EU States Seek Protection for High-End Technology

France, Germany and Italy have asked the European Commission to rethink rules on foreign investment into the EU amid concerns that technological know-how is leaking abroad, the three countries said in a joint letter obtained by Reuters.

The economy ministers of France and Germany, and Italy’s industry minister voiced concern that a growing number of non-EU investors were buying up European technologies for the strategic objectives of their home country.

At the same time, EU investors often face barriers when they try to invest in other countries, the ministers said in the letter to EU Trade Commissioner Cecelia Malmstrom.

“As a consequence, we are worried about the lack of reciprocity and about a possible sell-out of European expertise, which we are currently unable to combat with effective instruments,” the letter said.

They also expressed concern about cases of public procurement in countries where EU companies cannot compete for contracts, whereas the EU’s market is open to foreign competition.

In particular, they said the EC should review the possibility of EU member states being able to block outright a foreign investment or make it subject to conditions.

“EU law gives the right to member states to prohibit foreign investments which threaten public security and public order,” said the ministers, from the three largest eurozone economies.

“What is needed is additional protection based on economic criteria taking into account, and with reference to, the EC’s expertise,” they added.

The right of non-EU investors in the bloc should be subject to reciprocity in cases where EU investors are given only limited market access in non-EU countries, the ministers said.

They cited particular cases where European companies were forced to set up local joint ventures or cases where countries barred foreign investors entirely from certain sectors.

While France has long had a policy of vetting and potentially blocking foreign acquisitions under certain conditions, in Germany too opinion is now moving in the same direction following recent investments from China, a French Economy Ministry source said.

Berlin blocked the takeover of German electronics firm Aixtron by China’s Fujian Grand Chip Investment last year on grounds that its microchips could be used in Chinese nuclear weapons.

German Chancellor Angela Merkel also complained about lack of reciprocity after the €4.5 billion ($4.74 billion) buy-out of German robotics firm Kuka by Chinese electrical appliance maker Midea.