© Reuters. FILE PHOTO: European Union flags fly outside the European Commission headquarters in Brussels, Belgium, March 1, 2023.REUTERS/Johanna Geron/File Photo
By Philip Blenkinsop
BRUSSELS (Reuters) -The European Commission will set out plans on Wednesday to bolster the European Union’s economic security through closer scrutiny of foreign investment and more coordinated controls on exports and outflows of technologies to rivals such as China.
The EU executive will present a broad document on its strategy along with a proposed revision to its law on foreign direct investment screening that will require all EU countries to screen and possibly block foreign investments in the bloc if they pose a security risk.
Screening will also extend to investments within the EU if the investor is controlled by a foreign company, according to documents seen by Reuters.
The plans will not name any country, but the EU has stressed working with “reliable partners” and “de-risking”, the bloc’s policy of reducing economic reliance on China, which dominates green tech and key mineral production and which the bloc regards with more suspicion due to its close ties to Russia.
The Commission will push for greater EU coordination of export controls, particularly for products that could have military applications, and more awareness of the need for security in research into key technologies, especially if third countries are involved.
It will also press for measures that would limit leakage of sensitive technologies to destinations or countries “of concern”. Currently, there is no scrutiny of outbound investment.
Putting into place more EU-wide measures will prove tricky because export and investment controls are competences that EU members guard as their own. There is though a growing appreciation that the bloc needs to combine its economic weight to compete with the likes of China and the United States.
“It’s a hot potato that could take some time to go forward. Implementation will be difficult… but there is a new geopolitical reality,” one EU diplomat said.
The EU executive launched debate on the European Union’s economic security in June, saying the COVID pandemic, Russia’s invasion of Ukraine, cyber and infrastructure attacks and increased geopolitical tensions had exposed multiple new risks.
Part of the strategy involves bolstering EU competitiveness, diversifying supply and export markets, boosting research and investment in advanced semiconductors, quantum computing and biotechnology and closer partnerships with allies.
