The EU called the move ‘non-discriminatory’ but nobody doubts the main target is China (Greg Baker)

Brussels (AFP) – The EU took a major step Thursday towards tightening its scrutiny of foreign takeovers in strategic sectors like communications and artificial intelligence amid concern about investment by China.

Under a proposal adopted by the European Parliament, EU countries would supply information on foreign investment to other members if public order or security are concerned.

“We must defend Europe’s strategic interests,” European Commission chief Jean-Claude Juncker said as he welcomed the vote passing in the assembly in Strasbourg, France.

“And for that we need scrutiny over purchases by foreign companies that target Europe’s strategic assets,” Juncker said, while insisting Europe will remain open to investment.

The parliament said it now expects European Union countries on March 5 to endorse the rules it adopted by 500 votes for, 49 against and 56 abstentions.

They would take effect 18 months later.

They aim to protect sectors like energy, transport, communications, data, space and finance as well as technologies such as semiconductors, artificial intelligence and robotics.

European Parliament negotiatiors added sectors such as water, health, defence, media, biotechnology and food security.

The European Commission, the 28-nation EU’s executive arm, has pushed for screening such sectors for more than a year amid growing alarm over China’s investments.

EU Trade Commissioner Cecilia Malmstrom said earlier this week the draft is “non-discriminatory” but acknowledged there “is no secret” about concerns over China.

In December, Commission Vice President Andrus Ansip echoed US warnings about the threat posed by telecoms giant Huawei which Chinese law requires to cooperate with Beijing’s intelligence services.

Huawei is seen as an attractive investor in EU countries as they prepare to roll out fifth-generation networks that will bring near-instantaneous connectivity, vast data capacity and futuristic technologies.

– ‘Supermarket for great powers’ –

Huawei strenuously denies its equipment could be used for espionage.

“Some foreign powers plan their policy of economic conquest abroad,” French MEP Franck Proust warned after he steered the legislation through parliament.

“Europe has just armed itself to be able to respond to this kind of strategy and not become a supermarket for great powers,” said Proust, a member of the centre-right European People’s Party, the largest group in the assembly.

The rules call for sharing foreign direct investment information among EU member states, which can issue comments on FDI targeting other member states. 

The Commission can ask for information and send its opinion to the country concerned, which nonetheless makes the final decision.

The new framework will build on and complement various ones in 14 EU countries: Austria, Denmark, Germany, Finland, France, Latvia, Lithuania, Hungary, Italy, the Netherlands, Poland, Portugal, Spain and Britain.

Juncker launched the campaign for investment screening during his annual state of the union speech to the European Parliament in September 2017.

The plan fulfils a request by French President Emmanuel Macron, backed by Germany and Italy, that Brussels draw up a strategy to counter a wave of takeovers by Chinese companies in Europe.

German concerns were sparked by acquisitions at the time in the tech sector, most notably Chinese household goods maker Midea’s takeover of industrial robotics firm Kuka last year.

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