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Europe wants to better protect itself from Chinese appetites

MEPs are expected to adopt on Thursday 14 February a scheme to monitor sensitive foreign investment projects in the European Union.

► What does the text considered by MEPs provide?

Just weeks before the European elections in May 2019, the vote of MEPs to be held Thursday, February 14 is a victory for the promoters of a "Europe that protects"according to the slogan put forward by the European institutions. It is in any case a " first step " which must be crossed towards an increased economic defense of the European Union (EU) with the definitive adoption of a regulation which establishes a "Filtering foreign direct investment in Europe". A device resulting from a proposal from the European Commission of September 2017.

In concrete terms, the text plans to closely monitor, through an alert and information exchange mechanism, all foreign investment projects in a Union country. "Likely to impair security or public order"in strategic sectors such as telecommunications, energy, advanced technologies or farmland.

In the case of a foreign investment project in one of these sectors, any Member State will now be required to notify its partners by providing technical and financial information on the project concerned. The Commission will be responsible for issuing «Review»and other Member States will be able to comment on whether or not to accept the investment.

Pact Act, foreign investment under enhanced surveillance

However, this mechanism is not binding and a State wishing to complete the project can not be prevented from doing so. Question of national sovereignty. "But do not underestimate the power of the European political game and the strength of peer pressure," the European Commission argues. "It will be politically very difficult for a member to override the opinions and comments received in the context of such a procedure", do we want to believe in Brussels?

► Why this increased monitoring?

At present, thirteen EU states already have a national mechanism for monitoring foreign investment in strategic sectors. France created its first tool in 2005, strengthened in 2014, and it should still be in the Pact Act currently under consideration in Parliament. The European system is simply grafted on.

The rise of Chinese investment in the Old Continent has led more and more politicians to realize that we should not let everything go without intervention. The turning point came in 2016, when Chinese company Midea bought Kuka, a German manufacturer of industrial robots. Berlin then realized the need to take things in hand, joining France and Italy, already on the cutting edge.

Germany changes industrial strategy

This text is a " first step ", for Franck Proust, the French MEP (EPP) rapporteur for the project, who sees the end of a certain "European naivety". At this stage, however, sovereignty remains national. It would not have been possible to do otherwise, as this regulation has met the mistrust, even the hostility, of some Member States: those of northern Europe, traditionally free-traders, or Greece and Portugal, who have hosted several Chinese investments since the beginning of the crisis and who do not intend to close the door.

► What are the prospects?

After MEPs vote on Thursday, the text will be formally endorsed in March by the Heads of State and Government – a mere formality – to come into force by May. This is really, assure his supporters, of a " first step " who will call others. This regulation will be reviewed after three years, as opposed to five years.

The Commission is already seeing a ripple effect, pointing out that new states are starting to build a national system – these include the Czech Republic, Malta and Denmark.

Alstom-Siemens, the slingshot of Paris and Berlin

Another project is waiting for the European institutions: the possible modification of the rules of competition, recently accused by Paris and Berlin of preventing the creation of "European champions", after Brussels refused, on February 6, the merger between Alstom and Siemens.

Marie Dancer

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