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The EU’s FDI Screening Proposal – Can It Really Work?

Published online by Cambridge University Press:  02 December 2019

Chi-Chung Kao
Chi-Chung Kao*
Affiliation:
National Taipei University of Business (NTUB), No. 321, Section 1, Jinan Road, Taipei100, Taiwan, Republic of China. Email: cckao1972@ntub.edu.tw
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Abstract

Nowadays China and EU share close investment relations. However, concerns have been raised over FDIs (Foreign Direct Investments) aimed at sensitive sectors, especially those from Chinese state-owned companies. In light of this, the European Commission in late 2017 proposed a FDI Screening Regulation. This proposal contains certain features, including cooperation mechanisms between Member States and the Commission to notify and give comments on FDIs, direct monitoring of FDIs by the Commission on the grounds of Union interests, and the illustration of instances to be considered when screening FDIs. However, the success of this proposal is in doubt. Its fate regarding being adopted as law through the EU’s legislative process is uncertain, due to the Member States’ divided attitude towards FDI screening. Its provision contains a lethal loophole, undermining the cooperation and exchange of information between the Member States and the Commission. The non-binding nature of the opinions and comments addressed to the FDI receiving Member State renders the mechanisms practically unenforceable. To establish an effective FDI screening framework for the EU, this proposal needs to be revised and amended.

Type
Articles
Information
European Review , Volume 28 , Issue 2 , April 2020 , pp. 173 - 184
Copyright
© Academia Europaea 2019

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