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The European Union is one of the world’s leaders in both providing and attracting investments; however, modern changes in geopolitics require a profound understanding of all the potential risks involved. Hence, the EU is assessing the region’s outbound investment in key technology areas – semiconductors, AI and quantum technologies – in order to identify potential threats. This knowledge would allow further strengthening the EU-wide and the member states’ economic security and guide future political-economy priorities.
Background
In June 2023, the European Commission and the High Representative published a Joint Communication on a European Economic Security Strategy; it focused on minimizing risks arising from certain economic flows in the context of increased geopolitical tensions and accelerated technological shifts, while preserving maximum levels of economic openness and dynamism.
The proposed strategy sets out a common framework for achieving economic security by promoting the EU’s economic base and competitiveness; protecting against risks; and partnering with the broadest possible range of countries to address shared concerns and interests. The fundamental principles of proportionality and precision will guide measures on economic security.
The Strategy proposes to carry out a thorough assessment of risks to economic security in four areas: – risks to the resilience of supply chains, including energy security; – risks to physical and cyber security of critical infrastructure; – risks related to technology security and technology leakage; and – risks of “weaponisation” of economic dependencies or economic coercion.
More on Strategy in: https://ec.europa.eu/commission/presscorner/detail/en/ip_23_3358
Reviewing outbound investments
The Commission has adopted recommendations calling on the EU states’ governance to review outbound investments of their companies into non-EU countries: these recommendations apply, generally, to three technology areas presenting both strategic importance for the EU and imposing the highest risk: semiconductors, artificial intelligence and quantum technologies.
The Commission calls on the member states’ governance to assess risks to economic security potentially arising from such transactions.
The present review of outbound investments will help to formulate a EU-wide decision on whether further action is needed – at EU and/or national levels – to address any risks identified. The Commission’s ultimate objective is to prevent EU outbound investments from negatively impacting the economic security of the Union by ensuring that key technologies and know-how “do not fall into the wrong hands”.
The Recommendation on outbound investments builds on a White Paper and subsequent public consultations, which confirmed the need to assess potential risks to the EU’s security related to outbound investments.
The recommendation forms part of the EU’s Economic Security Strategy, followed by the ongoing work on inbound foreign direct investment screening by the member states.
As outlined in the EU strategy, effective EU action on economic security issues also depends on cooperation and coordination with third countries.
In this context, the Commission looks forward to further engage with allies on the subject of outbound investment screening.
Reference and citation from: https://ec.europa.eu/commission/presscorner/detail/da/ip_25_261
Perspectives
Present recommendation asks the member states’ governments to review, together with relevant stakeholders, outbound investments made by the EU investors in the mentions three key technologies in third countries. This review is to last 15 months and should cover both ongoing and past transactions, going back to 1 January 2021.
Building on the work of the Commission’s Expert Group on Outbound Investments, the final recommendation will provide guidance to the EU member states on how to identify and assess potential risks posed by these transactions.
Thus, member states are asked to provide a progress report by 15 July 2025 followed by a comprehensive report on their implementation of the present recommendation (as well as on any risks identified) by 30 June 2026.
More information in the Commission’s blogs: – Commission Recommendation on Outbound Investments; – Joint Communication on the European Economic Security Strategy, June 2023; – Commission Recommendation on critical technology areas, October 2023; – White Paper on Outbound Investments, January 2024; as well as – Summary of public consultation on the White Paper on Outbound Investments, July 2024.