PURPOSE: to propose a framework for the screening of
foreign direct investment into the European Union (trade
package).
PROPOSED ACT:
Regulation of the European Parliament and of the Council.
ROLE OF THE EUROPEAN PARLIAMENT: the European
Parliament decides in accordance with the ordinary legislative
procedure and on an equal footing with the Council.
BACKGROUND: foreign direct investment (FDI) is
included in the list of matters under the common commercial policy
pursuant to Article 207(1) TFEU. FDI is an important source of
growth, employment and innovation. It has brought significant
benefits to the EU as to the rest of the world. This is why the EU
wants to maintain an open investment environment.
While the Union's openness to foreign direct
investment will not change, it has to be accompanied by vigorous
and effective policies to, on the one hand, open up other economies
and ensure that everyone plays by the same rules, and, on the other
hand, to protect critical European assets against investment
that would be detrimental to legitimate interests of the Union or
its Member States.
Today, nearly half of the Member States have
screening mechanisms in place. A mechanism which allows the
State to monitor foreign investments in companies/sectors
considered of strategic importance and to oppose them under certain
conditions. However, existing screening mechanisms have differences
in scope and procedure.
The proposed framework shall ensure that foreign
investment remains a major source of growth in the EU and at the
same time contribute to protecting the EUs core
values.
The proposal is fully in line with the 2015
Trade for All Communication
to create a rules-based regime for trade and investment. The
proposed Regulation follows up on the Commission's reflection
paper of 10 May 2017 on Harnessing Globalisation
highlighting the benefits and the challenges of
globalisation.
CONTENT: the aim of the proposed Regulation is to
establish an enabling framework for the screening by the Member
States and the Commission of foreign direct investments in the
Union on the grounds of security or public order. It does not
require Member States to adopt or maintain a screening mechanism
for foreign direct investment.
It sets out the basic requirements to be met by
screening mechanism, such as the possibility of a judicial redress
of decisions, non-discrimination between different third countries
and transparency.
The proposed Regulation:
- confirms that foreign direct investment may be
screened by Member States and the Commission on the grounds of security or public order. These
grounds are defined in accordance with the relevant provisions of
the WTO (World Trade Organisation) Agreement and other trade and
investment agreements to which the Union or its Member States are
parties;
- establishes a cooperation mechanism between Member States and the Commission to inform
each other and exchange information on foreign direct investment
likely to threaten security or public order. Such cooperation
should enable Member States to exchange information and, where
possible, coordinate their response to foreign direct investment
where appropriate;
- provides for the possibility for the Commission to
issue an advisory opinion to the
Member States concerned if it considers that a FDI may affect
security or public order in relation to projects or programmes of
Union interest. These include projects and programmes in the fields
of research (Horizon 2020), space (Galileo), transport
(trans-European transport network, TEN-T), energy (trans-European
network energy, TEN-E) and telecommunications. The Commission
should also be able to issue an advisory opinion in case it
considers that a FDI in one Member State affects the security or
public order in another Member State;
- obliges Member States to inform other Member States
and the Commission about any foreign
direct investment that is undergoing screening within the framework
of their national screening mechanisms. The proposed cooperation
mechanisms will allow a Member State to raise concerns as regards a
foreign direct investment in another Member State and to provide
comments. The Commission may also issue a non-binding opinion on
such foreign direct investment;
- provides that Member States and the Commission may
request certain information on a
specific foreign direct investment on a case-by-case basis
in order to be able to analyse in detail whether this investment
affects or threatens to undermine security or order
public;
- requires Member States to establish contact points
within their administration which can
be consulted on all matters relating to the implementation of the
Regulation.
In addition, the Commission intends to set up a
coordination group composed of Member States
representatives and the Commission to examine issues relating to
FDI into the EU as a forum for exchanging information between
Member States on foreign direct investment flows and trends in this
area.
BUDGETARY IMPLICATIONS: the impact on appropriations
of an administrative nature is estimated at EUR 3.224
million over a 4-year period.