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Screening of Foreign Investments: Promises and Perils of Technological Sovereignty

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World Trade and Local Public Interest

Part of the book series: Studies in European Economic Law and Regulation ((SEELR,volume 19))

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Abstract

International economic law scholars identified an emerging regulatory trend of screening foreign investments and the risks involved in blurring distinctions between economic and political issues for international peace and stability. Although various academic contributions capture current anomalies in international (economic) relations, they offer conflicting explanations. Instead, broadening analysis of such “surface tensions” to include deeper “tectonic movements”, resulting from technology progress, reconciles various scientific observation. It would also allow to harness earlier academic contributions to perform more proactive function. Regulation on investment screening, where it touches upon development and circulation on new technologies, should be developed with great cautiousness, so that we don’t fall into a trap of our own making.

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Notes

  1. 1.

    (2019) Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for the screening of foreign direct investments into the Union.

  2. 2.

    Hindelang S, Moberg A Debate: A Common European Law on Investment Screening? In: Verfassungsblog. https://bit.ly/2Inohhh. Accessed 8 April 2019.

  3. 3.

    Wang E et al. (2019) Told U.S. security at risk, Chinese firm seeks to sell Grindr dating app. In: Reuters. https://reut.rs/2YxaiuO. Accessed 5 April 2019.

  4. 4.

    Bakker A The Political Economy of Capital Controls and Liberalization. In: Verfassungsblog. https://bit.ly/2UptBrN. Accessed 8 April 2019.

  5. 5.

    Waibel et al. (2010).

  6. 6.

    Brower and Schill (2008).

  7. 7.

    Franck (2005).

  8. 8.

    Cheng (2005).

  9. 9.

    Brower (2003).

  10. 10.

    Chung (2007).

  11. 11.

    Maupin (2013).

  12. 12.

    Sauvant and Alvarez (2011), pp. 1–12.

  13. 13.

    Marx and Engels (1932).

  14. 14.

    Fukuyama (2006).

  15. 15.

    Menkes (2019).

  16. 16.

    Slaughter (2005).

  17. 17.

    Chimni (2004).

  18. 18.

    Snyder (2018).

  19. 19.

    Freud et al. (2010).

  20. 20.

    Bauman (2000).

  21. 21.

    Fromm (1994).

  22. 22.

    Hayek and Caldwell (2007).

  23. 23.

    Menkes (2017a).

  24. 24.

    Cassese (2006), pp. 29–56.

  25. 25.

    North and Thomas (1973).

  26. 26.

    Ibid 19–20.

  27. 27.

    Ibid 17.

  28. 28.

    Ibid 19.

  29. 29.

    Dugain and Labbé (2016).

  30. 30.

    Ip (2018) The Antitrust Case Against Facebook, Google and Amazon. Wall Street Journal.

  31. 31.

    (2017) Joint statement of ministers of France, Germany and Italy calling for FDI screening mechanism.

  32. 32.

    For a comparison between various EU member state models (including a comparative table) see: European Parliament EU framework for FDI screening.

  33. 33.

    On the problematic issue of legal basis of the EU screening mechanism, whether conceived as a part of Common Commercial Policy (as suggested in Regulation, Preamble par. 7) or freedom of capital movement (as could results from Regulation, Preamble par. 4), see: Korte S In Search of a Role for the Member States and the EU to Establish an Investment Screening Mechanism. In: Verfassungsblog. https://bit.ly/2U3tzRs. Accessed 8 April 2019.

  34. 34.

    van den Broek N et al. (2018) EU and Germany Move to Further Tighten FDI Screening Process. In: WilmerHale News & Insights. https://bit.ly/2UKJQPx. Accessed 9 April 2019.

  35. 35.

    Kaman H-G, Seyfarth M German Government Amends German Foreign Trade and Payments Ordinance to Widen Control of Foreign Takeovers of Critical German Companies. In: WilmerHale News & Insights. https://bit.ly/2VAbUlF. Accessed 9 April 2019.

  36. 36.

    Stompfe P Rebuilding the Berlin Wall? In: Verfassungsblog. https://bit.ly/2KjYcm5. Accessed 8 April 2019.

  37. 37.

    Clark G National Security and Investment. A consultation on proposed legislative reforms (White Paper).

  38. 38.

    Brice N et al. Investissements étrangers en France (IEF): Renforcement du contrôle et extension des secteurs stratégiques. In: Jones Day. https://bit.ly/2GwpkZM. Accessed 25 April 2019.

  39. 39.

    (2019) Renforcement du dispositif de contrôle des investissements étrangers dans les entreprises sensibles. In: Direction générale du Trésor. https://www.tresor.economie.gouv.fr/Articles/2019/01/04/renforcement-du-dispositif-de-controle-des-investissements-etrangers-dans-les-entreprises-sensibles. Accessed 25 April 2019.

  40. 40.

    Originally provisions were introduced as a separate bill, Foreign Investment Risk Review Modernization Act (FIRRMA), and only later incorporated to NDAA.

  41. 41.

    50 U.S. Code § 4565 - Authority to review certain mergers, acquisitions, and takeovers.

  42. 42.

    Williams R (2017) CFIUS Reform and U.S. Government Concerns over Chinese Investment: A Primer. In: Lawfare. https://bit.ly/2GAqMJC. Accessed 10 April 2019.

  43. 43.

    Zable S (2018) The Foreign Investment Risk Review Modernization Act of 2018. In: Lawfare. https://bit.ly/2UkLJOV. Accessed 12 April 2019.

  44. 44.

    Vandevelde (1998).

  45. 45.

    Rose-Ackerman and Billa (2008).

  46. 46.

    Military and Paramilitary Activities in and Against Nicaragua (Nicaragua v. U.S.), 1986 I.C.J., para 224.

  47. 47.

    Menkes (2017b).

  48. 48.

    Dugain and Labbé (2016).

  49. 49.

    Menkes (2015).

  50. 50.

    In the economic sense of property rights i.e. exclusivity of enjoyment (use and taking benefits) and the right to alienate, whether formally in a form of property right per se or not, North and Thomas (1973).

  51. 51.

    Snyder (2018).

  52. 52.

    Ohlin (2017).

  53. 53.

    Sztompka (2007).

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Acknowledgments

The author thanks the Kosciuszko Foundation for the support of research at Cornell University.

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  1. Warsaw School of Economics, Warszawa, Poland

    Marcin J. Menkes

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Correspondence to Marcin J. Menkes .

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  1. Department of Private International Law, University of Szeged, Szeged, Hungary

    Csongor István Nagy

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Menkes, M.J. (2020). Screening of Foreign Investments: Promises and Perils of Technological Sovereignty. In: Nagy, C. (eds) World Trade and Local Public Interest. Studies in European Economic Law and Regulation, vol 19. Springer, Cham. https://doi.org/10.1007/978-3-030-41920-2_14

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