June 14, 2018 / 11:59 AM / a year ago

EU countries agree Commission scrutiny of foreign investments, but keep final say

BRUSSELS, June 14 (Reuters) - European Union countries have agreed to allow EU-level scrutiny of foreign investment, while stressing they should remain the ultimate arbiters of acquisitions by Chinese and other companies in their territories.

The European Commission last year proposed screening inward investments to protect Europe’s strategic interests and advantage in certain technologies. At present, 12 of 28 EU countries have review mechanisms, but they differ significantly.

EU member states’ ambassadors in Brussels approved a revised text late on Tuesday, clearing the way for negotiations with the European Parliament, which wants wider powers for the Commission in this field.

The Commission recognised last year that its member states will have the last word, but those members have still revised its initial proposal, underlining that it is for individual countries to decide whether or not to screen a particular foreign investment.

The Commission, in their view, should provide a “non-binding opinion”, rather than actually engage in screening itself, although it should also be able to offer an opinion even if a country is not formally screening an investment.

They do though agree that EU member states should take “utmost account” of that opinion on an investment and provide an explanation if they choose not to follow it.

The Commission has said screening should determine an investment’s impact on “security or public order” on critical infrastructure and technology and gave some examples of sectors, such as energy, transport and artificial intelligence

To that, the EU states added the media, defence and land and real estate. However, they did not go as far as the Parliament, which wants also to list sports facilities and betting services as strategic areas.

The final law, which could enter force next year, will be the result of negotiations between representatives of the Commission, the Parliament and the EU states. The first round is provisionally scheduled for July 10.

The original Commission proposal, presented last September, was prompted by a request from Germany, France and Italy.

Some EU nations that promote greater free trade have been sceptical of tougher screening, such as the Netherlands, Sweden and Denmark. Others, such as Portugal, Malta or Hungary, which have benefited from Chinese investment have expressed doubts. (Reporting by Philip Blenkinsop; Editing by Toby Chopra)

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