POSITION PAPER ON SCREENING OF FOREIGN DIRECT INVESTMENTS (FDI) – EVALUATION AND POSSIBLE REVISION OF THE CURRENT EU FRAMEWORK
POSITION PAPER on Screening of foreign direct investments (FDI) – evaluation and possible revision of the current EU framework[1]
In light of the open consultation launched by the European Commission on Screening of foreign direct investments and the planned preparation of a report evaluating the functioning and effectiveness of Regulation (EU) 2019/452[2], Bulgarian Industrial Association – Union of the Bulgarian Business presents the following opinion.
- Short implementation period. While the EU FDI screening framework represents a significant step towards enhancing the EU's ability to assess and potentially mitigate risks associated with foreign investments that may pose threats to security or public order within the European Union, the implementation time period of the Regulation (EU) 2019/452 is too short to accumulate extensive data to form a conclusive decision for changes in the Regulation.
The key FDI instrument is the Screening Regulation (EU) 2019/452. It is now complemented by the Foreign Subsidies Regulation (EU) 2022/2560[3]. The introduction and implementation of additional instruments and mechanisms could hamper the stability of the regulatory environment and distort the evaluation of the instruments that are already in place.
- The framework's definition of critical assets and technologies that are subject to screening may vary across Member States. The lack of harmonization in defining and identifying critical sectors and assets can result in differing levels of protection and screening thresholds. This may leave certain sectors or assets vulnerable to potential risks.
- Lack of Clarity on Criteria and Thresholds. The framework could benefit from providing clearer guidelines and criteria for screening foreign investments. This would help ensure consistency in decision-making across Member States and provide greater clarity to investors regarding the types of investments that may be subject to screening.
- Balance between Screening and Investment Promotion. Striking a balance between screening foreign investments for potential risks and promoting investment flows can be a delicate task. Overly restrictive screening measures may deter legitimate investments, while inadequate screening may leave critical assets and technologies vulnerable to potential risks.
It is of utmost importance to safeguard Europe’s open investment environment, especially having in mind the statistical data on inbound and outbound investment flows in the EU.
- Voluntary Cooperation Mechanism. The current EU FDI screening framework is based on a voluntary cooperation mechanism among EU Member States, which establishes a framework for information sharing and cooperation on foreign investments that may affect security or public order within the EU. To better suit the specific national sectoral needs for investments, especially the need for large investments to achieve the green and digital transition the Member States should maintain the options for versatility of the screening approaches while abiding with the minimum standards and principles that are set out by the Regulation. These include transparency, non-discrimination, protection of confidential information and the right to judicial review.
- Information Sharing and Cooperation. Effective implementation of the framework relies on information sharing and cooperation between Member States and the European Commission. The established mechanisms for sharing relevant information and coordinating screening activities should be tested and evaluated as to efficiently overcome the challenges due to differences in data protection regulations, varying levels of information availability, and coordination complexities among multiple stakeholders.
Sofia (BG), 14 July 2023
About Us:
The Bulgarian Industrial Association - Union of the Bulgarian Business (BIA) is a non-governmental employers’ organization, established on April 25th, 1980. During its over 40 years of history, BIA has proved itself as one of the leading social partners of the state in defining the economic policy while maintaining its governmental and political impartiality. The Bulgarian Industrial Association is guided solely by the virtues of national responsibility, competence, and integrity.
BIA has a well-developed matrix structure uniting both the branch organizations, which cover the entire spectrum of the economy and the regional structures, which correspond to the administrative division of the country.
BIAs' structure includes more than 120 branch organizations, the majority of which are members of the respective European branch structures. They are active participants in the sectoral social dialogue and are a party to the existing collective agreements in Bulgaria.
On a territorial basis, BIA has established a network of regional and municipal organizations in all regions and multiple municipal centers. More than 100 local business associations operate locally. The network is developing dynamically over time and the number of municipal and local organizations is constantly growing. The territorial structures of BIA are actively involved in the social dialogue on the regional level, as well as in the work of the Regional Development Councils.
The Bulgarian Industrial Association - Union of the Bulgarian Business have signed up to
the EU Transparency Register and the associated Code of Conduct. Register identification number: 997879216637-27.
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[1] https://policy.trade.ec.europa.eu/consultations/screening-foreign-direct-investments-fdi-evaluation-and-possible-revision-current-eu-framework_en
[2] Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for the screening of foreign direct investments into the Union - http://data.europa.eu/eli/reg/2019/452/oj
[3] Regulation (EU) 2022/2560 of the European Parliament and of the Council of 14 December 2022 on foreign subsidies distorting the internal market - http://data.europa.eu/eli/reg/2022/2560/oj
