Monitoring the impact of the EU’s new foreign investment screening mechanism: Policy brief, 19

Research output: Book/ReportReportAcademic

Abstract

Since 2020, the European Union (EU) has maintained a framework for foreign investment screening. It sets the parameters for Member State mechanisms to review foreign direct investment (FDI) on national security grounds and gives the European Commission a coordinating role. The adoption of the EU screening framework is part of Europe’s response to the rise of geoeconomic competition for critical resources and strategic assets.

No later than the 12 October 2023, the European Commission must present to the European Parliament and the Council a report evaluating the functioning and effectiveness of the EU investment screening framework and, if appropriate, a legislative amendment proposal.

As the deadline approaches, it has become clear that the Commission’s monitoring tools are insufficient. It is reliant on Member States being forthcoming with statistics that could support the case for a legislative expansion of the Commission’s competences. The Commission’s first annual report on the implementation of the framework was striking in its absence of key metrics that would allow an ex-post assessment of the framework’s impact on investment flows. Notably, it included no 1information on the breakdown of screened investments and screening decisions by countries of origin of inbound FDI. It presented aggregate data on the number of screening cases but not on the value of investments screened, which would allow for pricing of the security externalities identified in the screening process.

This policy brief outlines the Commission’s monitoring mandate over investment screening activity. It then proposes a set of parameters for measuring the impact of screening on investment flows, investment destinations, and funding cost, and for mapping the potential transformative effect of the EU investment screening framework on the European investment landscape.
Original languageEnglish
PublisherUniversity of Adelaide
Commissioning bodyThe University of Adelaide
Number of pages5
Publication statusPublished - 23 Jan 2023

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