Maltese MEP Alfred Sant broke with the line of the socialist and democratic grouping (S&D) at the European Parliament and voted against a proposal for a regulation establishing a framework for screening of foreign direct investments into the European Union. The proposal was discussed at the Economic and Monetary Committee of the European Parliament (ECON).
The draft Regulation introduces the means for Member States and the Commission to request information to screen foreign direct investments that raise concerns for security or public order. It would cover an exchange of information system applied to strategic investments. By extension, it would give the Commission the possibility to screen foreign direct investment in EU member states before they are carried out in order to ascertain whether they will have an impact on EU programs.
A majority of the MEPs in ECON agreed with the Commission's suggestions for screening of direct investment and exchange of information among Member States. However, there were also some reservations related to the Commission interfering with the decision-making processes of Member States and related to the safeguarding of commercially sensitive information. Dr Sant is the only Maltese MEP sitting on ECON.
“Better instead of implementing such proposals to reinstall controls on capital movements," remarked the Maltese MEP during a working session on the proposal. "This proposal will create new political and bureaucratic barriers to investment which by being one-size-fits-all, will put smaller Member States at a disadvantage,” he said.
Sant stated that the screening mechanism being envisaged would be poison for small EU states like Malta which are trying to attract foreign direct investments to their territories. Bigger economies would be better able to cope with screening and might indeed benefit competitively from it. Screening would negatively impact on the appetite of foreign firms to implement direct investment in places like Malta. Moreover, the sharing of information could concern sensitive information on investments in areas over which Member States might be competing with each other.
The proposal is expected to be discussed and voted on as a resolution at the Plenary of the European Parliament in June.