CECIMO on EU’s FDI proposal: ‘Leave investment screening to the Member States’
Brussels, 10 September 2018
Foreign Direct Investment (FDI) is a controversial subject at present, especially with China’s growing tendency towards strategic buyouts of European industry. Nevertheless, the EU’s proposal for an FDI Screening Mechanism will not address the issue adequately.
CECIMO, in a new position paper, recommends a more precise scope for the regulation, while underlining the right of Member States to perform investment screening.
The proposal for the regulation, establishing a framework for screening of foreign direct investments into the European Union, was published by the European Commission back in September 2017. Since then, there has been much debate about the advantages and disadvantages of screening FDI at European level.
FDI is a huge source of growth and employment, with investment into the EU amounting to around €5.4 trillion, as well as directly supporting 7.6 million jobs. Despite this, there is a need to protect key sectors (such as the machine tool sector), as the loss of important industries can constitute a risk to security and public order. Screening investments at EU level is not the solution, however. In fact, it may cause more problems than it solves, while also harming inward EU investment.
Currently, screening is performed exclusively by the Member States (MS), and is done on the basis of security and public order. But after the Regulation comes into force, the European Commission and MS can issue opinions about other countries’ FDIs. CECIMO is of the opinion that this will allow MS to exert political pressure on each other, impeding a country’s sovereign right to protect its own national interests. Security and public order are to be dealt with by MS, not the EU.
CECIMO is highly concerned about the initiative to introduce an Investment Screening Coordination Group. In reality, a large group involving so many different stakeholders will not be able to ensure the strict protection of commercially-sensitive information. It also risks discouraging future FDIs and may serve to deteriorate relationships with third-country investors.
The importance of FDI for the European economy and workforce cannot be understated. However, it is vital that the EU does not rush into a solution that could upset the balance of investments in Europe, while stepping into areas that are better-addressed by Member States.
CECIMO is the European Association representing the common interests of the Machine Tool Industries globally and at EU level. We bring together 15 National Associations of machine tool builders, which represent approximately 1300 industrial enterprises in Europe (EU + EFTA + Turkey), over 80% of which are SMEs. CECIMO covers 97% of total Machine Tool production in Europe and about 33% worldwide. It accounts for almost 136,000 employees and a turnover of more than €26 billion in 2017. Approximately 60% of CECIMO production is shipped abroad, whereas around half of it is exported outside Europe. CECIMO assumes a key role in determining the strategic direction of the European machine tool industry and promotes the development of the sector in the fields of economy, technology and science.
For media enquiries, contact:
Filip Geerts, Director General of CECIMO
Tel +32 2 502 70 90 email@example.com