Concerns about the risks posed by Chinese investment prompted the European Parliament to give the green light on Thursday to new powers to screen foreign takeovers in Europe’s strategic sectors.
The limited powers aim to protect European Union sectors such as water, transport, communications and technologies, including semiconductors, artificial intelligence and robotics.
Sitting in the French city of Strasbourg, the European Parliament adopted the draft legislation by 500 votes for, 49 against and 56 abstentions. EU member states must still approve it.
Under the proposal, EU countries will be required to supply, under certain conditions, information on foreign investment to other member countries if public order or security could be affected.
“Acquiring infrastructure, technologies or strategic interests is becoming a political objective,” French MEP Franck Proust warned as he shepherded the legislation through parliament.
“With this tool, Europe will be able to better shield itself against the butterfly’s wing effect of investment,” said Proust, a member of the center-right European People’s Party, the largest group in the assembly.
“All the powers in the world – the United States, Canada, Japan to China – have had their systems of screening, the United States with CFIUS since 1975. Only Europe had no screening system.”
Proust added, “We’re not looking to bar foreign investment. It is essential for EU countries, we need it. It’s to pay attention to the investments that are strange, that do not make economic sense but are political.”
The European Commission, the EU’s executive arm, which has pushed for such screening, has raised the alarm over China, particularly Chinese telecoms giant Huawei’s bid to help build 5G mobile networks across the bloc.
“This legislation is, of course, totally neutral and non-discriminatory,” EU Trade Commissioner Cecilia Malmstrom said on Wednesday.
“But it is no secret that if you follow the debate in certain countries right now… there is a question on China,” Malmstrom said.
“There could be other countries as well.”
But Malmstrom said the final decision will remain with the EU member countries.
In September 2017, during his annual state of the union speech to the European Parliament in Strasbourg, European Commission chief Jean-Claude Juncker promised to seek powers to screen foreign takeovers in Europe’s strategic sector.
The plan fulfills a request by French President Emmanuel Macron, backed by Germany and Italy, that Brussels draw up a strategy to counter a wave of takeovers by Chinese companies in Europe.
– with reporting by Agence France-Presse and Reuters