Creating an EU Investment Policy: Challenges for the Post-Lisbon Era of External Relations

Abstract

The introduction of EU competence over foreign direct investment (FDI) in Article 207 TFEU after the Lisbon Treaty has generated broad discussions regarding the scope of the ‘new’ EU competence and how it will affect Member States’ foreign investment policies and in particular their Bilateral Investment Treaties (BITs). Recently, the European Commission announced its intentions to create a new EU investment policy, indicating its aim to transform the EU into a major player in the field of foreign investment. Within this framework, the purpose of this chapter is to examine the challenges that the creation of an EU investment policy presents which the involved political actors will have to tackle within the following years. In that regard, this chapter looks firstly at the scope and content of EU competence, arguing that neither EU institutions nor Member States have fully grasped the broad scope of foreign investment regulation and how different areas of EU law besides the Common Commercial Policy can impact on it. Secondly, the chapter looks at the specific objectives and content of future EU investment agreements. It is argued that although the Commission intends to cover matters that exist under Member State BITs, such as protection against expropriation and investor-state arbitration, it does not have a clear vision of how to integrate them within the framework of the new ‘constitutional’ objectives of EU external relations. Thirdly, the chapter explores the institutional implications that the creation of an EU investment policy raises, focusing on the effects of concluding investment agreements as mixed agreements. Finally, the chapter examines the practical problems that emerge during the transition from national to EU investment policies. As the smooth transition from Member State BITs to EU investment agreements is necessary to preserve European investors’ interests and rights and to sooth the concerns of third countries, the Commission’s planned action focuses only on short-term measures, which merely postpone the uncertainty that EU investment policy will raise.