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Wednesday, July 6, 2022

EU countries back investment screening plan with China in mind

EU countries back investment screening plan with China in mind© Reuters. FILE PHOTO: An attendant walks past EU and China flags ahead of the EU-China High-level Economic Dialogue in Beijing

BRUSSELS (Reuters) – European Union countries agreed on Wednesday to a far-reaching system to coordinate scrutiny of foreign investments into Europe, notably from China.

Under the plan, developed in the wake of a surge in Chinese investments, the European Commission would investigate foreign investments in strategic technologies and infrastructure such as ports or energy networks.

Negotiators for the European Parliament and the EU’s 28 member states struck a deal last month to protect critical sectors.

However, it was not clear whether a sufficient number of countries would back the compromise, given opposition from some including Cyprus, Greece, Luxembourg, Malta and Portugal.

Some of the opponents have welcomed Chinese investment, such as Greece, whose largest port Piraeus is majority-owned by China’s COSCO Shipping.

But only Italy and Britain voiced reservations on Wednesday, said spokespeople for the European Council and for Austria, which holds the six-month rotating EU presidency.

The proposed new law does not name China but its backers’ complaints over investments by state-owned enterprises and for technology transfers are clear references to Beijing.

Parliament will vote on the proposal in February or March.

EU lawmakers succeeded in pushing through tougher screening than initially proposed, such as obliging the Commission to screen deals and requiring EU countries to cooperate.

They also extended the list of “critical sectors” to include aerospace, health, nano-technology, the media, electric batteries and the supply of food.

The system would not require individual countries to carry out screening. Currently 13 nations have a system in place. Those that do will need to inform other EU members and the Commission if they screen an investment.

All would have to provide an annual report to the Commission, which would also be obliged to give its opinion if a third of member states expressed concerns about a planned foreign investment.

The Commission’s opinions could address concerns that the security of vital infrastructure might be compromised or that innovations that have had years of expensive research could be lost to foreign hands.

However, EU countries and not the Commission would still make final decisions on whether to block foreign investments.

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Source: Investing.com

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