPE 11785).
Dalli explained: "It is very clear that the way we address investments in strategic sectors will require necessary attention in the future. In the Council, we will follow the developments on this subject with interest and remain ready to carefully examine any proposal the Commission puts on the table."
"These concerns need careful analysis and appropriate action. We are therefore assessing the real scope of this phenomenon, and trying to be clear about what the real issues are. This may represent a new challenge to EU policy and we need to assess whether we have the appropriate tools to respond to it. This may be particularly relevant at a time when the Commission is proposing a reflection on foreign investment in sensitive defence-related technologies and the opportunity to introduce some control", said Economic Affairs Commissioner Pierre Moscovici.
Moscovici went on to explain: "The Commission is convinced that an important part of the solution to some of the concerns related to the lack of a level playing field for EU investments abroad should come from our trade agenda, which aims at securing the best possible market access and transparent and non-discriminatory conditions for new investors operating in third countries."
"We are currently analysing the effectiveness of EU policies on foreign direct investment in close coordination with member states, which are maintaining their own foreign investments screening measures to see if the current framework provides sufficient flexibility to respond to the challenges we are facing. We should avoid as much as possible introducing unnecessary barriers to trade and investment, bearing in mind that the EU economy continues to need more investment", Moscovici added.
On behalf of the EPP, Germany’s Daniel Caspary regretted that China has not put into practice a promise by the Chinese president, Xi Jinping, of greater opening of its market, and criticised "problems" encountered by European investors in many Chinese industries, such as cars, metal supplies, banking, insurance, telecoms and publishing. He said the EU should take a harder line and needed open markets along with clear rules, noting the importance for the EU of identifying key EU industries where it needs to protect itself and, if necessary, prevent targeted acquisitions by Chinese investors.
On behalf of the S&D, Germany’s Bernd Lange noted the need for reciprocity and fair rules for all. If there are restrictions on European investment in a country, then he was inclined to say that the same methods should be applied against foreign investors, but without moving towards exacerbated protectionism. He said it was foreign investors’ behaviour that would be key. If they respect social and environmental standards, there would not be any reason to oppose them, he said.
There is a clear problem of reciprocity with China and major risks for Europe because strategic EU sectors, like robotics, defence, high tech and the airport sector, are being targeted. The danger is that the transfers of technology to a third country will undermine European interests in the long term, explained French MEP Emmanuel Maurel (S&D). He added that some member states, like France, have taken measures and it would be in the EU’s interest to follow suit, particularly because in the domain of foreign direct investment, like public procurement, Canada, Japan, the United States and Australia are defending themselves. He called for the EU to be inspired by firm policies like the arbitrary decision by the former US Administration under Barack Obama to reject all foreign direct investment projects deemed contrary to US interests.
On behalf of the Greens/EFA, Germany’s Reinhard Bütikofer also deplored the way foreign public companies invest in Europe in strategically useful sectors because they benefit from subsidies that are not lawful in Europe and are often from countries that are increasingly closing their markets to European investors. He said a strategic industrial policy was needed but the EU should protect its key industries without following a general policy of protectionism. He urged the European Commission to come up with an action plan by the end of the year. (Original version in French by Emmanuel Hagry)