Foreign investment screening in Corona times (cepAdhoc)
The COVID 19 crisis and its serious consequences for the economy have led to a debate on the need to protect EU companies from being taken over by foreign investors. Consequently, the EU Commission has published guidance on how to deal with investments from third countries. The cep has evaluated them.
Even during the COVID-19 pandemic, restricting foreign investments by Member States should not go beyond what is absolutely necessary to counter serious damage to security or public order. It is true that the EU's high dependence on certain suppliers from individual third countries has recently become apparent, particularly in the case of medical goods. However, capital restrictions are not appropriate to remedy this dependence. There are alternative measures to address the problem, including diversification of supply structures. The screening rules of the FDI Regulation leave too much room for manoeuvre for Member States to determine the adequacy of an FDI. They increase the risk of protectionism. A return to the narrow rules of the EU Treaties restricting the free movement of capital should be the aim.