New EU Framework Proposed for Foreign Direct Investments: A new framework has been proposed by the European Commission for the screening of Foreign Direct investment into the EU. The reasoning behind this proposal as expressed by the Commission President is mainly for collective security protection.
Foreign direct investments on European ground concerning utilization of energy or technology resources should only occur in a transparent manner as it is a political responsibility to ensure safety with focus on public interest.
New EU Framework proposed for Foreign Direct Investments
Pursuant to this new European framework, it will allow member states as well as the European Commission to assess a foreign direct investment in EU grounds. The grounds for this is for security as stated above and public order.
The main criteria for screening such foreign direct investments will be:
- the effects of the proposed Foreign Direct Investment on critical infrastructure and/or critical technologies;
- the security of supply of critical inputs;
- access to or ability to control sensitive information;
- And whether the investor is controlled by the government of a third country.
The Commission has stated that EU Member States shall have the authority to take the final decision on any assessment concerning foreign direct investments. National review schemes shall be used in an effort to construct a well rounded framework.
The proposed framework requires approval by the European Parliament and by the European Council.
Meanwhile approval is obtained; the European Commission is not wasting any time as it shall proceed with the following immediate actions:
- Intention of the European Commission is to create a group for coordinating incoming Foreign Direct Investment that will cover all issues under the scope of the proposed framework
- It shall be required to identify sectors and assets that have strategic implications from a security, public order, and/or control of critical assets point of view at national, cross-border, or European level. The group will exchange information and best practices and analysis on foreign direct investment.
- By the end of 2018, the Commission will have carried out an in-depth analysis of incoming flows into the EU from foreign direct investments and shall cooperate with Member states for the collection of data, analysis on trends, and assessment of the impact of investments.
Conclusions from Commission Members
The importance of Foreign Direct investments is very high as it is a valuable source of economic growth and EU shall continue to welcome such investments provided that the public interest is protected in a transparent manner.
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