Screening Foreign Direct Investment in the EU: Political Rationale, Legal Limitations, Legislative Options

Foreign Direct Investment (FDI) from third countries is a complex and controversial subject that requires screening mechanisms to mitigate potential threats to EU and Member State interests. This book analyzes the political rationale behind FDI screening, identifies legal limitations of current mechanisms, and explores legislative options for broader screening. It examines the Screening Regulation (Regulation (EU) 2019/452) and its newly introduced screening ground "security or public order" and argues that it cannot address concerns with regard to foreign investors. It also examines the freedoms of capital movement and establishment in EU primary law and various sources of international economic law to identify legislative options for broader FDI screening mechanisms.

Format: Paperback / softback
Length: 359 pages
Publication date: 21 July 2023
Publisher: Springer International Publishing AG

Foreign Direct Investment (FDI) from third countries is a significant topic of discussion in the European Union (EU) and its Member States. While some view FDI as a desirable form of investment to boost the EU's economy, others perceive it as a threat to important EU and Member State interests that must be mitigated through FDI screening mechanisms. FDI screening is a complex, controversial, and highly topical subject at the intersection of law, politics, and economics. This book aims to analyze the political rationale behind FDI screening in the EU, reveal the legal limitations of current FDI screening mechanisms based on security and public order, and identify legislative options for broader screening mechanisms in accordance with EU and international economic law. The book identifies four main concerns in the EU regarding FDI from third countries: distortive competition effects, the lack of reciprocity on FDI treatment between the EU and the investor's home country, objectives of the investor or their home country that may be detrimental to EU interests, and safety of private information. The book analyzes the Screening Regulation (Regulation (EU) 2019/452) and its newly introduced screening ground "security or public order" and asks whether this and other similar screening grounds based on the notions of security, public order, and public policy can address these concerns with regard to foreign investors. Based on an analysis of WTO law and EU primary law, the book argues that they cannot. Thus, the question arises: Do the EU and Member States have the flexibility to adopt broader FDI screening mechanisms? To answer this question, the book examines the freedoms of capital movement and establishment in EU primary law, as well as various sources of international economic law such as the WTO's General Agreement on Trade in Services, but also other bi- and multilateral agreements. The book concludes that the EU and Member States have the flexibility to adopt broader FDI screening mechanisms, but that they must ensure that such mechanisms are consistent with EU and international economic law and do not violate the rights of foreign investors.

Dimension: 235 x 155 (mm)
ISBN-13: 9783031056055
Edition number: 1st ed. 2022