On Thursday 14 September, the European Commission tabled its draft Community framework to screen Foreign Direct Investment (FDI) coming into the EU, and announced a coordination group with the member states to identify common concerns and strategic solutions on the issue.
To allow Europe to maintain its essential interests when foreign investors acquire strategic investments, allowing them to control or influence European companies with activities (technology, infrastructure, production factors or sensitive information) of critical importance for its security and public order, the Commission is proposing a new legislative framework which at the same time aims at guaranteeing a regime of openness, without discrimination towards third-country FDI.
This framework includes a Community framework for the screening of FDI by member states, for reasons of security or public order, laying down requirements on transparency, the principle of equality of treatment between investments of different origin and the obligation to guarantee the possibility of appealing against decisions adopted under these control mechanisms.
It provides for a cooperation mechanism between member states and the Commission that can be triggered if a specific FBI in one or more member states could affect the security or public order of another member state.
It also provides for screening by the Commission, for reasons of national security or public order, if an incoming FDI could have an impact on projects or programmes of Community interest, for instance in the fields of research (Horizon 2020), space (Galileo), transport (trans-European transport networks), energy (trans-European energy network) and telecommunications.
The new European framework for screening of third-country FDI aims to guarantee transparency and predictability for investors and national authorities. It will be based on control mechanisms already in place in 12 countries (Germany, Austria, Denmark, Spain, Finland, France, Italy, Latvia, Lithuania, Poland, Portugal and the United Kingdom) and will not affect the possibility for member states to decide whether or not to adopt new examination mechanisms.
This framework will maintain the flexibility needed at national level when decisions are made concerning third-country FDI, by giving the capitals the final say in any screening exercise.
The proposed regulation on the screening of FDI in the EU requires the approval of the European Parliament and member states of the EU at the Council under the ordinary legislative procedure.
To save time, the Commission is proposing to immediately adopt, in parallel, two additional measures: one to set in place a coordination group on incoming FDI, to be chaired by it and including experts of all member states, which will examine all aspects covered by the proposed regulation on the screening of foreign investments and to be used as a forum for broader discussions. This group will also be responsible for identifying sectors and assets with strategic repercussions from the point of view of security, public order and/or control of critical assets at national, cross-border or European level, and will examine questions of common interest such as subsidies and other practices of third countries facilitating strategic acquisitions.
The Commission also proposes to carry out an in-depth analysis of flows of foreign direct investment into the EU by the end of 2018, with emphasis on strategic sectors (energy, space and transport) and assets (key technologies, critical infrastructure, sensitive data), control of which by foreign investors could raise concerns for reasons of security or public order, particularly if these are held or controlled by a third country or receiving considerable subsidies. Working with the member states, the Commission will collect detailed data, analyse patterns and assess the impact of foreign investment in the EU. (Original version in French by Emmanuel Hagry)