# C_2018247EN.01002801.xml

| 13.7.2018 | EN | Official Journal of the European Union | C 247/28 |
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13.7.2018

EN

Official Journal of the European Union

C 247/28

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Opinion of the European Committee of the Regions — Trade Package

(2018/C 247/06)

| Rapporteur: | Micaela Fanelli (IT/PES), Mayor of Riccia, Campobasso |
| --- | --- |
| Reference documents: | Proposal for a Regulation establishing a framework for screening of foreign direct investments into the European Union
  COM(2017) 487 final
  Communication on the 2017 list of critical raw materials for the EU
  COM(2017) 490 final
  Report on the implementation of the trade policy strategy Trade for All — Delivering a progressive trade policy to harness globalisation
  COM(2017) 491 final
  Communication on A balanced and progressive trade policy to harness globalisation
  COM(2017) 492 final
  Communication on Welcoming foreign direct investment while protecting essential interests
  COM(2017) 494 final
  Recommendations for Council decisions
  COM(2017) 469 final, COM(2017) 472 final and COM(2017) 493 final |

Rapporteur:

Rapporteur:

Micaela Fanelli (IT/PES), Mayor of Riccia, Campobasso

Reference documents:

Reference documents:

Proposal for a Regulation establishing a framework for screening of foreign direct investments into the European Union

COM(2017) 487 final

Communication on the 2017 list of critical raw materials for the EU

COM(2017) 490 final

Report on the implementation of the trade policy strategy Trade for All — Delivering a progressive trade policy to harness globalisation

COM(2017) 491 final

Communication on A balanced and progressive trade policy to harness globalisation

COM(2017) 492 final

Communication on Welcoming foreign direct investment while protecting essential interests

COM(2017) 494 final

Recommendations for Council decisions

COM(2017) 469 final, COM(2017) 472 final and COM(2017) 493 final

I.   RECOMMENDATIONS FOR AMENDMENTS

RECOMMENDATIONS FOR AMENDMENTS

Proposal for a Regulation of the European Parliament and of the Council establishing a framework for screening of foreign direct investments into the European Union

COM(2017) 487 final

Amendment 1

Amendment 1

Recital 13

| Text proposed by the European Commission | CoR amendment |
| --- | --- |
| (13) | It is appropriate to lay down the essential elements of the procedural framework for the screening of foreign direct investment by Member States to allow investors, the Commission and other Member States to understand how such investments are likely to be screened and to ensure that these investments are screened in a transparent manner and that they are non-discriminatory between third countries. Those elements should at least include the establishment of timeframes for the screening and the possibility for foreign investors to seek judicial redress of screening decisions. |

Text proposed by the European Commission

CoR amendment

(13)

It is appropriate to lay down the essential elements of the procedural framework for the screening of foreign direct investment by Member States to allow investors, the Commission and other Member States to understand how such investments are likely to be screened and to ensure that these investments are screened in a transparent manner and that they are non-discriminatory between third countries. Those elements should at least include the establishment of timeframes for the screening and the possibility for foreign investors to seek judicial redress of screening decisions.

| (13) | It is appropriate to lay down the essential elements of the procedural framework for the screening of foreign direct investment by Member States to allow investors, the Commission and other Member States, as well as the local and regional authorities and social partners concerned,
  to understand how such investments are likely to be screened and to ensure that these investments are screened in a transparent manner and that they are non-discriminatory between third countries. Those elements should at least include the establishment of timeframes for the screening and the possibility for foreign investors to seek judicial redress of screening decisions. |
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(13)

It is appropriate to lay down the essential elements of the procedural framework for the screening of foreign direct investment by Member States to allow investors, the Commission and other Member States, as well as the local and regional authorities and social partners concerned,
  to understand how such investments are likely to be screened and to ensure that these investments are screened in a transparent manner and that they are non-discriminatory between third countries. Those elements should at least include the establishment of timeframes for the screening and the possibility for foreign investors to seek judicial redress of screening decisions.

, as well as the local and regional authorities and social partners concerned,

Reason

Reason

The regional authorities where the foreign direct investment (FDI) is planned or has been completed will be greatly affected by the decisions taken by the Member States and should therefore also be involved in the decisions.

Amendment 2

Amendment 2

Recital 18

| Text proposed by the European Commission | CoR amendment |
| --- | --- |
| (18) | To that end, it is also important to ensure a minimum level of information and coordination with regard to foreign direct investments falling under the scope of this Regulation in all Member States. This information should be made available by the Member States in which the foreign direct investment is planned or has been completed upon request of the Member States or of the Commission. Relevant information includes aspects such as the ownership structure of the foreign investor and the financing of the planned or completed investment, including, when available, information about subsidies granted by third countries. |

Text proposed by the European Commission

CoR amendment

(18)

To that end, it is also important to ensure a minimum level of information and coordination with regard to foreign direct investments falling under the scope of this Regulation in all Member States. This information should be made available by the Member States in which the foreign direct investment is planned or has been completed upon request of the Member States or of the Commission. Relevant information includes aspects such as the ownership structure of the foreign investor and the financing of the planned or completed investment, including, when available, information about subsidies granted by third countries.

| (18) | To that end, it is also important to ensure a minimum level of information and coordination with regard to foreign direct investments falling under the scope of this Regulation in all Member States. This information should
  , after consultation of the local and regional authorities concerned,
  be made available by the Member States in which the foreign direct investment is planned or has been completed upon request of the Member States or of the Commission. Relevant information includes aspects such as the ownership structure of the foreign investor and the financing of the planned or completed investment, including, when available, information about subsidies granted by third countries. |
| --- | --- |

(18)

To that end, it is also important to ensure a minimum level of information and coordination with regard to foreign direct investments falling under the scope of this Regulation in all Member States. This information should
  , after consultation of the local and regional authorities concerned,
  be made available by the Member States in which the foreign direct investment is planned or has been completed upon request of the Member States or of the Commission. Relevant information includes aspects such as the ownership structure of the foreign investor and the financing of the planned or completed investment, including, when available, information about subsidies granted by third countries.

, after consultation of the local and regional authorities concerned,

Reason

Reason

The regional authorities where the FDI is planned or has been completed will be greatly affected by the decisions taken by the Member States and should therefore also be involved in the decisions.

Amendment 3

Amendment 3

Article 3(2)

| Text proposed by the European Commission | CoR amendment |
| --- | --- |
| Article 3 | Article 3 |
| Screening of foreign direct investments | Screening of foreign direct investments |
| 2.   The Commission may screen foreign direct investments that are likely to affect projects or programmes of Union interest on the grounds of security or public order. | 2.   The Commission may screen foreign direct investments that are likely to affect
  existing or responsibly planned
  projects or programmes of Union interest on the grounds of security or public order. |

Text proposed by the European Commission

CoR amendment

Article 3

Article 3

Screening of foreign direct investments

Screening of foreign direct investments

Screening of foreign direct investments

Screening of foreign direct investments

2.   The Commission may screen foreign direct investments that are likely to affect projects or programmes of Union interest on the grounds of security or public order.

2.   The Commission may screen foreign direct investments that are likely to affect
  existing or responsibly planned
  projects or programmes of Union interest on the grounds of security or public order.

existing or responsibly planned

Amendment 4

Amendment 4

Article 6(1) and 6(2)

| Text proposed by the European Commission | CoR amendment |
| --- | --- |
| Article 6 | Article 6 |
| Framework for Member States’ screening | Framework for Member States’ screening |
| 1.   Member States’ screening mechanisms shall be transparent and not discriminate between third countries. In particular, Member States shall set out the circumstances triggering the screening, the grounds for screening and the applicable detailed procedural rules. | 1.   Member States’ screening mechanisms shall be transparent and not discriminate between third countries. In particular, Member States shall set out the circumstances triggering the screening, the grounds for screening and the applicable detailed procedural rules.
  The Member States shall also, as part of this procedure, and to the extent possible, inform and consult with the local and regional authorities where the FDI is planned or has been completed. |
| 2.   Member States shall establish timeframes for issuing screening decisions. Such timeframes shall allow them to take into account the comments of Member States referred to in Article 8 and the opinion of the Commission referred to in Articles 8 and 9. | 2.   Member States shall establish timeframes for issuing screening decisions. Such timeframes shall allow them to take into account the comments
  of the local and regional authorities where the FDI is planned or has been completed and
  of Member States referred to in Article 8 and the opinion of the Commission referred to in Articles 8 and 9. |
| [...] | [...] |

Text proposed by the European Commission

CoR amendment

Article 6

Article 6

Framework for Member States’ screening

Framework for Member States’ screening

Framework for Member States’ screening

Framework for Member States’ screening

1.   Member States’ screening mechanisms shall be transparent and not discriminate between third countries. In particular, Member States shall set out the circumstances triggering the screening, the grounds for screening and the applicable detailed procedural rules.

1.   Member States’ screening mechanisms shall be transparent and not discriminate between third countries. In particular, Member States shall set out the circumstances triggering the screening, the grounds for screening and the applicable detailed procedural rules.
  The Member States shall also, as part of this procedure, and to the extent possible, inform and consult with the local and regional authorities where the FDI is planned or has been completed.

The Member States shall also, as part of this procedure, and to the extent possible, inform and consult with the local and regional authorities where the FDI is planned or has been completed.

2.   Member States shall establish timeframes for issuing screening decisions. Such timeframes shall allow them to take into account the comments of Member States referred to in Article 8 and the opinion of the Commission referred to in Articles 8 and 9.

2.   Member States shall establish timeframes for issuing screening decisions. Such timeframes shall allow them to take into account the comments
  of the local and regional authorities where the FDI is planned or has been completed and
  of Member States referred to in Article 8 and the opinion of the Commission referred to in Articles 8 and 9.

of the local and regional authorities where the FDI is planned or has been completed and

[...]

[...]

Reason

Reason

The regional authorities where the FDI is planned or has been completed will be greatly affected by the decisions taken by the Member States and should therefore also be involved in the decisions.

Amendment 5

Amendment 5

Article 8(1)

| Text proposed by the European Commission | CoR amendment |
| --- | --- |
| Article 8 | Article 8 |
| Cooperation mechanism | Cooperation mechanism |
| 1.   Member States shall inform the Commission and the other Member States of any foreign direct investments that are undergoing screening within the framework of their screening mechanisms, within 5 working days from the start of the screening. As part of the information, and when applicable, the screening Member States shall endeavour to indicate whether it considers that the foreign direct investment undergoing screening is likely to fall within the scope of Regulation (EC) No 139/2004. | 1.   Member States shall
  consult with the local and regional authorities where the FDI is planned or has been completed, and
  inform the Commission and the other Member States of any foreign direct investments that are undergoing screening within the framework of their screening mechanisms, within 5 working days from the start of the screening. As part of the information, and when applicable, the screening Member States shall endeavour to indicate whether it considers that the foreign direct investment undergoing screening is likely to fall within the scope of Regulation (EC) No 139/2004. |

Text proposed by the European Commission

CoR amendment

Article 8

Article 8

Cooperation mechanism

Cooperation mechanism

Cooperation mechanism

Cooperation mechanism

1.   Member States shall inform the Commission and the other Member States of any foreign direct investments that are undergoing screening within the framework of their screening mechanisms, within 5 working days from the start of the screening. As part of the information, and when applicable, the screening Member States shall endeavour to indicate whether it considers that the foreign direct investment undergoing screening is likely to fall within the scope of Regulation (EC) No 139/2004.

1.   Member States shall
  consult with the local and regional authorities where the FDI is planned or has been completed, and
  inform the Commission and the other Member States of any foreign direct investments that are undergoing screening within the framework of their screening mechanisms, within 5 working days from the start of the screening. As part of the information, and when applicable, the screening Member States shall endeavour to indicate whether it considers that the foreign direct investment undergoing screening is likely to fall within the scope of Regulation (EC) No 139/2004.

consult with the local and regional authorities where the FDI is planned or has been completed, and

Reason

Reason

It is important that local and regional authorities are consulted in the screening of a particular FDI.

Amendment 6

Amendment 6

Article 8(6)

| Text proposed by the European Commission | CoR amendment |
| --- | --- |
| Article 8 | Article 8 |
| Cooperation mechanism | Cooperation mechanism |
| 6.   The Member States where the foreign direct investment is planned or has been completed shall give due consideration to the comments of the other Member States referred to in paragraph 2 and to the opinion of the Commission referred to in paragraph 3. | 6.   The Member States where the foreign direct investment is planned or has been completed shall give due consideration to the comments
  of the local and regional authorities where the FDI is planned or has been completed referred to in paragraph 1 and
  of the other Member States referred to in paragraph 2 and to the opinion of the Commission referred to in paragraph 3. |

Text proposed by the European Commission

CoR amendment

Article 8

Article 8

Cooperation mechanism

Cooperation mechanism

Cooperation mechanism

Cooperation mechanism

6.   The Member States where the foreign direct investment is planned or has been completed shall give due consideration to the comments of the other Member States referred to in paragraph 2 and to the opinion of the Commission referred to in paragraph 3.

6.   The Member States where the foreign direct investment is planned or has been completed shall give due consideration to the comments
  of the local and regional authorities where the FDI is planned or has been completed referred to in paragraph 1 and
  of the other Member States referred to in paragraph 2 and to the opinion of the Commission referred to in paragraph 3.

of the local and regional authorities where the FDI is planned or has been completed referred to in paragraph 1 and

Reason

Reason

It is important that local and regional authorities are consulted in the screening of a particular FDI.

Amendment 7

Amendment 7

Article 12

Article 12

| Text proposed by the European Commission | CoR amendment |
| --- | --- |
| Article 12 | Article 12 |
| Contact points | Contact points |
| Each Member State shall appoint
  a
  foreign direct investment screening contact point (‘FDI screening contact point’) for the screening of foreign direct investment. The Commission and other Member States shall involve these FDI screening contact points on all issues related to implementation of this Regulation. | Each Member State shall appoint
  at least one
  foreign direct investment screening contact point (‘FDI screening contact point’) for the screening of foreign direct investment. The Commission and other Member States shall involve these FDI screening contact points on all issues related to implementation of this Regulation.
  The FDI screening contact points shall also provide the local and regional authorities concerned — at their request — with all relevant information pertaining to the screening of the FDI. |

Text proposed by the European Commission

CoR amendment

Article 12

Article 12

Contact points

Contact points

Contact points

Contact points

Each Member State shall appoint
  a
  foreign direct investment screening contact point (‘FDI screening contact point’) for the screening of foreign direct investment. The Commission and other Member States shall involve these FDI screening contact points on all issues related to implementation of this Regulation.

a

Each Member State shall appoint
  at least one
  foreign direct investment screening contact point (‘FDI screening contact point’) for the screening of foreign direct investment. The Commission and other Member States shall involve these FDI screening contact points on all issues related to implementation of this Regulation.
  The FDI screening contact points shall also provide the local and regional authorities concerned — at their request — with all relevant information pertaining to the screening of the FDI.

at least one

The FDI screening contact points shall also provide the local and regional authorities concerned — at their request — with all relevant information pertaining to the screening of the FDI.

Reason

Reason

| (i) | Given that in some Member States trade policy is devolved to the regional level, it would seem appropriate to also provide for contact points at regional level. |
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(i)

Given that in some Member States trade policy is devolved to the regional level, it would seem appropriate to also provide for contact points at regional level.

| (ii) | It is important that local and regional authorities have as complete information as possible when taking a view on the screening of a particular FDI. |
| --- | --- |

(ii)

It is important that local and regional authorities have as complete information as possible when taking a view on the screening of a particular FDI.

II.   POLICY RECOMMENDATIONS

POLICY RECOMMENDATIONS

THE EUROPEAN COMMITTEE OF THE REGIONS

| 1. | welcomes the package of trade and investment proposals presented by the Commission as a response to the challenges EU trade policy faces, and following the reflection paper on harnessing globalisation; |
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1.

welcomes the package of trade and investment proposals presented by the Commission as a response to the challenges EU trade policy faces, and following the reflection paper on harnessing globalisation;

| 2. | holds the view that trade policy is being called upon to deal with multifaceted challenges by striking the right balance between multiple objectives: strengthening the EU’s trading position by connecting it to global growth centres, taking the lead in upholding the multilateral trading system, increasing economic growth and reducing poverty, protecting EU companies, citizens and regions from unfair competition, and dealing with the social and territorial costs, particularly in vulnerable sectors and among lower-skilled workers; |
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2.

holds the view that trade policy is being called upon to deal with multifaceted challenges by striking the right balance between multiple objectives: strengthening the EU’s trading position by connecting it to global growth centres, taking the lead in upholding the multilateral trading system, increasing economic growth and reducing poverty, protecting EU companies, citizens and regions from unfair competition, and dealing with the social and territorial costs, particularly in vulnerable sectors and among lower-skilled workers;

| 3. | supports the view that over the years international trade has fostered growth and promoted competitiveness both within and outside the EU; points, however, to growing concern over the uneven societal distribution of its benefits, its significant impact in terms of marked agglomeration and territorial marginalisation and, in particular, the severe strain that it is putting on the resilience of some local economies and communities; |
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3.

supports the view that over the years international trade has fostered growth and promoted competitiveness both within and outside the EU; points, however, to growing concern over the uneven societal distribution of its benefits, its significant impact in terms of marked agglomeration and territorial marginalisation and, in particular, the severe strain that it is putting on the resilience of some local economies and communities;

| 4. | strongly supports the Commission’s view that trade policy has an important role to play in ensuring that globalisation has positive economic, social, territorial and environmental effects for people and businesses in Europe and beyond; |
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4.

strongly supports the Commission’s view that trade policy has an important role to play in ensuring that globalisation has positive economic, social, territorial and environmental effects for people and businesses in Europe and beyond;

| 5. | underlines the key role played by the EGF in supporting people losing their jobs as a result of structural changes in world trade patterns due to globalization; reiterates (1), however, the need, to reform the way it operates by simplifying the EGF approval procedure, by lowering the thresholds for triggering the Fund (2) and by increasing its budget to at least EUR 500 million per annum and integrating it into the MFF in order to take account of the fact that since 2014 the scope of the EGF has been extended to include NEETs and may need to be further extended to cover preventive measures; insists on the complementarity between the EGF and the European Social Fund as part of the European Structural and Investment Funds (ESIF) since the EGF is a mechanism that delivers short-term assistance while long-term measures are supported by ESIF which can act as follow-up measures in the EGF areas; |
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5.

underlines the key role played by the EGF in supporting people losing their jobs as a result of structural changes in world trade patterns due to globalization; reiterates (1

2

| 6. | emphasises that, as underscored in an analysis (3) of trade flows in some Member States, the export performance of regions correlates positively with GDP, export performance correlates positively with the regional competitiveness index (RCI), and in each Member State the propensity and involvement of the productive fabric in exports is heavily concentrated in a few regions; |
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6.

emphasises that, as underscored in an analysis (3

| 7. | notes with concern that this analysis is borne out in another study (4), which finds that the benefits of FDI appear to be smaller in rural, non-metropolitan and less developed regions than in other regions and that productivity spill-overs are lower in rural and non-metropolitan regions, and even zero in the less developed regions; consequently, the contribution to convergence from the direct impact of FDI and from the opening-up of markets is likely to be very limited; |
| --- | --- |

7.

notes with concern that this analysis is borne out in another study (4

| 8. | emphasises in this respect the key role of cohesion policy in ensuring an adequate level of public investment in the regions and territories of the EU that are marginalised from these flows, and in increasing their competitiveness, while simultaneously stimulating their FDI and spurring on the growth of non-European companies already present in Europe; |
| --- | --- |

8.

emphasises in this respect the key role of cohesion policy in ensuring an adequate level of public investment in the regions and territories of the EU that are marginalised from these flows, and in increasing their competitiveness, while simultaneously stimulating their FDI and spurring on the growth of non-European companies already present in Europe;

| 9. | recalls that the European Commission’s 7th Cohesion report (9 October 2017) stressed that harnessing globalisation, by supporting economic transformation in regions, innovation, industrial modernisation, and technology uptake, should be among the three priorities for the future cohesion policy post-2020; |
| --- | --- |

9.

recalls that the European Commission’s 7th Cohesion report (9 October 2017) stressed that harnessing globalisation, by supporting economic transformation in regions, innovation, industrial modernisation, and technology uptake, should be among the three priorities for the future cohesion policy post-2020;

| 10. | draws attention to the fact that further trade liberalisation agreements reduce the amount of custom duties which constitute a significant own resource for the EU’s budget and urges the Commission to shortly present a proposal for a substantial reform of the EU’s own resources as requested in the CoR opinion 2017/1530 on the Reform of EU resources within the next MFF post-2020; |
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10.

draws attention to the fact that further trade liberalisation agreements reduce the amount of custom duties which constitute a significant own resource for the EU’s budget and urges the Commission to shortly present a proposal for a substantial reform of the EU’s own resources as requested in the CoR opinion 2017/1530 on the Reform of EU resources within the next MFF post-2020;

Transparency and democratic legitimacy of EU trade policy

Transparency and democratic legitimacy of EU trade policy

| 11. | welcomes the Commission’s commitment to enhancing transparency in trade negotiations and is confident that this approach will give the Member States the opportunity to involve local and regional authorities and/or other stakeholders back at the stage of framing the trade-policy objectives specific to certain extra-EU trade negotiations; |
| --- | --- |

11.

welcomes the Commission’s commitment to enhancing transparency in trade negotiations and is confident that this approach will give the Member States the opportunity to involve local and regional authorities and/or other stakeholders back at the stage of framing the trade-policy objectives specific to certain extra-EU trade negotiations;

| 12. | quotes in that regard the CoR study on The democratic dimension of EU negotiations on trade agreements: the role and responsibilities of citizens and local and regional authorities, which emphasises that the sheer availability of information is not enough for a transparent and participatory process and that particular attention should be paid to mechanisms at the national and local levels aimed at ensuring access to this information; local and regional authorities often point to the lack of a formal mechanism for dialogue with the respective national level when it comes to trade policy, and this absence is even more keenly felt at EU level; |
| --- | --- |

12.

quotes in that regard the CoR study on The democratic dimension of EU negotiations on trade agreements: the role and responsibilities of citizens and local and regional authorities

| 13. | is positive towards the Commission’s effort to provide more clarity on the mixed nature of many trade agreements by splitting the investment chapter; is of the opinion, however, that the crisis of consensus in relation to the global opening-up of markets and the drafting of new trade agreements is largely a result of the scant documentation on the positive and negative impacts of certain agreements and of the lack of clarity regarding the responsibilities of governments in responding to the specific negative effects on distribution generated by such agreements; |
| --- | --- |

13.

is positive towards the Commission’s effort to provide more clarity on the mixed nature of many trade agreements by splitting the investment chapter; is of the opinion, however, that the crisis of consensus in relation to the global opening-up of markets and the drafting of new trade agreements is largely a result of the scant documentation on the positive and negative impacts of certain agreements and of the lack of clarity regarding the responsibilities of governments in responding to the specific negative effects on distribution generated by such agreements;

| 14. | in line with what has been stated above, recalls the CoR’s position that it is imperative that any further step in trade liberalisation be preceded by territorial impact assessments which can be a powerful tool in identifying and quantifying — before the beginning of negotiations — the impact of a given trade deal on European regions, thus facilitating more sound, informed, transparent and evidence-based decisions to be made regarding the content of the deal and enabling tailor-made support to be given to the regions concerned to help anticipate or manage its impact; |
| --- | --- |

14.

in line with what has been stated above, recalls the CoR’s position that it is imperative that any further step in trade liberalisation be preceded by territorial impact assessments which can be a powerful tool in identifying and quantifying — before the beginning of negotiations — the impact of a given trade deal on European regions, thus facilitating more sound, informed, transparent and evidence-based decisions to be made regarding the content of the deal and enabling tailor-made support to be given to the regions concerned to help anticipate or manage its impact;

| 15. | regrets in that respect the fact that the Impact assessment accompanying the document Recommendation for a Council Decision authorising the opening of negotiations for a Free Trade Agreement with Australia and with New Zealand fails to provide for such an impact assessment in the section What are the impacts of the different policy options and who will be affected (5); |
| --- | --- |

15.

regrets in that respect the fact that the Impact assessment accompanying the document Recommendation for a Council Decision authorising the opening of negotiations for a Free Trade Agreement with Australia and with New Zealand

What are the impacts of the different policy options and who will be affected

5

| 16. | regards the study on the cumulative economic impact of potential ongoing and upcoming FTAs between the EU and twelve trade partners on EU agriculture (6), conducted by the Joint Research Centre, as a good example of how impact assessments can contribute to the formulation of sound, transparent and evidence-based trade policies; |
| --- | --- |

16.

regards the study on the cumulative economic impact of potential ongoing and upcoming FTAs between the EU and twelve trade partners on EU agriculture (6

| 17. | applauds the fact that the study did provide evidence-based scientific support to the European policy-making process since EU farmers are informed of what they can expect from the trade agreements notably with Australia and New Zealand; is of the view that in the context of those negotiations the Commission must place a particular emphasis on the likely negative impact on specific agricultural sectors as underscored in the study and protect those sectors by taking into consideration the underlying principles of the Common Agricultural Policy and the fact that agriculture is the main and only activity that supports employment, entrepreneurship and local food supply in many EU areas such as the mountainous areas where farmers in difficult conditions keep the countryside alive, thereby helping, inter alia, to conserve crucial environmental balances; |
| --- | --- |

17.

applauds the fact that the study did provide evidence-based scientific support to the European policy-making process since EU farmers are informed of what they can expect from the trade agreements notably with Australia and New Zealand; is of the view that in the context of those negotiations the Commission must place a particular emphasis on the likely negative impact on specific agricultural sectors as underscored in the study and protect those sectors by taking into consideration the underlying principles of the Common Agricultural Policy and the fact that agriculture is the main and only activity that supports employment, entrepreneurship and local food supply in many EU areas such as the mountainous areas where farmers in difficult conditions keep the countryside alive, thereby helping, inter alia, to conserve crucial environmental balances;

| 18. | repeats, in particular in view of the negotiations with Australia and New Zealand, its longstanding position that future EU trade agreements must not prevent government at all levels from providing, supporting or regulating public services, or from expanding the range of services they offer to the public (7), or from providing for the inclusion of certain social clauses with a view, inter alia, and in line with the European Council conclusions of 7 December 2015, to encouraging the development of the social economy; |
| --- | --- |

18.

repeats, in particular in view of the negotiations with Australia and New Zealand, its longstanding position that future EU trade agreements must not prevent government at all levels from providing, supporting or regulating public services, or from expanding the range of services they offer to the public (7

| 19. | welcomes that the Commission has set up on 22 December 2017 an advisory group on EU trade agreements with the aim to increase transparency and inclusiveness in EU trade policy but regrets, in view of the above, the fact that none of its 28 experts (8) is representing a local or regional authority or association. In case the Commission would maintain its line that there should be no EU institution or organ represented in the advisory group, the CoR would expect to be at least invited to attend as an observer; |
| --- | --- |

19.

welcomes that the Commission has set up on 22 December 2017 an advisory group on EU trade agreements with the aim to increase transparency and inclusiveness in EU trade policy but regrets, in view of the above, the fact that none of its 28 experts (8

| 20. | calls for prevailing labour standards and legal standards on product safety, on data, consumer, health and environmental protection, and on animal welfare in the EU and at national level to be upheld without being levelled downwards; it must be possible for these standards to be adjusted in accordance with EU law at Member State level, and the regulatory and financial latitude of local and regional authorities in this area should not come under pressure from international trade and investment agreements; |
| --- | --- |

20.

calls for prevailing labour standards and legal standards on product safety, on data, consumer, health and environmental protection, and on animal welfare in the EU and at national level to be upheld without being levelled downwards; it must be possible for these standards to be adjusted in accordance with EU law at Member State level, and the regulatory and financial latitude of local and regional authorities in this area should not come under pressure from international trade and investment agreements;

The quest for fairness outside the EU

The quest for fairness outside the EU

| 21. | points out that trade policy is not only about economic interests but is also an important vehicle of solidarity towards developing countries and countries enmeshed in regional crises; recalls in this regard the EU-Jordan joint decision on a relaxation of the rules of origin applicable in their bilateral trade as an excellent example here; |
| --- | --- |

21.

points out that trade policy is not only about economic interests but is also an important vehicle of solidarity towards developing countries and countries enmeshed in regional crises; recalls in this regard the EU-Jordan joint decision on a relaxation of the rules of origin applicable in their bilateral trade as an excellent example here;

| 22. | welcomes the Commission’s non-paper on Trade and Sustainable Development (TSD) chapters in EU Free Trade Agreement (FTAs) (9), which opened the discussion on compliance and enforcement, and on how the sustainability provisions should be linked to trade; |
| --- | --- |

22.

welcomes the Commission’s non-paper on Trade and Sustainable Development (TSD) chapters in EU Free Trade Agreement (FTAs)

9

| 23. | in relation to the question of whether non-compliance with a provision of the TSD Chapter should lead to certain trade-related consequences, or even sanctions, the CoR supports the view that countries that engage in unfair competition by lowering standards pertaining to fundamental labour conventions, e.g. child labour, should face possible sanctions; believes that further studies and research projects are needed in this field in order to ensure that policy-making is based on conclusive evidence; |
| --- | --- |

23.

in relation to the question of whether non-compliance with a provision of the TSD Chapter should lead to certain trade-related consequences, or even sanctions, the CoR supports the view that countries that engage in unfair competition by lowering standards pertaining to fundamental labour conventions, e.g. child labour, should face possible sanctions; believes that further studies and research projects are needed in this field in order to ensure that policy-making is based on conclusive evidence;

| 24. | welcomes the Commission’s commitment to enhancing the multilateral trading system which has at its heart the WTO and notes that global trade without the WTO will be more subject to the dynamics of power between states, with less regard to values; holds the view that the WTO could offer the ideal framework to minimise negative externalities of bilateral trade agreements for third countries, multi-lateralise the regulatory cooperation achieved thus far between like-minded countries and offer an explicit path to accession to other interested WTO members in the future; |
| --- | --- |

24.

welcomes the Commission’s commitment to enhancing the multilateral trading system which has at its heart the WTO and notes that global trade without the WTO will be more subject to the dynamics of power between states, with less regard to values; holds the view that the WTO could offer the ideal framework to minimise negative externalities of bilateral trade agreements for third countries, multi-lateralise the regulatory cooperation achieved thus far between like-minded countries and offer an explicit path to accession to other interested WTO members in the future;

The multilateral investment court

The multilateral investment court

| 25. | welcomes the Commission’s Recommendation for a Council Decision authorising the opening of negotiations on establishing a multilateral investment court (MIC) as a solution to many of the problems encountered with the investor-to-state dispute settlement (ISDS) system, namely the lack of legitimacy and safeguards for independence in ISDS, the lack of predictability and consistency of case-law, the lack of possibility of review in ISDS, high costs, lack of transparency in ISDS, and the poor accessibility for SMEs; |
| --- | --- |

25.

welcomes the Commission’s Recommendation for a Council Decision authorising the opening of negotiations on establishing a multilateral investment court (MIC) as a solution to many of the problems encountered with the investor-to-state dispute settlement (ISDS) system, namely the lack of legitimacy and safeguards for independence in ISDS, the lack of predictability and consistency of case-law, the lack of possibility of review in ISDS, high costs, lack of transparency in ISDS, and the poor accessibility for SMEs;

| 26. | notes that according to the CoR study on The democratic dimension of EU negotiations on trade agreements: the role and responsibilities of citizens and local and regional authorities, the aspect most frequently raised by local and regional authorities with regard to the implications of FTAs relates to ISDS, which is perceived to allow private companies to challenge local governments’ decisions; |
| --- | --- |

26.

notes that according to the CoR study on The democratic dimension of EU negotiations on trade agreements: the role and responsibilities of citizens and local and regional authorities

| 27. | stresses the need for a balance between the way private investor rights are protected — with sanction mechanisms — and the way workers’ rights are upheld — currently without such mechanisms — and calls on the Commission to ensure that the proposal to create a MIC will not maintain a parallel legal system with a special court for foreign investors that bypasses domestic legal systems for the sole benefit of these investors; also calls for the MIC to protect not only the rights of investors, but also the rights of states to legislate, and the rights of third parties; |
| --- | --- |

27.

stresses the need for a balance between the way private investor rights are protected — with sanction mechanisms — and the way workers’ rights are upheld — currently without such mechanisms — and calls on the Commission to ensure that the proposal to create a MIC will not maintain a parallel legal system with a special court for foreign investors that bypasses domestic legal systems for the sole benefit of these investors; also calls for the MIC to protect not only the rights of investors, but also the rights of states to legislate, and the rights of third parties;

| 28. | hopes that the Commission will clarify as soon as possible whether this multilateral investment court may be considered a unilateral institution or whether it will be connected to the jurisdiction of another, as well as how affected communities will be able to participate in judicial proceedings; |
| --- | --- |

28.

hopes that the Commission will clarify as soon as possible whether this multilateral investment court may be considered a unilateral institution or whether it will be connected to the jurisdiction of another, as well as how affected communities will be able to participate in judicial proceedings;

| 29. | asks the Commission to provide more clarity regarding the probable consequences on disputes under existing bilateral investment treaties (BITs) and the interlinkages between the MIC and domestic jurisdictions in particular in relation to the question of exhaustion of domestic remedies; supports in relation to intra-EU BITs and against the background of the on-going case C-284/16 Achmea the Commission’s view that ISDS mechanisms set in (pre-accession) intra-EU BITs conflict with EU law on the exclusive competence of EU courts for claims which involve EU law; |
| --- | --- |

29.

asks the Commission to provide more clarity regarding the probable consequences on disputes under existing bilateral investment treaties (BITs) and the interlinkages between the MIC and domestic jurisdictions in particular in relation to the question of exhaustion of domestic remedies; supports in relation to intra-EU BITs and against the background of the on-going case C-284/16 Achmea the Commission’s view that ISDS mechanisms set in (pre-accession) intra-EU BITs conflict with EU law on the exclusive competence of EU courts for claims which involve EU law;

| 30. | is confident that the Belgian request of 6 September 2017 for an opinion of the Court of Justice of the EU (CJEU) on the legality of the new bilateral Investment Court System (ICS) in the EU-Canada Agreement (CETA) will provide more clarity to the whole discussion about investment protection; |
| --- | --- |

30.

is confident that the Belgian request of 6 September 2017 for an opinion of the Court of Justice of the EU (CJEU) on the legality of the new bilateral Investment Court System (ICS) in the EU-Canada Agreement (CETA) will provide more clarity to the whole discussion about investment protection;

| 31. | notes with concern that several major trading partners of the EU, including the USA and Japan, do not support the creation of a MIC, while Japan’s preference for the ISDS system is one of the main issues that remain to be settled following the agreement in principle on an FTA which was reached on 6 July 2016; |
| --- | --- |

31.

notes with concern that several major trading partners of the EU, including the USA and Japan, do not support the creation of a MIC, while Japan’s preference for the ISDS system is one of the main issues that remain to be settled following the agreement in principle on an FTA which was reached on 6 July 2016;

The proposal for a Regulation establishing a framework for screening of FDI into the EU

The proposal for a Regulation establishing a framework for screening of FDI into the EU

| 32. | stresses the importance of FDI for the overall EU economy and more specifically for some of its regions, given that during the period 2003-2015, non-European investors carried out more than 52 000 FDI projects in Europe amounting to a total value of more than EUR 2 600 billion (10); |
| --- | --- |

32.

stresses the importance of FDI for the overall EU economy and more specifically for some of its regions, given that during the period 2003-2015, non-European investors carried out more than 52 000 FDI projects in Europe amounting to a total value of more than EUR 2 600 billion (10

| 33. | supports the Commission’s view that openness to FDI remains a key principle for the EU and a major source of growth and that this openness has to be accompanied by vigorous and effective policies to, on the one hand, open up other economies and ensure that everyone plays by the same rules, and, on the other hand, to protect critical European assets against investment that would be detrimental to legitimate interests of the EU or its Member States; |
| --- | --- |

33.

supports the Commission’s view that openness to FDI remains a key principle for the EU and a major source of growth and that this openness has to be accompanied by vigorous and effective policies to, on the one hand, open up other economies and ensure that everyone plays by the same rules, and, on the other hand, to protect critical European assets against investment that would be detrimental to legitimate interests of the EU or its Member States;

| 34. | welcomes therefore the principles behind the European Commission’s proposed regulation, as FDI currently may be treated differently among the Member States due to the fact that there is no EU-wide FDI screening legislation in place; |
| --- | --- |

34.

welcomes therefore the principles behind the European Commission’s proposed regulation, as FDI currently may be treated differently among the Member States due to the fact that there is no EU-wide FDI screening legislation in place;

| 35. | is concerned with regard to the European Commission’s right to carry out a screening for reasons of security and public order in the case of an FDI that is likely to have repercussions on projects or programmes of Union interest, since this criterion is very vague: it may include all kinds of FDI, and the list in the relevant Annex is not exhaustive. In addition, there is no clear definition of security and public order and therefore no legal certainty as to the extent of the powers of intervention of the European Commission; this could lead to Member States no longer being able to decide autonomously on FDI on grounds of security and public order; |
| --- | --- |

35.

is concerned with regard to the European Commission’s right to carry out a screening for reasons of security and public order in the case of an FDI that is likely to have repercussions on projects or programmes of Union interest, since this criterion is very vague: it may include all kinds of FDI, and the list in the relevant Annex is not exhaustive. In addition, there is no clear definition of security and public order and therefore no legal certainty as to the extent of the powers of intervention of the European Commission; this could lead to Member States no longer being able to decide autonomously on FDI on grounds of security and public order;

| 36. | regrets the fact that such an important proposal is presented by the Commission without an impact assessment; holds the view that the study announced by the Communication accompanying the proposal on investment flows into the EU and the impact assessment should have preceded the presentation of the proposal in an effort to ensure that the inter-institutional discussions on this matter are based on concrete evidence; |
| --- | --- |

36.

regrets the fact that such an important proposal is presented by the Commission without an impact assessment; holds the view that the study announced by the Communication accompanying the proposal on investment flows into the EU and the impact assessment should have preceded the presentation of the proposal in an effort to ensure that the inter-institutional discussions on this matter are based on concrete evidence;

| 37. | calls for the proposal for a regulation to make clear that existing restrictions on the free movement of capital between the EU and third countries may be maintained, without any limitation, on grounds of public order and security, or maintained without any specific procedural framework being specified; |
| --- | --- |

37.

calls for the proposal for a regulation to make clear that existing restrictions on the free movement of capital between the EU and third countries may be maintained, without any limitation, on grounds of public order and security, or maintained without any specific procedural framework being specified;

| 38. | holds the view that the Commission should also assess the policies that have created the conditions which have led to problematic investments, since in many cases FDI in previously state-owned infrastructures or companies are often the consequences of austerity policies and of the liberalisation in strategic sectors; |
| --- | --- |

38.

holds the view that the Commission should also assess the policies that have created the conditions which have led to problematic investments, since in many cases FDI in previously state-owned infrastructures or companies are often the consequences of austerity policies and of the liberalisation in strategic sectors;

| 39. | stresses that justifying a restriction on FDI for national security and public order reasons is different from restricting it for fears of market distortion and calls on the Commission to ensure that the mechanism is not used as a disguised protectionist measure; notes in this respect that an FDI screening mechanism that restricts investments simply because the FDI is subsidised cannot be sufficient grounds for blocking an investment and that it has to prove that the FDI at hand is part of strategic or national industrial goals of a foreign state; |
| --- | --- |

39.

stresses that justifying a restriction on FDI for national security and public order reasons is different from restricting it for fears of market distortion and calls on the Commission to ensure that the mechanism is not used as a disguised protectionist measure; notes in this respect that an FDI screening mechanism that restricts investments simply because the FDI is subsidised cannot be sufficient grounds for blocking an investment and that it has to prove that the FDI at hand is part of strategic or national industrial goals of a foreign state;

| 40. | calls on the Commission for more clarity on the impact of a Member State not following the Commission’s opinion and on the extent to which the proposed framework will allow timely and proportionate reactions considering that the EU investment screening should last no longer than the time specified for national procedures; |
| --- | --- |

40.

calls on the Commission for more clarity on the impact of a Member State not following the Commission’s opinion and on the extent to which the proposed framework will allow timely and proportionate reactions considering that the EU investment screening should last no longer than the time specified for national procedures;

| 41. | pleads for entering into dialogue on investment screening with the EU’s main trade partners. International approximation of rules on screening foreign direct investment would indeed limit conflicts and promote investment certainty; |
| --- | --- |

41.

pleads for entering into dialogue on investment screening with the EU’s main trade partners. International approximation of rules on screening foreign direct investment would indeed limit conflicts and promote investment certainty;

| 42. | welcomes the fact that the co-legislators have reached an agreement to amend the current EU anti-dumping methodology, which will have to take into account core ILO conventions when assessing the existence of significant distortions; |
| --- | --- |

42.

welcomes the fact that the co-legislators have reached an agreement to amend the current EU anti-dumping methodology, which will have to take into account core ILO conventions when assessing the existence of significant distortions;

| 43. | notes however that the new rules will only be fully effective if the EU modernises its trade defence instruments (TDIs) and that the positive impact of this for industry is linked to a breakthrough on TDI modernisation plans, proposed in 2013; |
| --- | --- |

43.

notes however that the new rules will only be fully effective if the EU modernises its trade defence instruments (TDIs) and that the positive impact of this for industry is linked to a breakthrough on TDI modernisation plans, proposed in 2013;

| 44. | agrees that the European Union has exclusive competence with respect to foreign direct investment, as it falls within the common commercial policy pursuant to Article 207(1) TFEU. Notes, however, that the Commission is proposing this regulation only for those Member States that have established investment screening mechanisms and that the proposal does not require the Member States to put in place their own investment screening. The proposal is therefore fully compliant with the subsidiarity principle. |
| --- | --- |

44.

agrees that the European Union has exclusive competence with respect to foreign direct investment, as it falls within the common commercial policy pursuant to Article 207(1) TFEU. Notes, however, that the Commission is proposing this regulation only for those Member States that have established investment screening mechanisms and that the proposal does not require the Member States to put in place their own investment screening. The proposal is therefore fully compliant with the subsidiarity principle.

Brussels, 23 March 2018.

The President of the European Committee of the Regions

Karl-Heinz LAMBERTZ

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(1)  CoR opinion on the Reflection paper on harnessing globalisation, rapporteur: Micaela Fanelli, adopted on 10 October 2017.

1

(2)  Considering in particular that the equivalent US programme (‘Trade Adjustment Assistance/TAA’) foresees no minimum threshold of redundancies to be reached.

2

(3)  EPRS.

3

(4)  ESPON, The World in Europe, global FDI flows towards Europe.

4

The World in Europe, global FDI flows towards Europe

(5)  On page 18 of the document, available here: https://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1505372743628&uri=SWD:2017:293:FIN

5

(6)  Study published on 15 November 2016, available here: https://ec.europa.eu/jrc/en/publication/eur-scientific-and-technical-research-reports/cumulative-economic-impact-future-trade-agreements-eu-agriculture

6

(7)  CoR opinion on A more responsible trade and investment policy, rapporteur: Neale Richmond (IE/EPP), adopted on 8 April 2016.

7

A more responsible trade and investment policy

(8)  http://trade.ec.europa.eu/doclib/docs/2017/december/tradoc_156487.pdf

8

(9)  Available here: http://trade.ec.europa.eu/doclib/press/index.cfm?id=1689

9

(10)  ESPON research project on The World in Europe, global FDI flows towards Europe.

10

The World in Europe, global FDI flows towards Europe

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