The European Commission recently unveiled a package of five initiatives aimed at strengthening the European Union’s economic security “at a time of growing geopolitical tensions and profound technological shifts.” Among other goals, these initiatives seek to improve the screening of foreign investments into the EU, identify potential risks stemming from outbound investments in certain technologies, foster enhanced coordination on export control matters involving dual-use goods, and support research and development in technologies with dual-use potential.
The key objectives of these initiatives are as follows.
Foreign Investment Screening
- ensuring that all EU member states have a screening mechanism in place and harmonizing national rules to make cooperation with other member states and the EC more effective and efficient
- covering transactions within the EU where the direct investor is established in the EU but is ultimately controlled by people or entities from a non-EU country
- establishing a minimum sectoral scope where all EU member states are required to screen transactions
Outbound Investment Monitoring
- conducting a 12-week public consultation to gather stakeholder input and views on the monitoring and subsequent risk assessments that EU member states would have to undertake
- issuing an EC recommendation to member states this summer that takes into account the outcome of the public consultation and recommends that member states monitor outbound investments in critical technologies for a 12-month period and then report back to the EC and other member states
- carry out a shared risk assessment based on the findings of the monitoring process, to be undertaken by the EC and member states to determine whether the monitored transactions bring risks to EU security
- formulate adequate policy responses if necessary
Exports of Dual-Use Goods
- in the short term, consider alternative approaches to introduce uniform EU controls for those items that have been agreed with partners at the multilateral level, even if they could not be formally adopted due to the blockage of the multilateral decision-making process by certain countries
- create a forum for political level coordination on export controls between the EC and member states to foster common EU positions
- adopt a recommendation by this summer to improve technical level coordination between member states and the EC on new national control lists of dual-use items before they are adopted by individual member states, thereby improving the EU’s capacity to identify security and supply chain risks for the EU as a whole
- advance the planned evaluation of the DualUse Regulation to the first quarter of 2025
Supporting R&D in Technologies with Dual-Use Potential
Comments are being sought through April 30 on whether to:
- move forward based on the current set-up, building on an approach characterized by an exclusive focus on either civil or defense applications and introducing incremental improvements that can already be tested in the current EU funding programs,
- remove the exclusive focus on civil applications in selected parts of the successor program to Horizon Europe, which would permit supporting strategic emerging technologies independently of the field of application (defense or civil) in selected parts of the program (subject to specific conditions), or
- create a dedicated instrument with a specific focus on R&D with a dual-use potential, while the civil and defense R&D programs would maintain their mutually exclusive focus.
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