EUROPEAN COMMISSION

Brussels, 13.9.2017

COM(2017) 487 final

2017/0224(COD)

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

{SWD(2017) 297 final}

EXPLANATORY MEMORANDUM

1.CONTEXT OF THE PROPOSAL

•Reasons for and objectives of the proposal

•Consistency with existing policy provisions in the policy area

•Consistency with other Union policies

Foreign direct investment is a capital movement under Article 63 TFEU. Article 63 TFEU prohibits any restriction to capital movements between Member States and between Member States and third countries. Investment screening mechanisms may represent a restriction on the free movement of capital which, however, may be justified when necessary and proportionate for the achievement of the objectives defined in the Treaty, including on public security and public policy grounds (Article 65 TFEU) or for overriding reasons in the general interest, as defined by the Court of Justice of the European Union.

As clarified in the case law of the Court of Justice, whereas Member States enjoy discretion in determining public policy and public security requirements in the light of their national needs, 4 those public interests cannot be determined unilaterally by the Member States without any control by the institutions of the EU and must be interpreted strictly: they may be relied on only if there is a genuine and sufficiently serious threat to a fundamental interest of society. 5 Restrictions to the fundamental freedoms must not be misapplied so as to, in fact, serve purely economic ends. Furthermore, investment screening mechanisms should comply with the general principles of EU law, in particular the principles of proportionality and legal certainty. These principles require that the procedure and the criteria for the investment screening are defined in a non-discriminatory and sufficiently precise manner. Potential investors must be able to know such mechanisms in advance and to seek judicial review.

The proposed Regulation is consistent with these requirements. It confirms that Member States may screen foreign direct investments on grounds of security or public order and sets out basic procedural requirements for Member State's screening mechanisms, such as transparency, non-discrimination between different third countries and judicial review.

Foreign direct investment may lead to the establishment of a third country investor in the EU, e.g. when such an investment acquires a controlling stake in an EU-based undertaking. Article 49 TFEU prohibits restrictions on the freedom of establishment of nationals of a Member State in the territory of another Member State. Whereas Article 63 TFEU also applies to capital movements from third countries, Article 49 TFEU does not apply to the establishment of third country nationals in the EU. Thus the proposed Regulation does not affect the Treaty provisions on freedom of establishment.

To address the growing concern of securing valuable raw materials for the Union economy, the Commission launched the European Raw Materials Initiative in 2008. It is an integrated strategy that establishes targeted measures to secure and improve access to raw materials for the EU. One of the priority actions of the Initiative was to establish a list of Critical Raw Materials at the EU level. This list contains raw materials which reach or exceed thresholds for both Economic Importance and Supply Risk. The Commission established the first list in 2011 and has kept to the commitment to update it at least every three years to reflect market, production and technological developments 14 . A second list was published in 2014 and a new list is published in parallel to this Regulation.

The list of Critical Raw Materials should help to incentivise the European production of Critical Raw Materials and facilitate the launching of new mining and recycling activities. The Commission has in recent years taken account of the list of Critical Raw Materials through a wide range of actions in the areas of trade, international relations, research and innovation, knowledge base and circular economy. The EU supports complementary policy initiatives by Member States who are also involved in the preparation of the list of Critical Raw Materials.

The proposed Regulation will not affect the dual-use export control governed by Regulation (EC) No 428/2009 22 . Trade in dual-use items is subject to controls to prevent the risks that these items may pose for international security. Controls derive from international obligations and are in line with commitments agreed upon in multilateral export control regimes. The EU export control regime is governed by Regulation (EC) No 428/2009 setting up a Community regime for the control of exports, transfer, brokering and transit of dual-use items, which provides for common control rules, a common list of dual-use items as well as coordination and cooperation to support consistent implementation and enforcement throughout the Union. The Regulation is binding and directly applicable throughout the EU.

2.LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

•Legal basis

•Subsidiarity (for non-exclusive competence)

•Proportionality

•Choice of the instrument

3.RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS

•Ex-post evaluations/fitness checks of existing legislation

•Stakeholder consultations

•Collection and use of expertise

•Impact assessment

The Union is one of the most open economies to incoming foreign direct investment. Inward investments to the EU are constantly growing. They increasingly focus on particular sectors, on larger than average enterprises, and increasingly emanate from state owned enterprises or investors with strong links to governments. In contrast to this, since 2016, at global level, restrictions to foreign direct investment are increasing.

Recently, a series of take-overs of European companies involved foreign investors with strong ties to their home governments which strategy focus on the purchase of European companies that develop technologies or maintain infrastructures that are essential to perform critical functions in society and the economy. The ultimate risk is that such investment could be detrimental to security and public order of the Union or its Member States. The combination of these developments triggered concerns of European citizens, companies and Member States. These concerns need careful analysis and appropriate action, as announced in the Commission Reflection paper on Harnessing Globalisation, issued on 10 May 2017.

In view of the rapidly changing economic reality, growing concerns of citizens and Member States, the proposal is exceptionally presented without an accompanying impact assessment. The proposal targets specifically the main issues identified at this stage in a proportionate manner. Other elements will be further assessed in the study announced in the Communication accompanying this Regulation. In the meantime the Commission proposal for Regulation is accompanied by a Staff working document providing a factual description of foreign takeovers in the EU on the basis of the available data, as well as a brief analysis of the issue at stake.

The Commission Communication accompanying the Proposal for a Regulation announces an in-depth analysis of investment flows into the EU in particular those in strategic sectors or assets which may raise security or public order concerns. The analysis will include data collection, analysis of trends, and assessment of impact, including through case studies. Its results will feed into the decision-making process.

•Regulatory fitness and simplification

•Fundamental rights

4.BUDGETARY IMPLICATIONS

There are no other budgetary implications than administrative costs (see Financial Statement annexed to this proposal).

5.OTHER ELEMENTS

•Implementation plans and monitoring, evaluation and reporting arrangements

•Explanatory documents (for directives)

•Detailed explanation of the specific provisions of the proposal

Subject matter, scope and definitions (Articles 1 and 2)

This Regulation aims to establish a comprehensive enabling framework for the screening of foreign direct investments within the Union. Article 1 confirms that foreign direct investment may be screened by the Member States and the Commission on the grounds of security or public order. The grounds for investment screening are defined in compliance with the relevant requirements for the imposition of restrictive measures based on grounds of security or public order stipulated in the WTO Agreement (including in particular Article XIV(a) and Article XIV bis of the GATS), and in other trade and investment agreements or arrangements to which the Union or its Member States are parties.

For the purpose of this Regulation, Article 2 lays down a number of applicable definitions. In particular it clarifies that foreign direct investment covers a broad range of investments which establish or maintain lasting and direct links between investors from third countries and undertakings carrying out an economic activity in Member States. It does not cover portfolio investments.

In addition, as referred to in the Commission Communication accompanying this proposal, the Commission will set up a coordination group with regard to the screening of foreign direct investment consisting of Member States' representatives and the Commission. The Group would meet regularly to consider issues relating to foreign direct investment into the EU, including those arising from the implementation of the Regulation. This group could provide a forum for exchanging information between Member States on, inter alia, foreign direct investments flows and trends, as well as best practices for screening foreign direct investments.

2017/0224 (COD)

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

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 207(2) thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national parliaments,

Acting in accordance with the ordinary legislative procedure,

Whereas:

(1)Foreign direct investment contributes to the Union's growth, by enhancing its competitiveness, creating jobs and economies of scale, bringing in capital, technologies, innovation, expertise, and by opening new markets for the Union's exports. It supports the objectives of the Commission's Investment Plan for Europe and contributes to other Union projects and programmes.

(2)The Union and the Member States have an open investment environment, which is enshrined in the Treaty on the Functioning of the European Union ('TFEU') and embedded in the international commitments undertaken by the Union and its Member States with respect to foreign direct investment.

(3)Pursuant to the international commitments undertaken in the World Trade Organisation, the Organisation for Economic Cooperation and Development, and in the trade and investment agreements concluded with third countries, the Union and Members States may adopt restrictive measures relating to foreign direct investment on the grounds of security or public order, subject to certain requirements.

(4)Several Member States have put in place measures according to which they may restrict the movement of capital between Member States and between Member States and third countries on grounds of public policy or public security. Those measures reflect Member States' objectives and concerns with respect to foreign direct investment, and result in a number of different measures in terms of scope and procedure. Other Member States do not have such mechanisms.

(5)There is currently no comprehensive framework at EU-level for the screening of foreign direct investments on the grounds of security or public order.

(6)Foreign direct investment falls within the common commercial policy. In accordance with Article 3(1)(e) TFEU, the European Union has exclusive competence with respect to the common commercial policy.

(7)It is important to provide legal certainty and to ensure EU wide coordination and cooperation by establishing a framework for the screening of foreign direct investment in the Union on grounds of security or public order. This is without prejudice to the sole responsibility of the Member States for the maintenance of national security.

(8)The framework for the screening of foreign direct investment should provide the Member States and the Commission with the means to address risks to security or public order in a comprehensive manner, and to adapt to changing circumstances, whilst maintaining the necessary flexibility for Member States to screen foreign direct investments on grounds of security and public order taking into account their individual situations and national circumstances.

(9)A broad range of investments which establish or maintain lasting and direct links between investors from third countries and undertakings carrying out an economic activity in a Member State should be covered.

(10)Member States should be able to take the necessary measures, in compliance with Union law, to prevent circumvention of their screening mechanisms and decisions to protect security or public order. This should cover investments within the Union by means of artificial arrangements that do not reflect economic reality and circumvent the screening mechanisms and screening decisions, where the investor is ultimately owned or controlled by a natural person or an undertaking of a third country. This is without prejudice to the freedom of establishment and free movement of capital enshrined in the TFEU.

(11)To guide Member States and the Commission in the application of the Regulation, it is appropriate to provide a list of factors that may be taken into consideration when screening foreign direct investment on the grounds of security or public order. This list will also improve transparency of the screening process for investors considering making or having made foreign direct investments in the Union. This list of factors that may affect security or public order should remain non-exhaustive.

(12)In determining whether a foreign direct investment may affect security or public order, Member States and the Commission should be able to consider all relevant factors, including the effects on critical infrastructure, technologies, including key enabling technologies, and inputs which are essential for security or the maintenance of public order, and the disruption, loss or destruction of which would have a significant impact in a Member State or in the Union. In that regard, Member States and the Commission should also be able to take into account whether a foreign investor is controlled directly or indirectly (e.g. through significant funding, including subsidies) by the government of a third country.

(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.

(14)A mechanism which enables Member States to cooperate and assist each other where a foreign direct investment in one Member State may affect the security or public order of other Member States should be set up. Member States should be able to provide comments to a Member State in which the investment is planned or has been completed, irrespective of whether the Member States providing comments or the Member States in which the investment is planned or has been completed maintain a screening mechanism or are screening the investment. The comments of Member States should also be forwarded to the Commission. The Commission should also have the possibility, where appropriate, to issue an opinion to the Member State in which the investment is planned or has been completed, irrespective of whether this Member State maintains a screening mechanism or is screening the investment and irrespective of whether other Member States have provided comments.

(15)Furthermore, the Commission should have the possibility to screen foreign direct investments likely to affect projects and programmes of Union interest on grounds of security or public order. This would give the Commission a tool to protect projects and programmes which serve the Union as whole and represent an important contribution to its economic growth, jobs and competitiveness. This should include in particular projects and programmes involving a substantial EU funding or established by Union legislation regarding critical infrastructure, critical technologies or critical inputs. For greater clarity, an indicative list of projects or programmes of Union interest in relation to which foreign direct investment can be subject to a screening by the Commission should be listed in an Annex.

(16)Where the Commission considers that a foreign direct investment is likely to affect projects or programmes of Union interest on grounds of security or public order, the Commission should have the possibility to address an opinion to the Member States in which such investment is planned or completed within a reasonable timeframe. The Member States should take utmost account of the opinion and provide an explanation to the Commission if they do not follow this opinion, in compliance with their duty of sincere cooperation under Article 4(3) TEU. The Commission should also have the possibility to request from those Member States the information necessary for its screening of such investment.

(17)In order to facilitate the cooperation with other Member States and the screening of foreign direct investment by the Commission, Member States should notify their screening mechanisms and any amendment thereto to the Commission, and should report on the application of their screening mechanisms on a regular basis. For the same reason, Member States that do not have a screening mechanism should also report on the foreign direct investments that took place in their territory, on the basis of the information available to them.

(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 subsides granted by third countries.

(19)The communication and cooperation at Member State and Union level should be enhanced through the establishment of contact points for the screening of foreign direct investments in each Member State.

(20)Member States and the Commission should take all necessary measures to ensure the protection of confidential and other sensitive information.

(21)No later than three years after the entry into force of this Regulation, the Commission should present to the European Parliament and the Council a report on the application of this Regulation. Where the report proposes modifying the provisions of this Regulation, it may be accompanied, where appropriate, by a legislative proposal.

(22)The implementation of this Regulation by the Union and the Member States should comply with the relevant requirements for the imposition of restrictive measures based on grounds of security or public order stipulated in EU law, in the Agreement on the European Economic Area (EEA Agreement), in the WTO Agreement (including in particular Article XIV(a) and Article XIV bis of the GATS) and in other trade and investment agreements or arrangements to which the Union or Member States are parties.

(23)When a foreign direct investment constitutes a concentration falling within the scope of Council Regulation (EC) No 139/2004 25 , the implementation of this Regulation should be without prejudice to the application of Article 21(4) of Regulation (EC) No 139/2004. This Regulation and Article 21(4) of Regulation (EC) No 139/2004 should be applied in a consistent manner. To the extent that the respective scope of application of the two regulations overlap, the grounds for screening set out in Article 1 of this Regulation and the notion of legitimate interests within the meaning of Article 21(4), third paragraph, of Regulation (EC) No 139/2004 should be interpreted in a coherent manner, without prejudice to the assessment of the compatibility of the national measures aimed at protecting these interests with the general principles and other provisions of Union law.

(24)This Regulation is consistent with and without prejudice to other notification and screening procedures set out in sectoral Union law,

HAVE ADOPTED THIS REGULATION:

Article 1

Subject matter and scope

This Regulation establishes a framework for the screening by the Member States and the Commission of foreign direct investments in the Union on the grounds of security or public order.

Article 2

Definition

For the purposes of this Regulation, the following definitions apply:

1.'foreign direct investment' means investments of any kind by a foreign investor aiming to establish or to maintain lasting and direct links between the foreign investor and the entrepreneur to whom or the undertaking to which the capital is made available in order to carry on an economic activity in a Member State, including investments which enable effective participation in the management or control of a company carrying out an economic activity;

2.'foreign investor' means a natural person of a third country or an undertaking of a third country intending to make or having made a foreign direct investment;

3.'screening' means a procedure allowing to assess, investigate, authorise, condition, prohibit or unwind foreign direct investments;

4.'screening mechanism' means an instrument of general application, such as a law or regulation, and accompanying administrative requirements, implementing rules or guidelines, setting out the terms, conditions and procedures for the screening of foreign direct investments on grounds of security or public order;

5.'screening decision' means a measure adopted in application of a screening mechanism;

6.'undertaking of a third country' means an undertaking constituted or otherwise organised under the laws of a third country.

Article 3

Screening of foreign direct investments

1.Member States may maintain, amend or adopt mechanisms to screen foreign direct investments on the grounds of security or public order, under the conditions and in accordance with the terms set out in this Regulation.

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.

3.Projects or programmes of Union interest shall include in particular those projects and programmes which involve a substantial amount or a significant share of EU funding, or which are covered by Union legislation regarding critical infrastructure, critical technologies or critical inputs. An indicative list of projects or programmes of Union interest is included in Annex 1.

Article 4

Factors that may be taken into consideration in the screening

In screening a foreign direct investment on the grounds of security or public order, Member States and the Commission may consider the potential effects on, inter alia:

–critical infrastructure, including energy, transport, communications, data storage, space or financial infrastructure, as well as sensitive facilities;

–critical technologies, including artificial intelligence, robotics, semiconductors, technologies with potential dual use applications, cybersecurity, space or nuclear technology;

–the security of supply of critical inputs; or

–access to sensitive information or the ability to control sensitive information.

In determining whether a foreign direct investment is likely to affect security or public order, Member States and the Commission may take into account whether the foreign investor is controlled by the government of a third country, including through significant funding.

Article 5

Anti-circumvention

Member States may maintain, amend or adopt measures necessary to prevent circumvention of the screening mechanisms and screening decisions.

Article 6

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.

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.

3.Confidential information, including commercially-sensitive information, made available by foreign investors and undertaking concerned shall be protected.

4.Foreign investors and undertakings concerned shall have the possibility to seek judicial redress against screening decisions of the national authorities.

Article 7

Notification by Member States of screening mechanisms and annual reporting

1.Member States shall notify to the Commission their existing screening mechanisms by […] (30 days of the entry into force of this Regulation) at the latest. Member States shall notify to the Commission any amendment to an existing screening mechanism or any newly adopted screening mechanism within 30 days of entry into force of the screening mechanism at the latest.

2.Member States that maintain screening mechanisms shall provide the Commission with an annual report on the application of their screening mechanisms. For each reporting period, the report shall include in particular information on:

(a)foreign direct investments screened and undergoing screening;

(b)screening decisions prohibiting foreign direct investments;

(c)screening decisions subjecting foreign direct investments to conditions or mitigating measures;

(d)the sectors, origin, and value of foreign direct investment screened and undergoing screening.

3.Member States that do not maintain screening mechanisms shall provide the Commission with an annual report covering foreign directs investments that took place in their territory, on the basis of information available to them.

Article 8

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.

2.Where a Member State considers that a foreign direct investment planned or completed in another Member State is likely to affect its security or public order, it may provide comments to the Member State where the foreign direct investment is planned or has been completed. The comments shall be forwarded to the Commission in parallel.

3.Where the Commission considers that a foreign direct investment is likely to affect security or public order in one or more Member States, it may issue an opinion addressed to the Member State in which the foreign direct investment is planned or has been completed. The Commission may issue an opinion irrespective of whether other Member States have provided comments.

4.The Commission or a Member State which duly considers that a foreign direct investment is likely to affect its security or public order may request from the Member State where the foreign direct investment is planned or has been completed, any information necessary to provide comments referred to in paragraph 2, or to issue the opinion referred to in paragraph 3.

5.Comments pursuant to paragraphs 2 or opinions pursuant to paragraph 3 shall be addressed to the Member State where the foreign direct investment is planned or has been completed within a reasonable period of time, and in any case no later than 25 working days following receipt of the information referred to in paragraphs 1 or 4. In cases where the opinion of the Commission follows comments from other Member States, the Commission shall have 25 additional working days for issuing the opinion.

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.

7.Cooperation between Member States pursuant to this Article shall take place through the contact points referred to in Article 12.

Article 9

Framework for Commission screening

1.Where the Commission considers that a foreign direct investment is likely to affect projects or programmes of Union interest on grounds of security or public order, the Commission may issue an opinion addressed to the Member State where the foreign direct investment is planned or has been completed.

2.The Commission may request from the Member State where the foreign direct investment is planned or has been completed any information necessary to issue the opinion referred to in paragraph 1.

3.The Commission shall address its opinion to the Member State concerned within a reasonable period of time, and in any case no later than 25 working days following receipt of the information requested by the Commission pursuant to paragraph 2. Where a Member State has a screening mechanism in place as referred to in Article 3(1) and the information on foreign direct investment undergoing screening has been received by the Commission pursuant to Article 8(1), the opinion shall be delivered no later than 25 working days following receipt of such information. Where additional information is needed to issue an opinion, the 25-day period shall run from the date of receipt of the additional information.

4.The opinion of the Commission shall be communicated to the other Member States.

5.The Member States where the foreign direct investment is planned or has been completed shall take utmost account of the Commission's opinion and provide an explanation to the Commission in case its opinion is not followed.

Article 10

Information requirements

1.Member States shall ensure that the information requested by the Commission and other Member States pursuant to Articles 8(4) and 9(2) is made available to the Commission and the requesting Member States without undue delay.

2.The information referred to in paragraph 1 of this Article shall include in particular:

(a)The ownership structure of the foreign investor and of the undertaking in which the foreign direct investment is planned or has been completed, including information on the ultimate controlling shareholder or shareholders;

(b)The value of the foreign direct investment;

(c)The products, services and business operations of the foreign investor and of the undertaking in which the foreign direct investment is planned or has been completed ;

(d)The Member States in which the foreign investor and the undertaking in which the foreign direct investment is planned or has been completed conduct business operations;

(e)The funding of the investment, on the basis of information available to the Member State.

Article 11

Confidentiality

1.Information received as a result of the application of this Regulation shall be used only for the purpose for which it was requested.

2.Member States and the Commission shall ensure the protection of confidential information acquired in application of this Regulation.

Article 12

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.

Article 13

Evaluation

1.The Commission shall evaluate and present to the European Parliament and the Council a report on the application of this Regulation no later than 3 years after its entry into force. Member States shall be involved in this exercise and shall provide the Commission with necessary information for the preparation of that report.

2.Where the report recommends modifying the provisions of the Regulation, the report may be accompanied by an appropriate legislative proposal.

Article 14

Entry into force

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels,

LEGISLATIVE FINANCIAL STATEMENT

1.FRAMEWORK OF THE PROPOSAL/INITIATIVE

1.1.Title of the proposal/initiative

1.2.Policy area(s) concerned

1.3.Nature of the proposal/initiative

1.4.Objective(s)

1.5.Grounds for the proposal/initiative

1.6.Duration and financial impact

1.7.Management mode(s) planned

2.MANAGEMENT MEASURES

2.1.Monitoring and reporting rules

2.2.Management and control system

2.3.Measures to prevent fraud and irregularities

3.ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE

3.1.Heading(s) of the multiannual financial framework and expenditure budget line(s) affected

3.2.Estimated impact on expenditure 

3.2.1.Summary of estimated impact on expenditure

3.2.2.Estimated impact on operational appropriations

3.2.3.Estimated impact on appropriations of an administrative nature

3.2.4.Compatibility with the current multiannual financial framework

3.2.5.Third-party contributions

3.3.Estimated impact on revenue

LEGISLATIVE FINANCIAL STATEMENT

1.FRAMEWORK OF THE PROPOSAL/INITIATIVE

1.1.Title of the proposal/initiative

1.2.Policy area(s) concerned 

1.3.Nature of the proposal/initiative

x The proposal/initiative relates to a new action 

◻ The proposal/initiative relates to a new action following a pilot project/preparatory action 26  

◻ The proposal/initiative relates to the extension of an existing action 

◻ The proposal/initiative relates to an action redirected towards a new action 

1.4.Objective(s)

1.4.1.The Commission's multiannual strategic objective(s) targeted by the proposal/initiative

1.4.2.Specific objective(s) and Specific objective No [ ] 

1.4.3.Expected result(s) and impact

Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted.

1.4.4.Indicators of results and impact

Specify the indicators for monitoring implementation of the proposal/initiative.

1.5.Grounds for the proposal/initiative

1.5.1.Requirement(s) to be met in the short or long term

1.5.2.Added value of Union involvement (it may result from different factors, e.g. coordination gains, legal certainty, greater effectiveness or complementarities). For the purposes of this point 'added value of Union involvement' is the value resulting from Union intervention which is additional to the value that would have been otherwise created by Member States alone.

1.5.3.Lessons learned from similar experiences in the past

1.5.4.Compatibility and possible synergy with other appropriate instruments

◻ Proposal/initiative of limited duration

–◻    Proposal/initiative in effect from [DD/MM]YYYY to [DD/MM]YYYY

–◻    Financial impact from YYYY to YYYY

X Proposal/initiative of unlimited duration

–Implementation with a start-up period from YYYY to YYYY,

–followed by full-scale operation.

1.6.Management mode(s) planned 27  

◻ Direct management by the Commission

–◻ by its departments, including by its staff in the Union delegations;

–◻    by the executive agencies

◻ Shared management with the Member States

◻ Indirect management by entrusting budget implementation tasks to:

–◻ third countries or the bodies they have designated;

–◻ international organisations and their agencies (to be specified);

–◻the EIB and the European Investment Fund;

–◻ bodies referred to in Articles 208 and 209 of the Financial Regulation;

–◻ public law bodies;

–◻ bodies governed by private law with a public service mission to the extent that they provide adequate financial guarantees;

–◻ bodies governed by the private law of a Member State that are entrusted with the implementation of a public-private partnership and that provide adequate financial guarantees;

–◻ persons entrusted with the implementation of specific actions in the CFSP pursuant to Title V of the TEU, and identified in the relevant basic act.

–If more than one management mode is indicated, please provide details in the ‘Comments’ section.

Comments

2.MANAGEMENT MEASURES

2.1.Monitoring and reporting rules

Specify frequency and conditions.

2.2.Management and control system

2.2.1.Risk(s) identified

2.2.2.Information concerning the internal control system set up

2.2.3.Estimate of the costs and benefits of the controls and assessment of the expected level of risk of error

2.3.Measures to prevent fraud and irregularities

Specify existing or envisaged prevention and protection measures.

3.ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE

3.1.Heading(s) of the multiannual financial framework and expenditure budget line(s) affected

·Existing budget lines

In order of multiannual financial framework headings and budget lines.

·New budget lines requested

In order of multiannual financial framework headings and budget lines.

3.2.Estimated impact on expenditure

[This section should be filled in using the spreadsheet on budget data of an administrative nature (second document in annex to this financial statement) and uploaded to DECIDE for interservice consultation purposes.]

3.2.1.Summary of estimated impact on expenditure

EUR million (to three decimal places)

DG: <…….>				Year N 31	Year N+1	Year N+2	Year N+3	Enter as many years as necessary to show the duration of the impact (see point 1.6)			TOTAL
• Operational appropriations
Number of budget line	Commitments	(1)
	Payments	(2)
Number of budget line	Commitments	(1a)
	Payments	(2a)
Appropriations of an administrative nature financed from the envelope of specific programmes 32
Number of budget line		(3)
TOTAL appropriations for DG <…….>	Commitments	=1+1a +3
	Payments	=2+2a +3

If more than one heading is affected by the proposal / initiative:

EUR million (to three decimal places)

TOTAL appropriations under HEADING 5 of the multiannual financial framework

(Total commitments = Total payments)

3.224

3.224

3.224

3.224

3.224

EUR million (to three decimal places)

3.2.2.Estimated impact on operational appropriations

–x    The proposal/initiative does not require the use of operational appropriations

–◻    The proposal/initiative requires the use of operational appropriations, as explained below:

Commitment appropriations in EUR million (to three decimal places)

3.2.3.Estimated impact on appropriations of an administrative nature

3.2.3.1.Summary

–◻    The proposal/initiative does not require the use of appropriations of an administrative nature

–x    The proposal/initiative requires the use of appropriations of an administrative nature, as explained below:

EUR million (to three decimal places)

HEADING 5 of the multiannual financial framework
Human resources	3.136	3.136	3.136	3.136				3.224
Other administrative expenditure	0.088	0.088	0.088	0.088				0.088
Subtotal HEADING 5 of the multiannual financial framework	3.224	3.224	3.224	3.224				3.362

Outside HEADING 5 37 of the multiannual financial framework
Human resources
Other expenditure of an administrative nature
Subtotal outside HEADING 5 of the multiannual financial framework

The appropriations required for human resources and other expenditure of an administrative nature will be met by appropriations from the DG that are already assigned to management of the action and/or have been redeployed within the DG, together if necessary with any additional allocation which may be granted to the managing DG under the annual allocation procedure and in the light of budgetary constraints.

3.2.3.2.Estimated requirements of human resources

–◻    The proposal/initiative does not require the use of human resources.

–X    The proposal/initiative requires the use of human resources, as explained below:

Estimate to be expressed in full time equivalent units

XX is the policy area or budget title concerned.

The human resources required will be met by staff from the DG who are already assigned to management of the action and/or have been redeployed within the DG, together if necessary with any additional allocation which may be granted to the managing DG under the annual allocation procedure and in the light of budgetary constraints.

Description of tasks to be carried out:

3.2.4.Compatibility with the current multiannual financial framework

–x    The proposal/initiative is compatible the current multiannual financial framework.

–◻    The proposal/initiative will entail reprogramming of the relevant heading in the multiannual financial framework.

–◻    The proposal/initiative requires application of the flexibility instrument or revision of the multiannual financial framework.

3.2.5.Third-party contributions

–X The proposal/initiative does not provide for co-financing by third parties.

–The proposal/initiative provides for the co-financing estimated below:

Appropriations in EUR million (to three decimal places)

3.3.Estimated impact on revenue

–X    The proposal/initiative has no financial impact on revenue.

–◻    The proposal/initiative has the following financial impact:

–◻    on own resources

–◻    on miscellaneous revenue

EUR million (to three decimal places)

For miscellaneous ‘assigned’ revenue, specify the budget expenditure line(s) affected.

Specify the method for calculating the impact on revenue. 

(1) A mechanism allowing the State to monitor foreign investments in companies/sectors considered of strategic importance and to oppose them under certain conditions.

(2) These considerations are without prejudice to the question of the full compatibility of all screening mechanisms with EU law.

(3) COM(2015)497, 14.10.2015.

(4) Case C-265/95, Commission v France ("strawberries"), paragraph 33.

(5) Case C-463/00, Commission v Spain, paragraph 34; Case C-212/09 Commission v Portugal, paragraph 83 and Case C-244/11 Commission v Greece, paragraph 67.

(6) Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (OJ L 24, 29.1.2004, p. 1).

(7) In order to ensure a smooth handling of the foreign direct investment screening mechanism at national level and the procedure pursuant to Article 21(4) of the EU Merger Regulation, it could be useful that Member States indicate whether a transaction is likely to fall within the scope of the EU Merger Regulation when they inform the Commission and other Member States that they have started a screening procedure pursuant to Article 8(1) of the proposed Regulation.

(8) Council Directive 2008/114/EC of 8 December 2008 on the identification and designation of European critical infrastructures and the assessment of the need to improve their protection (OJ L 345, 23.12.2008, p.75).

(9) Directive 2009/72/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC (OJ L 211, 14.8.2009, p. 55).

(10) Directive 2009/73/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC (OJ L 211, 14.8.2009, p. 94).

(11) The new Regulation repealing Regulation (EU) No 994/2010 is currently in the adoption process and is expected to enter into force in autumn 2017.

(12) COM (2016) 318, Proposal for a Regulation of the European Parliament and of the Council on risk-preparedness in the electricity sector and repealing Directive 2005/89/EC

(13) Directive (EU) 2016/1148 of the European Parliament and of the Council of 6 July 2016 concerning measures for a high common level of security of network and information systems across the Union, OJ L 194, 19.7.2016, p. 1.

(14) Communication "Tackling the challenges in commodity markets and on raw materials", COM(2011)25

(15) JOIN(2013) 1 final, 7.2.2013.

(16) Regulation (EU) No 283/2014 of the European Parliament and of the Council of 11 March 2014 on guidelines for trans-European networks in the area of telecommunications infrastructure and repealing Decision No 1336/97/EC, OJ L 86, 21.3.2014, p. 14.

(17) Directive (EU) 2016/1148 of the European Parliament and of the Council of 6 July 2016 concerning measures for a high common level of security of network and information systems across the Union

(18) Commission Communication COM(2016) 410 on Strengthening Europe's Cyber Resilience System and Fostering a Competitive and Innovative Cybersecurity Industry.

(19) Regulation (EU) No 283/2014 of the European Parliament and of the Council of 11 March 2014 on guidelines for trans-European networks in the area of telecommunications infrastructure and repealing Decision No 1336/97/EC

(20) OJ L 293, 31.10.2008, p. 3.

(21) Directive 2007/44/EC of the European Parliament and of the Council of 5 September 2007 amending Council Directive 92/49/EEC and Directives 2002/83/EC, 2004/39/EC, 2005/68/EC and 2006/48/EC as regards procedural rules and evaluation criteria for the prudential assessment of acquisitions and increase of holdings in the financial sector (OJ L 247, 21.9.2007, p. 1–16), Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338–436), Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ L 335, 17.12.2009, p. 1–155), Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (OJ L 173, 12.6.2014, p. 349–496).

(22) Council Regulation (EC) No 428/2009 of 5 May 2009 setting up a Community regime for the control of exports, transfer, brokering and transit of dual-use items, OJ L 134, 29.5.2009, p.1.

(23) See in particular Directive 2004/109/EC of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC (OJ, L390, 31.12.2004, p. 38); Directive 2004/25/EC on takeover bids (OJ, L142, 30.4.2004, p. 12).

(24) See, for example, Regulation 2008/114 on the identification of European critical infrastructure, Directive 2009/73 on common rules for the internal market in natural gas and Directive 2009/72 on common rules for the internal market in electricity, Regulation 428/2009 setting up a Community regime for the control of exports, transfer, brokering and transit of dual-use items, Directive 2016/1148 on network infrastructure security, new Regulation on safeguards to the security of gas supply, repealing Regulation 994/2010.

(25) Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (OJ L 24, 29.1.2004, p. 1).

(26) As referred to in Article 54(2)(a) or (b) of the Financial Regulation.

(27) Details of management modes and references to the Financial Regulation may be found on the BudgWeb site: https://myintracomm.ec.europa.eu/budgweb/EN/man/budgmanag/Pages/budgmanag.aspx  

(28) Diff. = Differentiated appropriations / Non-diff. = Non-differentiated appropriations.

(29) EFTA: European Free Trade Association.

(30) Candidate countries and, where applicable, potential candidates from the Western Balkans.

(31) Year N is the year in which implementation of the proposal/initiative starts.

(32) Technical and/or administrative assistance and expenditure in support of the implementation of EU programmes and/or actions (former ‘BA’ lines), indirect research, direct research.

(33) Year N is the year in which implementation of the proposal/initiative starts.

(34) Outputs are products and services to be supplied (e.g.: number of student exchanges financed, number of km of roads built, etc.).

(35) As described in point 1.4.2. ‘Specific objective(s)…’

(36) Year N is the year in which implementation of the proposal/initiative starts.

(37) Technical and/or administrative assistance and expenditure in support of the implementation of EU programmes and/or actions (former ‘BA’ lines), indirect research, direct research.

(38) AC= Contract Staff; AL = Local Staff; END= Seconded National Expert; INT = agency staff; JED= Junior Experts in Delegations.

(39) Sub-ceiling for external staff covered by operational appropriations (former ‘BA’ lines).

(40) As regards traditional own resources (customs duties, sugar levies), the amounts indicated must be net amounts, i.e. gross amounts after deduction of 25 % for collection costs.

EUROPEAN COMMISSION

Brussels, 13.9.2017

COM(2017) 487 final

ANNEX

to the

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

{SWD(2017) 297 final}

ANNEX

List of projects or programmes of Union interest referred to in Article 3(3)

–European GNSS programmes (Galileo & EGNOS):

Regulation (EU) No 1285/2013 of the European Parliament and of the Council of 11 December 2013 on the implementation and exploitation of the European satellite navigation systems and repealing the Council Regulation (EC) No 876/2002 and Regulation (EC) No683/2008 of the European Parliament and of the Council.

–Copernicus:

Regulation (EU) No 377/2014 of the European Parliament and of the Council of 3 April 2014 establishing the Copernicus Programme: OJ L 122/44, 24.4.2014

–Horizon 2020:

Regulation (EU) No 1291/2013 of the European Parliament and of the Council of 11 December 2013 establishing Horizon 2020 - the Framework Programme for Research and Innovation (2014-2020) and repealing Decision No 1982/2006/EC, including actions therein relating to Key Enabling Technologies such as artificial intelligence, robotics, semiconductors and cybersecurity.

–Trans-European Networks for Transport (TEN-T):

Regulation (EU) No 1315/2013 of the European Parliament and of the Council of 11 December 2013 on Union guidelines for the development of the trans-European transport network and repealing Decision No 661/2010; OJ L 348, 20.12.2013, p. 1–128.

–Trans-European Networks for Energy (TEN-E):

Regulation (EU) No 347/2013 of the European Parliament and of the Council of 17 April 2013 on guidelines for trans-European energy infrastructure and repealing Decision No 1364/2006/EC and amending Regulations (EC) No 713/2009, (EC) No 714/2009 and (EC) No 715/2009; OJ L 115, 25.4.2013, p. 39.

–Trans-European Networks for Telecommunications:

Regulation (EU) No 283/2014 of the European Parliament and of the Council of 11 March 2014 on guidelines for trans-European networks in the area of telecommunications infrastructure and repealing Decision No 1336/97/EC.