New EU Initiatives Proposed to Strengthen Economic Security
The EU Commission has adopted five initiatives to strengthen the EU’s economic security at a time of growing geopolitical tensions and profound technological shifts. The package aims to enhance the EU’s economic security while upholding the openness of trade, investment, and research for the EU’s economy.
The initiatives adopted aim at:
- further strengthening the protection of EU security and public order by proposing improved screening of foreign investment into the EU
- stimulating discussions and action for more European coordination in the area of export controls, in full respect of existing multilateral regimes and Member States’ prerogatives
- consulting Member States and stakeholders to identify potential risks stemming from outbound investments in a narrow set of technologies
- promoting further discussions on how to better support research and development involving technologies with dual-use potential
- proposing that the Council recommends measures aimed at enhancing research security at national and sector level.
Certain foreign investments may present risks to the EU’s security and public order. The Commission has reviewed over 1,200 foreign direct investment (FDI) transactions notified by Member States over the past 3 years under the existing FDI Screening Regulation. Building on this experience and extensive evaluation of the functioning of the current regulation, today’s proposal addresses existing shortcomings and improves the efficiency of the system by:
- ensuring that all Member States have a screening mechanism in place, with better harmonised national rules
- identifying minimum sectoral scope where all Member States must screen foreign investments
- extending EU screening to investments by EU investors that are ultimately controlled by individuals or businesses from a non-EU country.
The EU is one of the biggest foreign investors in the world and recognises the importance of open global markets. It also acknowledges the growing concerns regarding outbound investments in a narrow set of advanced technologies that could enhance military and intelligence capacities of actors who may use these capabilities against the EU or to undermine international peace and security.
This is currently neither monitored nor controlled at EU or Member State level. The Commission’s White Paper on Outbound Investments is therefore proposing a step-by-step analysis of outbound investments to understand potential risks linked to them. This analysis will include a three-month stakeholder consultation and a 12-month monitoring and assessment of outbound investments at national level, which will contribute to a joint risk assessment report. Based on the outcome of the risk assessment, the Commission will determine, together with Member States, if and which policy response is warranted.