Assessing the EU Framework Regulation for the Screening of Foreign Direct Investment—What Is the Effect on Chinese Investors?

Abstract

An increase of Chinese investment into the territory of the European Union has raised EU regulators’ concerns regarding the public security of the EU. As a result, the new Framework Regulation 2019/452 establishing a framework for the screening of FDI into the EU was adopted as a legal instrument aimed at their control, applicable from 11 October 2020. Adopted within the scope of Common Commercial Policy of the EU, the Framework Regulation, however, might not become an effective legal measure, as its application by Member States both in light of the freedom of movement of capital and the relevant CJEU jurisprudence raises significant legal questions. This article broadly discusses the newly introduced cooperation mechanism between Member States and the European Commission, as well as the relevant effect of the Framework Regulation upon Chinese investment and the pending negotiations of the EU-China BIT.