For a long time, supporters of unfettered free trade have dominated within the European Union (EU). But the election of Donald Trump, the rise of China, the Covid-19 pandemic and the war in Ukraine have shaken things up in recent years. Today, in its economic relations with the outside world, and particularly with Beijing but also with Washington, the EU is seeking a subtle balance: being less naive, reducing its dependencies, protecting itself better while remaining an open continent.
The initiatives presented by the European Commission on Wednesday January 24, on behalf of “economic security”, are part of this logic, even if they are significantly less ambitious than the community executive wanted in June 2023. Its president, Ursula von der Leyen, had in fact mentioned the need for reinforced control of foreign investments in within the EU and exports of sensitive goods outside community borders, in order to prevent its sensitive technologies or critical infrastructures from falling into unfriendly hands, such as those of China or Russia. She had also campaigned for the establishment of controls on investments by European companies in third countries which would facilitate technology leaks.
Faced with the outcry from member states who feared the consequences and judged that with this proposal Angela Merkel’s former minister was encroaching on their powers, the Commission finally tempered its ardor. Several capitals had also suspected the very transatlantic Ursula von der Leyen of wanting to give pledges to the United States.
Artificial intelligence and semiconductors
In order to avoid a “turf war” with the Twenty-Seven, explained the vice-president of the community executive, Margrethe Vestager, it is a “gradual approach” which was chosen. Ultimately, the only legislative proposal that the Commission has put on the table concerns the strengthening of the control of foreign investments in Europe, put in place in 2020. Under this, the Member States, equipped with a mechanism of control of foreign investments, must report to the Commission and other European countries current projects likely to raise questions.
The Commission wishes that “all member states have a control mechanism” foreign investments, while today four countries do not have any: Croatia, Cyprus, Bulgaria and Greece. Ireland does not have one either, but it plans to remedy it this year. Furthermore, she campaigns for “a minimum sectoral scope of application”, which could concern artificial intelligence, the most sophisticated semiconductors, biotech and quantum computing. Finally, control must also apply to inter-EU investments, when the investor is held by capital from third countries. The scope of this text, however, remains limited: the Commission has no power to block an investment, the last word remaining with the Member States.