A mechanism aimed at strengthening cooperation among EU member states to better control foreign investment in strategic areas will come into force on Sunday, the European Commission announced Friday.
The mechanism, which was approved by the European Parliament in February 2019, should respond to concerns from major EU powers about foreign money investing in the EU’s most sensitive strategic sectors, such as telecoms giant Huawei, according to an AFP report.
Artificial intelligence, robotics, nanotechnology, and telecommunications are among the sectors that could be subject to this mechanism.
Specifically, in some cases, the mechanism would facilitate the exchange of information between member states in the event of foreign investment. Each member state could then “voice concerns” that would likely increase the pressure of a foreign investment in a particular country.
It would also allow the European Commission to issue an opinion when an investment poses a threat to the security or public order of more than one member state, or when a foreign investment harms “a project or program of interest”.
However, the scope of this mechanism is still limited because the European Commission itself does not have the power to stop foreign investments, and in any case, the final decision to stop a foreign investment rests with the member states.
In the EU, France, Germany or Italy, there are concerns that foreign conglomerates, especially Chinese conglomerates, are acquiring key expertise by buying their companies and providing services in the EU at lower prices and in an unfair manner. Some EU member states have long been calling for legislation on foreign investment in strategic areas in order to stop certain corporate takeover deals.
When Chinese appliance giant Midea bought German machine tool maker Kuka for 4.6 billion euros in 2016, Berlin and Brussels could do nothing but stare blankly when it acquired the “Made in Germany” technology.
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