BRUSSELS, Nov 20 (Reuters) - The European Union reached a provisional deal on Tuesday on a far-reaching system to coordinate scrutiny of foreign investments into Europe, notably from China.

After five months of negotiations, representatives for the European Parliament and the EU’s 28 member states reached the agreement a “trilogue” meeting with the European Commission on Tuesday. (Reporting by Philip Blenkinsop Editing by Alissa de Carbonnel) </s> The European Union on Tuesday agreed on rules for a far-reaching system to coordinate scrutiny of foreign investments into Europe, notably from China, to end what a negotiator called “European naivety”.

After five months of negotiations, representatives for the European Parliament and the EU’s 28 member states struck the deal at a meeting with the European Commission.

Under the plan, developed in the wake of a surge in Chinese investments, the EU executive would investigate foreign investments in critical sectors to protect Europe’s strategic interests in some fields of technology.

“It will mark the end of European naivety,” Franck Proust, who headed the parliament’s negotiating team, said ahead of the talks. “All the world powers – the United States, Japan, China, – have a method of screening. Only Europe does not.”

The proposal, demanded by France, Germany and the previous government of Italy, still needs the support of the 28 EU states at a meeting on Dec. 5. Their backing is by no means certain given opposition from a number a countries, including Cyprus, Greece, Luxembourg, Malta and Portugal.

Some of the opponents have welcomed Chinese investment, such as Greece, whose largest port Piraeus is majority-owned by China’s COSCO Shipping.

Parliament’s trade committee is due to vote on the compromise proposal on Dec. 10, with the chamber as a whole to review it in February or March.

Lawmakers in the European Parliament wanted tougher screening than initially proposed by the EU executive, such as obliging the Commission to screen deals and requiring EU countries to cooperate.

The system would not require individual countries to carry out screening. Currently 13 nations have a system in place.

However, all would have to provide an annual report to the European Commission.

EU countries, and not the Commission, would still make final decisions on whether or not to approve foreign investments. </s> BRUSSELS—The European Union agreed on Tuesday to establish a framework for screening foreign investments in an attempt to safeguard strategic EU assets following a Chinese buying spree, though questions remain about the rules’ effectiveness.

In development for more than a year, the measures are intended to bolster the EU’s capacity to protect industries important to security and public order. </s> BRUSSELS (Reuters) - The European Union on Tuesday provisionally agreed on rules for a far-reaching system to coordinate scrutiny of foreign investments into Europe, notably from China, to end what a negotiator called “European naivety”.

A staff member prepares for the EU-China High-level Economic Dialogue at Diaoyutai State Guesthouse in Beijing, China, June 25, 2018. REUTERS/Jason Lee

Negotiators for the European Parliament and the EU’s 28 member states struck a deal to protect strategic technologies and infrastructure, such as ports or energy networks.

Under the plan, developed in the wake of a surge in Chinese investments, the European Commission would investigate foreign investments in critical sectors and offer opinions.

The opinions could address concerns over whether the security of vital infrastructure could be compromised or that innovations that have had years of expensive research could be lost to foreign hands.

“It will mark the end of European naivety,” Franck Proust, who headed the parliament’s negotiating team, said ahead of the talks. “All the world powers - the United States, Japan, China, - have a method of screening. Only Europe does not.”

The proposed new law does not name China, but its backers’ complaints over investments by state-owned enterprises and for technology transfers are clear references to Beijing.

The proposal, demanded by France, Germany and the previous government of Italy, still needs the support of the 28 EU states at a meeting on Dec. 5. Their backing is by no means certain given opposition from a number a countries, including Cyprus, Greece, Luxembourg, Malta and Portugal.

Some of the opponents have welcomed Chinese investment, such as Greece, whose largest port Piraeus is majority-owned by China’s COSCO Shipping.

“This is not about closing down our markets but about acting responsibly,” said Austrian Economy Minister Margarete Schramboeck, whose country represented the EU states and urged them to back the compromise text.

Parliament will vote on the proposal in February or March.

EU lawmakers succeeded in pushing through tougher screening than initially proposed, such as obliging the Commission to screen deals and requiring EU countries to cooperate.

They also extended the list of “critical sectors” to include aerospace, health, nano-technology, the media, electric batteries and the supply of food.

The system would not require individual countries to carry out screening. Currently 13 nations have a system in place. Those that do will need to inform other EU members and the Commission if they screen an investment.

All would have to provide an annual report to the Commission, which would also be obliged to give its opinion if a third of member states expressed concerns about a planned foreign investment.

However, EU countries, and not the Commission, would still make final decisions on whether to block foreign investments on security and public interest grounds. </s> The head of the European Commission Jean-Claude Juncker failed to mention the United States in the list of countries Brussels wants to conclude trade agreements with in the coming years, during his speech to the European Parliament on Wednesday."With the help of the European Parliament, we have just secured a trade agreement with Canada that will provisionally apply as of next week. We have a political agreement with Japan on a new economic partnership. By the end of the year, we have a good chance of doing the same with Mexico and South American countries. And today, we are proposing to open trade negotiations with Australia and New Zealand," Juncker said.The European Commission's term of office runs until October 31, 2019.Before Donald Trump's election as the US President, Washington and Brussels were actively negotiating the Transatlantic Trade and Investment Partnership (TTIP) trade agreement. Trump canceled the TPP agreement with Asian countries as he dislikes multilateral trade agreements. Talks on TTIP have stalled, too.In his speech, Juncker insisted Europe wants deals that would be profitable for the bloc, not only the other side."Let me say once and for all: we are not naïve free traders. Europe must always defend its strategic interests," he said.Relations between long-term allies America and Europe have strained in the last few months. Recently Washington unilaterally imposed sanctions against the Russian energy sector over alleged meddling in US presidential elections by Moscow. The EU said the sanctions could backfire on European countries working with Russia."If a foreign, state-owned, company wants to purchase a European harbor, part of our energy infrastructure or a defense technology firm, this should only happen in transparency, with scrutiny and debate," Juncker said.China's COSCO Shipping already has a majority stake in Greece's biggest port, Piraeus, and a share of a terminal at Europe's largest port, Rotterdam.Germany, France, and Italy praised Juncker's speech on tighter oversight of foreign acquisitions of European property."Europe and of course Germany are and will remain open to investment from abroad. But we need to prevent other states from taking advantage of our openness in order to push through their industrial policy interests," German Economic Affairs Minister Brigitte Zypries said in a joint statement with France and Italy."The EU must be ready to stand up for its interests and protect itself - in particular when competition is not fair, and we are dealing with important national strategic interests," said French Finance Minister Bruno Le Maire. </s> Prime Minister Justin Trudeau and European leaders have signed Canada’s free trade deal with the EU in Brussels.

The Comprehensive Economic and Trade Agreement, known as CETA, was reached after seven years of negotiation.

Trudeau had initially expected to sign the deal in Brussels days ago, but the restive Belgian region of Wallonia nearly killed the deal because of its opposition to the pact’s investor-state dispute settlement mechanism.

The Prime Minister’s Office says Trudeau spoke on Friday with European Council president Donald Tusk, who confirmed the texts of the deal, along with a side agreement known as the Strategic Partnership Agreement, had been approved for signature.

The deal’s supporters say it will boost trade by billions through cuts in tariffs across a broad swath of sectors including agriculture, pharmaceuticals and the auto industry.

The prime minister’s trip to Brussels got off to a bit of a bumpy start, with a mechanical problem forcing his flight to return to Ottawa about 30 minutes after it took off Saturday night. After more than an hour on the ground the flight left again and continued on to Belgium without further incident.

Canada will have to pass implementing legislation, which will move through the Commons easily because the Liberals have a majority of the seats. The European Parliament will also need to approve it, and EU watchers say this should not be a problem because there are enough votes behind the deal.

About 95 per cent of the agreement, including tariff reductions and the lowering of other trade barriers, can take effect after the European Union and Canada pass it. Barring unforeseen events, this is expected to happen in early- to mid-2017.

One notable exception is the court, known as investor-state dispute settlement mechanism. The mechanism sets out formal arrangements for how businesses could sue governments when state decisions affect their investments. But it does not take effect right away and may never take effect.

A question mark has been hanging over this provision of the trade pact, and the wording of the Belgian deal reached this week to seal that country’s approval indicated that responsibility for ratifying the provision for the court will lie with the parliaments of the 28 European Union member countries.

A source with knowledge of the deal said on Friday that, in fact, the investor court will come into being only if no European parliament rejects it.

“For this system to come into place, all 28 member states have to ratify it – or at least not vote CETA down,” the source said. “That is a process that could take years.”

If one country votes to reject the investor court, it will not form part of the Canada-EU deal.

“It will be all or nothing.”

The decisions that parliaments across Europe will render on the court will take two to five years, the source said.

The Trudeau government has said many decisions are still to be made about the structure of the investor court, and it hopes that tweaks to the arrangement could satisfy all legislators across 28 states. In some countries, regional governments will also have the power to vote on the investor-state dispute settlement mechanism. </s> Canadian Prime Minister Justin Trudeau signed the treaty along with the heads of EU institutions, a step that should enable a provisional implementation of the pact early in 2017 with the removal of most import duties.

The Comprehensive Economic and Trade Agreement's (CETA) passage has not been smooth.

French-speakers in southern Belgium, a minority within their own small country and accounting for less than 1 percent of the 508 million EU consumers likely to be affected by CETA, raised objections that held up the deal until a breakthrough on Thursday, confirmed by regional parliamentary votes on Friday.

"All's well that end's well," said European Commission President Jean-Claude Juncker. "We have 20 ongoing negotiations and today we are fixing the global standards the European Union and the European Commission want others to accept."

The Canada agreement is seen as a springboard to a larger EU deal with the United States, known as the Transatlantic Trade and Investment Treaty (TTIP), which has been the target of labor unions and environmental and other protest groups.

EU Trade Commissioner Cecilia Malmstrom said TTIP talks were not dead, contrary to what some politicians in Germany and France have said, but would need to wait for the next U.S. president - taking office in January - to resume.

Supporters say CETA will increase Canadian-EU trade by 20 percent and boost the EU economy by 12 billion euros ($13 billion) a year and Canada's by C$12 billion ($9 billion).

For Canada the deal is important to reduce its reliance on the neighboring United States as an export market.

For the EU, it is a first trade pact with a G7 country and a success plucked from the jaws of defeat at a time when the bloc's credibility has taken a beating from Britain's vote in June to leave after 43 years of membership.

"This has been a very long process. A huge majority of people in Europe are in favor of Europe, but there are concerns and we need to engage with them," Malmstrom said. "The Commission cannot do that alone."

Some 100 anti-globalization protesters clashed with police outside the venue in Brussels, trying to break down barriers in front of the main entrance and hurling red paint. A Reuters photographer saw police detain some people.

Sunday's signing will not be the last act.

Assuming the European Parliament gives its assent, CETA could come into force partially early next year. However, full implementation, which would include a contentious investment protection system, will ensue only after clearance by more than three dozen national and regional parliaments.

The Belgian experience shows this outcome is no given.

The main focus of protests against CETA and TTIP remains the system to protect foreign company's investments. Critics say its provision for arbitration panels to rule on disputes with states can be abused by multinational companies to dictate public policy, such as on environmental standards.

The EU and Canada say their investment protection system guarantees the right of governments to regulate, make use of independent judges and be more transparent.

The deal will eliminate tariffs on almost 99 percent of goods. The beneficiaries would include, for example, carmakers or the EU textile sector, for which Canadian duties of up to 18 percent can be imposed at present.

Service companies could also benefit and EU companies would be able to tender for public contracts at Canadian provincial and municipal level, the first time Canada has offered this.

Canada would be able to send larger quotas of pork, beef and wheat to the EU market, and EU dairy producers would be able to export more than double the current amount of "high quality" cheeses to Canada. </s> The European Union has taken action to try to prevent the collapse of the Iran nuclear deal, adopting a new rule banning European companies from complying with US sanctions and allowing the European Investment Bank to fund projects in Iran.

But it will leave many companies with a painful choice whether to follow EU or US rules on doing business with Iran.

The decision by the European Commission, the EU’s executive body, is provisional as it requires approval from the European Parliament and the heads of EU member states.

However, it is a strong signal of the EU’s desire to rescue the crumbling 2015 nuclear deal, a day after Tehran announced plans to increase its uranium enrichment capacity with new centrifuges.

"The European Union is fully committed to the continued, full and effective implementation of the [Iran nuclear deal] so long as Iran also respects its obligations," it said in a statement on Wednesday after a meeting of senior EU commissioners in Brussels. </s> Brussels: European Union (EU) finance ministers reached on Friday an agreement on reforming bank capital rules, a major step to boost the bloc’s financial stability and to agree on a backstop for its bank-rescue fund in June, officials said.

The deal came after 18 months of heated debates among the 28 EU governments on how to apply new global bank capital rules that overhauled financial regulations after the 2007-2009 global crisis.

“The Council (of EU finance ministers) has agreed a general approach on the banking package,” said Vladislav Goranov, the Finance Minister of Bulgaria, the country that holds the EU presidency, at a public session of a meeting of EU finance ministers in Brussels.
The European Union reaches a provisional agreement on a system to investigate foreign investments into Europe.