EU Proposes Tougher Stance On Foreign Investments

In response to an increase of Chinese acquisitions of European rivals, the European Parliament’s international trade committee has approved a proposal calling for greater scrutiny of foreign investments. According to Reuters, the committee voted to extend the list of “critical sectors” that would prompt EU scrutiny, as well as force the European Commission and EU countries to act.

Coordinator of the parliament’s proposals, Franck Proust said, “Without falling into protectionism, it is time to show that Europe is no longer taking a naive stance on globalization. We are against shady or harmful investments, in particular those that meet political ambitions to take control of industries or technologies.”

The proposal aims to scrutinize foreign investments more closely, and has created a list of fields that should be investigated when deals come into play — including the media, election infrastructure, data analysis, biomedicine and automobiles. Though 12 EU countries currently have review mechanisms, each nation’s process is significantly different. The proposal would coordinate the EU’s response to better protect the region’s strategic interests. The draft of the proposal is specific on investments made with state influence or that transfer key technologies to a third country, such as Chinese state-led firms that aim to acquire European rivals.

However, not every EU nation will be on board for stricter regulations. Nations that promote greater free trade, such as the Netherlands, Sweden and Denmark — as well as others that have benefited from Chinese investment, including Portugal, Malta or Hungary — may oppose the step. The Federation of German Industries (BDI) even warned lawmakers not to pass any legislation that would implement investment controls across Europe.

BDI Director-General Joachim Lang said, “They can only be justified when they are protecting a greater good, such as security and public order, but not when they serve industrial policy goals. Any signal that gives impetus to the international spiral of investment protectionism is wrong.”