14 Sep 2017


Brussels, Brussels Daily, IFA in Brussels

State of the Union 2017 – Trade Package: Commission unveils initiatives for a balanced and progressive trade policy

On 13 September, in his annual State of the Union address, President Jean-Claude Juncker stated: “I want us to strengthen our European trade agenda. Yes, Europe is open for business. But there must be reciprocity. We have to get what we give. Trade is not something abstract. Trade is about jobs, creating new opportunities for Europe’s businesses big and small. Every additional €1 billion in exports supports 14,000 extra jobs in Europe. Trade is about exporting our standards, be they social or environmental standards, data protection or food safety requirements.”

Following the State of the Union speech by President Jean-Claude Juncker, the Commission has today unveiled a weighty package of trade and investment proposals for a progressive and ambitious trade agenda. The proposals include the creation of a European screening framework to ensure that foreign direct investment does not compromise the EU’s strategic interests when it comes to security and public order, as well as draft mandates to open trade negotiations with Australia and New Zealand. In a move to make the EU’s trade policy the most transparent and inclusive in the world, the Commission has decided to set up an Advisory Group on EU trade agreements and to publish as of today any new proposal for negotiating mandates. Finally, today’s proposals include a draft mandate to start negotiations towards the creation of a multilateral investment court.

First Vice-President of the European Commission Frans Timmermans said: “For free and fair trade we need to balance the opening of markets for trade and investment as key driver of our prosperity with international rules that uphold our high standards and common values and protect our interests. This is why we propose as part of the trade package a permanent multilateral investment court that is fair and impartial. Such a court system will enable us to get the right balance between the interests of states and investors and the necessary democratic legitimacy by ensuring independence, accountability and transparency.”

Vice-President Jyrki Katainen said: “Global trade needs to be proactively shaped and managed to ensure it is fair, projects values and remains firmly anchored in a rules-based system. With the rising threat of protectionism and weakened commitment of large players to global trade governance, the EU must step up to take the lead. Our approach is balanced and responsible: we open markets, but we also set high rules and standards to govern globalisation, and we make sure there is a level playing-field. Trade enables EU’s industry to thrive, it creates opportunities for SMEs to export and allows them to create jobs.

Trade Commissioner Cecilia Malmström said: “The world needs leaders in trade. The EU continues to champion free and fair trade, at the forefront of a group of like-minded countries. Today’s package of proposals shows this leadership in action. It also demonstrates our determination to develop EU trade policy in a way that’s as open and inclusive as possible. And in the coming weeks I will be working closely with the European Parliament and EU governments, through the Council of the EU, to move these proposals forward as quickly as possible.”

The key elements of the package are:

  • A proposal for a European framework to screen foreign direct investment. It will ensure that foreign investment remains a major source of growth in the EU while protecting the EU’s essential interests. The legislative proposal is accompanied by a set of further measures that take immediate effect. These are detailed in a dedicated Communication outlining the strategic need for such a screening.
  • Recommendations to the Council to open negotiations for trade agreements with Australia and New Zealand. These agreements would build on the recent successful agreements with Canada, Vietnam, Singapore as well as Japan among others, expanding the alliance of partners committed to progressive rules for global trade.
  • A recommendation to the Council to open negotiations to establish a multilateral court for the settlement of investment disputes. This major innovation in global governance would be yet another step towards a more transparent, coherent and fair approach to deal with company complaints under investment protection agreements.
  • Unprecedented transparency: With the publication of the draft mandates for bilateral trade agreements with Australia and New Zealand, and for a multilateral agreement on investment dispute settlement, the Commission has decided to publish as of now all its recommendations for negotiating directives for trade agreements (known as negotiating mandates). When they are submitted to the European Parliament and the Council, those documents will in parallel be sent automatically to all national Parliaments and will be made available to the general public. This should allow for a wide and inclusive debate on the planned agreements from the start. The Commission asks Member States to ensure the involvement of the relevant national and regional stakeholders in trade talks at the earliest possible stage.
  • The creation of an Advisory Group on EU trade agreements. The group will allow the Commission to engage with civil society and gather more easily different perspectives and insights from a wide and balanced group of stakeholders, ranging from trade unions, employers’ organisations, consumer groups and other non-governmental organisations. The creation of this Group is a continuation of the Commissions’ efforts to make trade policy even more transparent and inclusive.

The details of today’s trade package are outlined in the Communication on “A Progressive Trade Policy to Harness Globalisation”. It is accompanied by a progress report on the EU trade policy strategy “Trade for All” looking at its implementation two years on.


Global trade is a key contributor to a competitive and prosperous European Union, with more than 30 million jobs supported by European exports to the rest of the world. 90% of future global growth will happen outside Europe’s borders. A globally integrated economy therefore continues to benefit both large and small or medium-sized European companies, as well as European citizens, workers and consumers.

In October 2015 the Commission proposed a new trade and investment strategy for the European Union, entitled “Trade for All: Towards a more responsible trade and investment policy”. Today’s Communication and the five initiatives are intended to build on this strategy in the context of the Commission’s broader Reflection Paper on Harnessing Globalisation from May 2017.

For More Information

Communication: A balanced and progressive trade policy to harness globalisation

“Trade for all” implementation report

Press release on investment screening

Factsheet on investment screening   

Draft mandate for negotiations with Australia

Draft mandate for negotiations with New Zealand

Factsheet on future negotiations with Australia and New Zealand

Draft mandate for negotiations to create a multilateral investment court

Factsheet on future negotiations for a multilateral investment court

Factsheet on transparency

PRESIDENT JEAN-CLAUDE JUNCKER’S State of the Union Address 2017

IFA Brussels

State of the Union 2017 – Trade Package: European Commission proposes framework for screening of foreign direct investments

State of the Union 2017 – Trade Package: European Commission proposes framework for screening of foreign direct investments

On 13 September, in his annual State of the Union address, President Jean-Claude Juncker stated: “Let me say once and for all: we are not naïve free traders. Europe must always defend its strategic interests. This is why today we are proposing a new EU framework for investment screening. If a foreign, state-owned, company wants to purchase a European harbour, part of our energy infrastructure or a defence technology firm, this should only happen in transparency, with scrutiny and debate. It is a political responsibility to know what is going on in our own backyard so that we can protect our collective security if needed.”

The European Commission unveiled proposals today to set up a European framework for screening foreign direct investment into the European Union. In parallel, the Commission will start a detailed analysis of the foreign direct investment flows into the EU and set up a coordination group with Member States to help identify joint strategic concerns and solutions in the area of foreign direct investment.

Vice-President Jyrki Katainen said: “The EU is and will remain one of the most open investment regimes in the world. Foreign direct investment is an important source of growth, jobs and innovation. However, we cannot turn a blind eye on the fact that in certain cases foreign take-overs can be detrimental to our interests.

The EU’s Trade Commissioner Cecilia Malmström said:”The aim of what we are proposing is to keep the EU open to foreign investment, with a non-discriminatory, transparent and predictable framework. A European framework for screening foreign direct investments will allow us to respond collectively and defend our European strategic interests when they are at risk.”    

The EU has one of the most open investment regimes in the world. Openness to foreign investment is enshrined in EU Treaties. However, in some cases foreign investors might seek to acquire strategic assets that allow them to control or influence European firms whose activities are critical for our security and public order. This includes activities related to the operation or provision of critical technologies, infrastructure, inputs or sensitive information. Acquisitions by foreign state-owned or controlled companies in these strategic areas may allow third countries to use these assets not only to the detriment of the EU’s technological edge, but also to put our security or public order at risk.

The Commission proposes a new legal framework to enable Europe to preserve its essential interests. This includes:

  • A European framework for screening of foreign direct investments by Member States on grounds of security or public order, including transparency obligations, the rule of equal treatment among foreign investment of different origin, and the obligation to ensure adequate redress possibilities with regard to decisions adopted under these review mechanisms.
  • A cooperation mechanism between Member States and the Commission. The mechanism can be activated when a specific foreign investment in one or several Member States may affect the security or public order of another.
  • European Commission screening on grounds of security or public order for cases in which foreign direct investment in Member States may affect projects or programmes of Union interest. This includes projects and programmes in the areas of research (Horizon 2020), space (Galileo), transport (Trans-European Networks for Transport, TEN-T), energy (TEN-E) and telecommunications.

The new EU-level investment screening framework will ensure transparency and predictability for investors and national governments. It will build on the national review mechanisms already in place in 12 Member States[1] and will not affect EU countries’ ability to adopt any new review mechanisms or to remain without such national mechanisms. When it comes to decisions on foreign direct investments, the European framework will maintain the necessary national flexibility. Member States keep the last word in any investment screening.

The proposed Regulation on screening of foreign direct investments into the EU needs the approval of the European Parliament and EU Member States in the Council (ordinary legislative procedure). In order not to lose any time, the European Commission therefore proposes in parallel to immediately proceed with two additional measures.

First, the Commission will set up a coordination group on inward foreign direct investment that will cover all issues under the scope of the proposed screening Regulation, but will also be a forum for wider discussions. Its broad remit will include identifying sectors and assets that have strategic implications from a security, public order and/or control of critical assets point of view at national level, cross-border level or at European level. The group will be chaired by the Commission and composed of representatives of all Member States.

The group will exchange information and best practices, and analysis on foreign direct investments. It will discuss issues of common concern, such as subsidies and other practices by third countries facilitating strategic acquisitions.

Second, by the end of 2018, the Commission will carry out an in-depth analysis of foreign direct investment flows into the EU, focusing on strategic sectors (such as energy, space, transport) and assets (key technologies, critical infrastructure, sensitive data) whose control may raise concerns for security, or public order reasons. This is particularly the case when the investor is owned or controlled by a third country or benefits from significant state subsidies. In cooperation with Member States, the Commission will collect detailed data, analyse trends, and assess the impact of investments, including through case studies.


The EU has one of the world’s most open investment regimes, and collectively EU Member States have the fewest restrictions in the world on foreign direct investment (FDI). The OECD expressly acknowledged this in its FDI Regulatory Restrictiveness Index which measures statutory barriers against foreign investment in over 60 countries.

The Commission’s reflection paper of 10 May 2017 on Harnessing Globalisation recognised increasing concerns about foreign investors’ strategic acquisitions of European companies with key technologies. These concerns called into question the capacity of the current regulatory framework to address them.

In June 2017, the European Council welcomed the Commission’s initiative to harness globalisation and specifically to analyse investments from third countries in strategic sectors.

For its part, the European Parliament called on the Commission, together with Member States, “to screen third country foreign direct investments in the EU in strategic industries, infrastructure and key future technologies, or other assets that are important in the interests of security and protection of access to them”.

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