On Tuesday 20 June, the European Commission presented a number of areas of work designed to “de-risk and protect the Union’s economic security”. The main aim at this stage is to launch the debate on potential legislative initiatives or revisions to existing texts, particularly on export and investment controls. The current division on these issues will require an in-depth debate with the Member States and the European Parliament, and the Commission is aware of this.
“Global integration and open economies are a force for good for Europe[...] and this will not change in the future”, tried to reassure the President of the European Commission, Ursula von der Leyen. However, the Commission adds in its fifteen-page communication that “geopolitical and technological realities requires us to adapt our approach, preserving the vast majority of Europe’s highly valuable economic links to the world while ensuring that the new risks we face, which are narrow but critical, are effectively tackled”.
Identifying risks
To begin with, the Commission believes that it must identify potential threats to economic security, in particular by working together with the Member States.
The Commission and the High Representative of the Union for Foreign Affairs and Security Policy, Josep Borrell, have identified four types of risk on which work should be undertaken with the EU27. These risks are categorised as follows: - value chain resilience; - critical infrastructure security; - technological security; - economic dependency and coercion.
Next, when it comes to taking action to protect the Union’s interests, the Commission suggests basing itself on three main principles: - promoting competitiveness; - protecting yourself from risks; - strengthening links with certain third countries.
For the first pillar, the aim is to complete or implement the various initiatives designed to strengthen the EU’s competitiveness, such as the new ‘zero net emissions’ industrial strategy.
However, it is in the second pillar that the Commission is putting forward its most sensitive proposals: namely, greater control over EU investments and exports.
Adapting the investment framework
In March 2023, Ursula von der Leyen mentioned the idea of controlling outbound investment from the EU (see EUROPE 13153/17) and this idea is indeed taken up in the communication of 20 June. The Commission wants to prevent the leakage of sensitive technologies “to destinations of concern that operate civil-military fusion strategies”.
As a first step, it wants to set up a group of experts from the Member States to examine security risks and conduct a genuine cooperation process in complete confidentiality.
Its objective is then to propose an “initiative” in this area by the end of the year. Whether or not this will be legislative remains difficult to predict, according to several sources. The private sector and third country partners will in any case be widely consulted, the Commission insists.
“The complexity of this file should not be underestimated”, said European Trade Commissioner Valdis Dombrovskis.
Foreign direct investments are not being left behind. These are already subject to coordinated screening between Member States, but the Commission wants to analyse the effectiveness of this control and possible measures to improve it. An analysis of the current framework with a view to a possible revision is scheduled for the end of the year (see EUROPE 13201/36).
Strengthening export controls
Export controls are currently largely in the hands of the EU27, but the EU does have a framework for monitoring and authorising exports of dual-use goods, revised in 2021.
However, the Commission sees “the need for more rapid and coordinated action at European level” in this area, as it fears that action by member countries will be fragmented. In March, for example, the Netherlands introduced export controls on certain printing machines used in the manufacture of semi-conductors (see EUROPE 13139/2).
The Commission has therefore indicated that it intends to make a proposal “to improve the effectiveness and efficiency of the current framework” by the end of the year. The first step will be to see how the regulation on the control of exports of dual-use goods can be exploited, or not.
Protecting research
The Commission is also concerned about the leakage of technologies whose research is funded by the EU. It would like to propose measures to improve security around research. It will also have to ensure that the tools it already has at its disposal are implemented, for example, to prohibit certain third countries from taking part in the programmes it finances.
Reactions to the Commission’s proposals
On the European Parliament’s part, the Chairman of the Committee on International Trade, Bernd Lange (S&D, German), was sceptical: in his view, Washington’s policy should not be followed at any cost. The United States has imposed controls on semiconductor exports in recent months.
His compatriot and EPP colleague Markus Ferber also warned against overly restrictive measures: “As Europeans, we benefit a great deal from an open and rules-based international economic order. We should not be the ones putting new obstacles into the way of free trade”, he declared.
It will be the turn of the EU Heads of State or Government to react to these proposals at their European Council meeting on 28 and 29 June. According to a draft of the summit conclusions, obtained by EUROPE, they should “call for an approach that provides proportionate, precise and targeted answers to security challenges, while ensuring a balance between the open economy and the defence of the Union’s interests”.
See the draft conclusions of the European Council: https://aeur.eu/f/7lx
See the Commission communication: https://aeur.eu/f/7lz (Original version in French by Léa Marchal)