Abstract
This chapter outlines political, legal, and economic aspects of Australia’s inward foreign investment screening regime, taking account of the historical development of the legislative framework and its practical implementation to date. Australian screening is characterised by high levels of discretion in the Treasurer, within broad policy parameters regarding the meaning of ‘national interest’ and ‘national security’. The impact of the most recent changes as of 2021 is difficult to assess, but they have clearly increased the number of investment proposals that are subject to review. Although most applications are approved, approval with conditions is common, while other applications may be withdrawn following informal feedback, obviating the need for formal rejection. The increasing restrictiveness of Australia’s approach and its continuing differentiation between investors from different countries create risks of violating one of Australia’s 30+ international investment agreements in force, the majority of which include investor–state dispute settlement mechanisms. The economic and diplomatic rationale for such restrictiveness and differentiation (particularly in the form of higher screening thresholds for some but not all of Australia’s preferential trade agreement partners) is unclear.
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Notes
- 1.
DFAT (2022d).
- 2.
OECD (2020). The OECD FDI Restrictiveness Index is a composite index measuring four kinds of restrictions on FDI. One of these is screening and approval mechanisms. The three others are foreign equity restrictions, foreign personnel restrictions and operational restrictions (such as branching, profit repatriation and land ownership).
- 3.
OECD (2020).
- 4.
OECD (2020).
- 5.
FIRB (2022a), p. 1.
- 6.
- 7.
Scissors (2022).
- 8.
ALP (2007) [6], [27].
- 9.
Garnaut (2007).
- 10.
Uren (2012), p. 43.
- 11.
ALP (2012), p. 13, 19, 51.
- 12.
Chan (2013).
- 13.
Ibid.
- 14.
Ibid.
- 15.
Treasurer (2020a).
- 16.
McIlroy (2022).
- 17.
ALP (2021).
- 18.
Hanratty (1996).
- 19.
Treasury (2015).
- 20.
FIRB (2022a), pp. 14–16.
- 21.
FIRB (2022a), pp. 14, 16.
- 22.
Ibid. See Foreign Acquisitions and Takeovers Regulation 2015 (Cth) s 5 (definition of ‘agreement country or region’) (FATR). Thailand also benefits from some lower thresholds with respect to certain land investments.
- 23.
FIRB (2022a), pp. 15–16. See FATR s 51.
- 24.
FIRB (2021), p. 1.
- 25.
FIRB (2022a), p. 2.
- 26.
Treasurer (2017).
- 27.
Parliament (2021), [3.42].
- 28.
Productivity Commission (2020), p. 83.
- 29.
E.g. FATA s 67(1)(b).
- 30.
Reuters (2009).
- 31.
Treasury (2008).
- 32.
FIRB (2022a), pp. 8–9.
- 33.
FIRB (2022a), p. 10.
- 34.
Bath (2018), pp. 154–155.
- 35.
- 36.
Treasurer (2020b).
- 37.
Treasurer (2020a).
- 38.
Productivity Commission (2020), p. 113.
- 39.
Black (2019).
- 40.
See, e.g., FATA ss 4 (definition of ‘national security business’), 55B(a)–(c), 67(1A)(a)(i); FATR s 8AA(2)(b), (e).
- 41.
FATA ss 55B(1)(b), 81.
- 42.
FATR s 8AA(2)(c)-(e), (g)-(h).
- 43.
FATR s 8AA(2)(b).
- 44.
Security of Critical Infrastructure Act 2018 (Cth) s 9.
- 45.
FIRB (2021), p. 12.
- 46.
FATA s55E.
- 47.
FATR s 60A.
- 48.
FATA s 66A(1) (see also (2), (5)).
- 49.
FATA s 79A(1).
- 50.
FATA s 79A(2).
- 51.
FIRB (2021), p. 46.
- 52.
FIRB (2022b), p. 3.
- 53.
FIRB (2022a), p. 11.
- 54.
FIRB (2022b), p. 11.
- 55.
FIRB (2022b), p. 27.
- 56.
FATA ss 67, 69, 79D, 79E.
- 57.
Treasury (2021).
- 58.
Treasury (2022a).
- 59.
Treasury (2021), p. 15.
- 60.
Treasury (2022b).
- 61.
Treasury (2022b).
- 62.
Foreign Acquisitions and Takeovers Amendment Regulations 2022 (Cth) pt 2.
- 63.
Parliament (2021).
- 64.
- 65.
Parliament (2022).
- 66.
International M&A deals are deals between an Australian target and an acquirer firm not located in Australia.
- 67.
2002 is the first full year of data in Fig. 3.
- 68.
FIRB (2021), p. 17, 19.
- 69.
FIRB (2021), p. 19.
- 70.
- 71.
- 72.
Productivity Commission (2020), p. 86.
- 73.
See above nn 22–23 and surrounding text.
- 74.
DFAT (2011).
- 75.
See, e.g., Senate (2014), [2.7].
- 76.
ALP (2021).
- 77.
Minister for Trade and Tourism (2022).
- 78.
DFAT (2022b).
- 79.
Knight and Voon (2020), pp. 117–118, 122–123.
- 80.
Free Trade Agreement between the Government of Australia and the Government of the People’s Republic of China, signed 17 June 2015 (entered into force 20 December 2015) (ChAFTA).
- 81.
Zhou (2017), pp. 420–426.
- 82.
Regional Comprehensive Economic Partnership (signed 15 November 2020, entered into force for Australia and China on 1 January 2022) (RCEP).
- 83.
Mitchell et al. (2017), pp. 17, 27, 35.
- 84.
Voon and Merriman (2022).
- 85.
- 86.
Voon and Merriman (2023).
- 87.
Agreement between the Government of Australia and the Government of the People’s Republic of China on the Reciprocal Encouragement and Protection of Investments, signed 11 July 1988 (entered into force 11 July 1988) (BIT).
- 88.
Voon and Sheargold (2018), pp. 220–224.
- 89.
ChAFTA arts 9.12.1, 9.12.2(a)(i).
- 90.
ChAFTA annex III, schedule of Australia.
- 91.
BIT arts I:1(b), (f), II:1, III(a), (b), (c).
- 92.
ChAFTA arts 9.8, 9.11.4, 16.3.
- 93.
Huiqin and Zhou (2018), p. 189.
- 94.
Kehoe et al. (2021).
- 95.
See DFAT (2022a).
- 96.
Ferguson et al. (2022), p. 3.
- 97.
DFAT (2022b).
- 98.
DFAT (2022c).
- 99.
Voon Merriman (2022).
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McCalman, P., Puzzello, L., Voon, T., Walter, A. (2024). Inward Foreign Investment Screening in Australia: Development and Implications. In: Springer Studies in Law & Geoeconomics. Springer, Cham. https://doi.org/10.1007/17280_2024_33
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DOI: https://doi.org/10.1007/17280_2024_33
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