Thinking Past Naivete: Investment Screening by the EU as a Problem of (Mis)trust in International Relations

Abstract

The EU’s investment screening mechanism (ISM) has been a prime example of the unilateral turn in EU trade and investment policy and of a broader global trend of a rise in ISMs. Being a champion of market liberalization and open investment regimes, however, for the EU to introduce a regulatory barrier to cross-border capital flows is particularly remarkable. This contribution argues that conceptually, ISMs may be understood as exposing a problem of trust in international relations (IR) and that a greatly consequential, if not decisive, underlying factor affecting both the introduction and usage of the EU ISM has been the level of trust between the EU and the People’s Republic of China. The introduction of the EU ISM is a symptom of mistrust in EU-China relations in its legislative form, and a test of trust in its individual decisions at Member State (MS) level. Discussing the above, the article aims to fulfil two objectives. First, it demonstrates how the concept of trust can illustrate the genesis and later the functioning of the EU ISM. Secondly, it explores what legal tools may be adopted to either rebuild trust or to render trust inessential by curtailing the security vulnerabilities which require it. EU External Affairs, China, Foreign Investment, FDI, Investment Screening, National Security, Trust