Analysis On Mechanism And Its Reform About EU Security Screening Of Foreign Direct Investment

On March 5,2019,Regulation of establishing a framework for the screening of foreign direct investments into the Union were passed by the EU Council.The new legislation would enter into force in April 2019 and would be formally implemented1.5 years from the date of entry into force.Will the EU tighten foreign regulation and establish a strong screening mechanism similar to The Committee on Foreign Investment in the United States(CFIUS)as Chinese investors set off the craze for mergers and acquisitions(M&A)in EU in recent years? Since its publication,the regulation has raised widespread concerns among non-EU investors,particularly for Chinese investors.Although there is no essential difference between the EU's foreign investment security screening and the foreign state security screening system in the general sense,it does have certain "EU characteristics".The existing EU foreign investment security screening system is led by Member States,and the diversity is significant,the whole is fragmented,and the European Commission is not directly involved in foreign investment security screening,and has long been cautious about the foreign investment security screening of member countries,which is caused by the conflict liberalization of free capital flow established by the EU basic treaties and foreign security screening merchanism.As the European Commission has long adhered to open foreign investment policies to safeguard capital liberalization,the exercise of foreign investmentscreening by Member States has long been overseen by the European Commission and even by judicial screening by the European Court of Justice.With the large external export of capital in emerging countries,the pattern of global capital flows has changed,and the pressure of foreign investment supervision in EU increased.Within the EU,the existing EU foreign investment security screening system has been questioned,the voice is that the current EU foreign investment screening as a whole is not strong enough to cope with new shocks and challenges.Among the factors driving the start of the reform process of the EU foreign security screening system,the "China factor" is very prominent.In February 2017,Germany,France and Italy submitted to the EU a plan to reform the EU foreign investment security screening system,proposing the establishment of a FDI security screening system at the EU level,with a focus on "unequal opening" and "unfair competition" issues and security threats.However,the foreign investment security screening mechanism of EU level faces the EU's lack of authority,this dilemma can be divided into real and should be two levels.Under the constraints of the EU's lack of competence,the European Commission proposed a framework for the establishment of an EU foreign investment security Screening,which mainly reflects the basic framework for establishing a foreign investment screening at the EU level,cooperation mechanisms among Member States,Member States and the EU level,and the basic framework for foreign investment screening by Member States.These reforms reflect a response to the shortcomings and conflicts of the original security screening mechanism in the EU.The new framework has changed the fragmentation of the previously led foreign Investment case screening system,enhancing the cooperation and coordination capacity of Member States in conducting foreign investment screening;The EU-level screening framework has also enhanced the European Commission's proactive capacity to participate in foreign investment security screening and its proactive intervention in foreign investment security screening in member countries,changed the absence of the European Commission in the foreign investment security screening.On the whole,the reform of the EU foreign Security screening system has enhanced the system and coordination of the EU foreign Investment securityscreening mechanism,incorporated the proposition of "fair competition",and expanded the examination ability and flexibility of the Member States to carry out foreign security screening.As in terms of limitations,the reform has not been a good precaution against the risk of Member States abusing their censorship systems.The new framework of the EU foreign investment security screening established by the regulation will significantly improve the screening risk faced by our investors.Therefore,our investors should actively seek a legal response.China's investors can be targeted to achieve the localization of legal identity in the EU;State-owned enterprises can classify their identities more accurately.In addition,Chinese investors should also actively seek judicial relief.The reform of the EU foreign investment security screening system has also brought enlightenment to the legislation of China's FDI security screening system.The new Foreign Investment Law adopted in 2019 formally incorporates the specific provisions for the establishment of China's audit mechanism,which is the first time that China has raised the system of foreign investment security screening to the legal level,which is of great significance,but because of the high generalization of the provisions of this clause,in the design of the specific operating mechanism of the system about the subsequent supporting rules,we should also respond to the new regulation of the EU foreign investment security screening in the systemic.design.First of all,we should fully absorb the rationality of the text of the draft Foreign Investment Law for 2015 years.In 2015,the Ministry of Commerce published the first draft of the Foreign Investment Law,the draft do a more specific and detailed institutional arrangements on the security screening merchanism.For the future security screening system,more specific provisions of a certain reference and reference significance should be set,in addition,the rules should strengthen the protection of China's industrial competitive advantage.The protection of national security and the protection of industrial competitive advantage are usually closely integrated.In the supporting legislation of the future foreign investment security screening system,we should strengthen the cross-cutting and overlapping study ofantitrust review and foreign investment security screening in the top level design,fully combine the current and future competitive advantages of our country,and strengthen the protection of strategic industries through security screening.Finally,With regard to the judicial remedy of whether investors should be allowed to seek judicial relief,this paper holds that foreign investors can be given limited judicial relief rights in legislation,such as providing for the justiciability of the review procedure,and appropriately improving the transparency and predictability of the screening process.This is conducive to preventing the abuse of censorship procedures and the creation of a more stable,transparent and predictable investment environment in China,in the meantime,in line with the foreign investment law legislation reflected in the legislative guidance to enhance the openness of foreign investment.