91998E2119

WRITTEN QUESTION E-2119/98

by Glenys Kinnock (PSE) to the Commission

(10 July 1998)

Subject: Unilateral investment sanctions on Burma

Would the Commission challenge an EU Member State if it were to impose unilateral investment sanctions on Burma?

Answer given by Mr Monti on behalf of the Commission

(5 October 1998)

The Commission shares the concern of the Parliament about the situation in Burma. The Community has taken a number of steps in this respect. The common position on Burma which is due for review before 28 October 1998, does not, so far, include measures amounting to an investment ban.

As regards any investment bans by Member States, it should be noted that investment by Community nationals in other Member States or third countries, constitutes a movement of capital within the meaning of Article 73b ff. EC Treaty. Hence, the Community rules on capital movements apply to investments and investment bans. Article 73b prohibits, as a general principle, all restrictions on capital movements and payments not only between Member States but also between Member States and third countries. Therefore, Member States, as a principle, have to provide for full freedom of capital movements, including foreign direct investment, with any third country, including Burma.

The Treaty makes available to Member States a limited number of exceptions to this general principle. Thus Article 73c(1) EC Treaty provides that "The provisions of Article 73b shall be witthout prejudice to the application to third countries of any restrictions which existed on 31 December 1993 under national or Community law in respect of direct investment - including investment in real estate - establishment, the provision of financial services or the admission of securities to capital markets". No general restrictions by Member States on capital movements with Burma existed on 31 December 1993, which would be covered by this Treaty provision, apart from a very few sectoral restrictions (such as in the transport or fisheries sector) which apply to all third countries. Article 73g(2) allows for unilateral measures by Member States for serious political reasons and on grounds of urgency, as long as the Council has not taken Community measures.