How will the EU screen the FDI?

The EU is one of the major places in the world that is very open and favourable to foreign direct investment. However, the open regime might become a bit more restrictive.

President of the European Commission, Jean-Claude Juncker, mentioned in his State of the Union speech that Europe must defend its strategic interests and is not a naïve free trader. According to the Commission, in some cases the open regime attracts foreign investors to acquire assets in companies of strategic importance to the EU, especially in the field of critical technologies, infrastructure or security. Therefore, the Commission suggested several measures that should create a legal framework that would screen foreign direct investment coming to the EU, while preserving the openness of the EU toward investment from outside countries. So far, 12 countries in the EU have their own investment screening mechanism, however, the systems differ in terms of scope and design.

Czech business and employers’ organizations welcome the effort made by the Commission in the area of foreign direct investment. The framework needs to be created on the basis of proportionality, transparency and non-discrimination, and must be in line with the rules set by the World Trade Organization. Furthermore, Czech business and employers’ organizations call on the Commission to further specify which sectors would fall under the scope of the framework. Also, the Commission should clarify whether the screening mechanism would be applied to all investment or only to an investment surpassing a certain threshold in terms of value. Last but not least, the proposal shouldn’t diminish the competitiveness of the EU and European companies. As it is a sensitive topic, the approach of the Commission should be balanced and fair.