EU Investment Research Articles

The Geoeconomic Turn in EU Trade and Investment Policy: Implications for Developing Countries

The so-called geoeconomic turn in global trade policy-making has changed the context in which the European Union positions itself as a trade actor. However, there is little scholarly attention paid to how the geoeconomic turn affects the EU’s relations with developing countries. This article analyses the potential implications of new EU autonomous trade and investment instruments for developing countries, and how the EU has taken these consequences into account when designing them. We rely on a combination of desk research of official documents, trade data, and secondary literature complemented with expert interviews. We find that a trade-off between geoeconomic and development objectives is more pertinent in sustainability-related than in competitiveness- and security-oriented instruments. In these sustainability instruments, differential treatment of developing countries rarely features in the design—despite some proposals having been made. The geoeconomic turn has thus made it more difficult to align the different objectives in the EU’s trade and investment policies, and development concerns are sometimes relegated to the background.

Isolated court determinations on the admissibility of arbitration: a case study of the German Federal Court of Justice’s recent decision on intra-EU ICSID proceedings

Abstract The German Federal Court of Justice recently confirmed that German courts can issue declarations—with binding effect for the German legal order—finding intra-EU ICSID arbitration inadmissible. While this further step in the post-Achmea dismantling of the EU investment protection system is an important, if unsurprising, development for investment protection lawyers, the procedural mechanism used, section 1032(2) of the German Civil Procedural Code (Zivilprozessordnung—ZPO), is relevant to all forms of arbitration and is available as soon as one party is seated or even just has assets in Germany. This article provides an overview of the German mechanism for isolated determination of the admissibility of arbitration. It uses the recent Federal Court of Justice decision as a model example where such an early determination allows for significant costs savings, explores the functioning of the relevant statutory provision, and highlights situations in which this may be an appropriate means of determining the admissibility of arbitration while limiting costs exposure.

Limitations of coordinative Europeanisation in the Just Transition Mechanism in Romania

The EU currently promotes a radical transition towards a green, digital and more inclusive economy, which for its realization relies on the European Investor State’s financial architecture. As the transition generates losers, not only winners, instruments like the Just Transition Mechanism (JTM) are designed to provide a compensatory function. However, our research shows that it might miss its mark of ‘leaving no one behind’. JTM is a fascinating extension of European Investor State as it seeks to service the losers through investments rather than compensations. Firstly, JTM mirrors the vision of the InvestEU program and doubles down on industrial transformation and strategic investments that rely substantially on private sector involvement. Secondly, as a process, the JTM requires local stakeholder coordination and national institutional capacity – both of which can pose additional challenges to newer member states without enhancing local capabilities. Thirdly, based on the process design, much like other EU programs, JTM has a level of complexity that leaves beneficiaries highly reliant on technical assistance. As such, investment gaps in the newer member states might be extended, and not compressed by the current compensatory financial tools of the EU. Using an in-depth case study method, we develop a multi-dimensional evaluation of the Just Transition process in the most affected region of the Jiu Valley in Romania. Through an original local stakeholder mapping, we find that while the local and national authorities have the highest influence in determining the Just Transition process in Romania, they are also very much distrusted by other local actors. Our findings reveal that it is not just the often-cited weakness in institutional capacity, but also that of poor stakeholder consensus that impede the strategic planning and implementation of new EU investment tools at the level of targeted beneficiaries.

The three ages of the European policy for productive investments

Across the EU sectoral policies, a variety of instruments are used to foster investments and to transform Europe’s productive capacities. Reading beyond the traditional bureaucratic and policy silos, this paper shows how such a composite repertoire of instruments crystalised, taking advantage of two complementary historical fieldworks. Using the sociological concept of ‘age’, we show how a European policy for productive investments emerged, supported by specific rationales and staff, to address episodes of budgetary constraints over investment policies. We first distinguish an ‘age of infrastructure’ (from the 1950s), where the first EEC bureaucrats in charge of these policies – mainly lawyers and engineers – designed loans strategies to continue reconstruction efforts, targeting heavy infrastructural investments in energy or transportation. Then, we show how in the 1970s context of rising budgetary tensions, economists urged their colleagues to take advantage of the Common Market to create European champions, through grants and co-financing, and by promoting SMEs as growth drivers: this marks the ‘integrative age’. Finally, from the 1990s, bureaucrats with a background in finance reoriented PI policies to overcome so-called ‘markets failures’ through loans, guarantees and equity, initiating an ‘age of leverage’ in EU public action. Here, the global access to (publicly subsidized) finance and the rise of derisking activities became a new standard. By capturing the way these successive policy ages concatenated and gave the EU Investor State its current shape, our approach accounts for both stability and change in EU policies.

Reducing transport sector CO2 emissions patterns: Environmental technologies and renewable energy

The research explores the impact of environmental technologies and renewable energy on carbon dioxide (CO2) emissions from the EU transportation sector (2007–2020). Utilizing panel corrected standard error and feasible generalized least squares methods, the study uncovers key drivers influencing declining CO2 emissions. The results reveal a significant and variable effect of environmental technologies and renewable energy on CO2 emissions in the EU transport sector, emphasizing the positive correlation between increased renewable energy adoption and emission reduction. This underscores the necessity for heightened EU investment in sustainable transport infrastructure and clean energy solutions, encompassing initiatives like electric vehicles, hydrogen fuel cells, and biofuels. The study further recommends promoting renewable energy sources for transport systems, aligning with the broader goals of the European Green Deal and the EU Climate Law. Additionally, the research provides essential insights into policy implications, emphasizing a multifaceted approach including comprehensive strategies for cleaner transportation, innovation, and education to accelerate the transition towards sustainable practices in the EU.

Brexit: analysis of the socio-economic impact on the future of UK-Ireland relations

This paper discusses the outcomes of the debate over the status of the Irish border during negotiations for the United Kingdom’s withdrawal from the European Union (“Brexit”), aiming to measure its socioeconomic impact after the creation of a new external border. To this end, we collect and compare data on the trade of goods and services between the UK and the Republic of Ireland, foreign direct investment (FDI), gross domestic product growth, and unemployment rates for the 2016-2019 period, during which London and Brussels negotiated the Withdrawal Agreement. Special attention is given to the North-South interaction in the island of Ireland since its border was one of the most problematic issues when the new UK-EU trade deal was being crafted. Although the exact long-term implications were not completely clear in the chosen period for this analysis, the evidence found suggests that the FDI in the UK is the most negatively impacted indicator, due to the relevance of the presence of EU investors in the country before Brexit, while other variables have shown nearly no relevant fluctuations to support the hypothesis that a change on the Irish border’s status would negatively impact on the UK-Ireland economic relations on the long term.

The impact of the green economy on the sustainable development of Kazakhstan

The authors in this study noted that, the world economy is faced with the realities of depletion of natural resources, water, and environmental pollution. The global course around the world today is the “green economy”, which provides not only a careful attitude to nature, but also the introduction of innovative technologies. In addition to the high level of physical and moral depreciation of equipment, which worsens the issue of irrational consumption of raw materials and energy, there is also a lack of innovation due to low demand and restricted funding. The current implementation of the Invest EU investment program aims to attract a minimum of 650 billion rubles between 2021 and 2027 in long-term public and private investments to support the sustainable revitalization of the European economy. A significant portion, 30%, of these funds are earmarked for climate-related projects. This presents a unique chance for funding innovative ventures that carry higher financial risks, with the added security of a $26.2 billion euro EU budget guarantee. The Public Sector Loan Facility offers a unique financing option, serving as a credit line to enhance public funding in specific areas. This facility, offered by the European Investment Bank, combines grants from the European Union with loans to support projects in targeted regions. It also extends assistance to projects that may not generate profits. The Center for Green Finance was founded in Kazakhstan in 2018 at the Astana International Financial Center with the aim of advancing and advocating for environmentallyfriendly financial practices.

The emergence of geo-economic institutions: observations on European and Chinese development cooperation in Ukraine, Georgia, and Moldova 2014 – 2020

The emergence of China as a major provider of development finance has garnered considerable scholarly debate. Chinese investments and their impact on recipient states have been extensively studied, mainly focusing on the Belt and Road Initiative (BRI). In response to the BRI, the European Commission recently announced its connectivity strategy, the Global Gateway initiative. In this context, and even before the announcement, little work has been done to map Chinese state capitalist development finance side by side with the European Union’s (EU) market-led, public-private partnership-oriented strategies, especially within Europe’s own neighborhood. Additionally, the literature insufficiently explains why development institutions (agents) would act geo-economically to enforce their most powerful member states’ (principals) international agendas. This lack of theoretical explanatory power poses a serious puzzle. Thus, we ask, how has EU and Chinese institutional investment cooperation developed (legally and financially) in the EU’s Eastern Partnership (EaP) region in the previous EU Multiannual Financial Framework (MFF) from 2014 to 2020? We argue that development institutions have acted in accordance with their principal’s policy goals by facilitating investment and institutional agreements and by offering beneficial cooperation conditions, so that the EU and China can direct investment in a geo-economic manner if they choose to do so. In the following, we find that European investment in the EaP countries Ukraine, Moldova, and Georgia, has been huge in absolute terms (amount invested) and strong in relative terms––through deeper economic cooperation––when compared to Chinese investment activity in the same countries. This development supports the EU’s aim of countering China’s increasing economic presence in the region. However, we find that this gap has been closing in total terms. Our study suggests that while China has not matched EU investment in the EaP region for the previous MFF, further research is needed to unpack individual sectors and their geo-economic implications for official development institutions and their respective states.

China's investment in EU member-states’ seaports

The article focuses on the Chinese port investment in the EU countries and analyses the motivation and current situation behind it from the Chinese perspective as well as explains the European perception of investment and its future prospect. The study is based on the Chinese and European official documents and Chinese scholars' articles. In recent years, the number of Chinese port investment projects in European countries has been increasing, and the role of ports as hubs in China-EU economic and trade cooperation has become more prominent. However, the negative perception of Chinese port investment in the EU also gradually increases. The EU is concerned that Chinese port investments will challenge the market dominance of European companies in the port shipping sector and cause political division within the EU, even with far-reaching geopolitical implications and security problems. Chinese academics generally believe that China's investment in EU ports is purely a matter of its own economic and trade interests rather than security considerations, and advocate that China and EU should actively promote port cooperation, follow the path of spatial integration and integration of interests, and build a multi-party community of interests for China-EU port cooperation, and require Europe to abandon the direct influence of external factors and commit to fostering a positive interaction between China and EU. It is necessary for Europe to work towards an effective cooperation between China and the EU on economic development issues and political security issues instead of creating a malicious confrontation.

Strategic Autonomy: The Legal Contours of a Security Policy Construct

Following-up on the many academic analyses of strategic autonomy over the past decade, this special issue aims to take a more comprehensive perspective on ‘security’ by analysing the notion of strategic autonomy from a legal vantage point. After two more general contributions – on the role of the Court of Justice of the European Union and on the ‘supranationalization’ of security despite the key role of EU Member States in this area – the focus turns on specific policy areas. Subsequent contributions thus address strategic autonomy in the context of EU defence-industrial spending, sanctions, data autonomy, energy and investment and economic measures. Together, these contributions highlight different dimensions of the challenges the EU is currently facing. The question that is central to this Introduction –and to the special issue as whole – is to identify and shed light on the important legal contours of an essentially political concept. strategic autonomy, comprehensive security, EU external relations, security and defence, EU competences

Book review: EU Investment Protection Law – Chapter 8 of ceta, the Vietnam and Singapore Free Trade Agreements and EU Regulations 1219/ 2012, 913/2014 and 2019/452 – Article-by-Article Commentary by Moritz Keller

Book review: EU Investment Protection Law – Chapter 8 of ceta, the Vietnam and Singapore Free Trade Agreements and EU Regulations 1219/ 2012, 913/2014 and 2019/452 – Article-by-Article Commentary by Moritz Keller

Investor-State Dispute Settlement Mechanism in Vietnam’s New Generation Free Trade Agreements: Challenges and Recommendations

In the recent years, Vietnam's attraction to foreign investment capital has increased rapidly. As a result, the disputes in the field of foreign investment have emerged more frequently. The fact that a dispute occurs between the government of the host country and a foreign investors, regardless of its cause, will bring adverse consequences to both parties. Amicable settlement of such disputes is an important factor to improve the efficiency of foreign investment, maintaining the trust between the host country and foreign investors. Therefore, stipulating commitments on the dispute settlement mechanism for international investment in multilateral free trade agreements such as Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Vietnam - EU Investment Protection Agreement (EVIPA), and Regional Comprehensive Economic Partnership (RCEP) are indispensable. Therefore, in this context, the paper studies the investor-state dispute settlement (ISDS) mechanism in new-generation free trade agreements to which Vietnam is a member, namely EVIPA, CPTPP, RCEP; accordingly, the paper proposes some recommendations to Vietnam.

The Unilateral Turn in EU Trade and Investment Policy

As part of the European Commission’s Open Strategic Autonomy agenda, the European Union has reformed its unilateral trade and investment policy toolbox. Existing instruments have been updated (e.g., Trade Defence Instruments, the Enforcement Regulation) and new instruments have been adopted (e.g., the Foreign Subsidies Regulation, the Foreign Direct Investment Screening Regulation, the Anti-Coercion Instrument). These developments are significant: taken together, they herald a unilateral turn in the EU’s trade and investment policy. This special issue explores aspects of this unilateral turn. It combines a bird’s-eye perspective with studies of specific instruments; it brings together political science and legal methodologies; and it looks at the unilateral turn from the inside-out and from the outside-in. The special issue scratches the surface of what we consider to be a seismic change in the EU’s trade and investment policy. We hope it will trigger further debate and scholarly analysis of this important topic. In this introduction, we set the scene and introduce the six articles that are part of this special issue. unilateral turn, unilateralism, EU trade and investment policy, security, sustainability, level playing field, geopolitics, geopoliticization, economic coercion, restrictive measures, common commercial policy

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

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

EU Investment Protection Law: Chapter Eight of CETA, the Vietnam and Singapore Free Trade Agreements and EU Regulations 1219/2012, 912/2014 and 2019/452. Article-by-Article Commentary edited by Moritz Keller

EU Investment Protection Law: Chapter Eight of CETA, the Vietnam and Singapore Free Trade Agreements and EU Regulations 1219/2012, 912/2014 and 2019/452. Article-by-Article Commentary edited by Moritz Keller

Nexus among financial development and equity market on green economic finance: Fresh insights from European Union

The EU has led efforts to promote green economic financing, crucial to achieving sustainable development objectives and transitioning to a greener economy. This paper explores the link between financial development, the stock market, and green economic financing in the EU from 2000 to 2020. We reveal the relationship between these factors using panel quantile regression analysis. The paper examines how financial development and equity markets promote green economic financing, which helps achieve sustainable development objectives and solve environmental issues. Financial development and stock market effects on green economic financing vary among quantiles. Financial development has a favorable and considerable influence on green economic financing, suggesting that a well-developed financial system may promote sustainable and environmentally friendly investments. The equity market is also linked with green economic financing, implying that a healthy stock market may increase green project funding. We also find threshold effects, demonstrating that financial development and stock markets affect green economic financing unevenly. At higher quantiles, financial development and stock market advantages on green economic finance are more significant for nations with more significant green investment.These results affect EU officials and investors. Policymakers may promote a greener economy by permitting sustainable investments.

FOREIGN DIRECT INVESTMENTS IN THE CONDITIONS OF THE COVID-19 PANDEMIC: GEORGIA-EU RELATIONS

Ramin Tsinaridze 
 Email: ramin.tsinaridze@bsu.edu.ge 
 PhD of Business Administration, Associate Professor Batumi Shota Rustaveli State University 
 Georgia, Batumi 
 https://orcid.org/0000-0002-0444-9740
 
 Giorgi Rizhvadze 
 Email:giorgirijvadze@gmail.com 
 PHD student of Business Administration, Batumi Shota Rustaveli State University 
 Georgia, Batumi 
 https://orcid.org/0000-0002-9750-4808
 
 Purpose. Analysis of foreign direct investment motivations and assessment of their impact on Georgia's economy, under the conditions of the COVID-19 pandemic, as well as analysis of Georgia's EU investment relations and determination of future prospects.
 Methodology/approach. The methodological basis of the paper is the fundamental research of economic science. Georgian or foreign language scientific articles, works and studies are used in the research, the material used in the research is based on the data of the Ministry of Finance of Georgia, the Ministry of Economy and Sustainable Development, and the National Statistics Service. Qualitative and statistical methods, data from international organizations are used in the research, this research is mainly based on information collection, comparison, study and analysis.
 Research tasks. The main tasks and hypotheses of the research can be formulated as follows: the effect of the inflow of foreign direct investments on the stability of the exchange rate of the lari, Determination of factors affecting GDP and economic growth.
 Practical value / results. Research results and conclusions can be used in higher education as a guide material. In addition, it will significantly help the government institutions in determining the course of the country's economic development, its adjustment and processing specific issues of realization.

Evolution of the Payback Period for Energy-Efficient Residential Buildings in Romania in the Last Decade

The European Union set ambitious targets to achieve climate neutrality by 2050, and one of the measures taken towards this goal was the implementation of nearly Zero-Energy Buildings. Despite the commitments of the EU member states, many householders and investors had a disposition to incredulity regarding the energy efficiency of the buildings due to the higher cost of the investment and the relatively long payback time. However, at the end of 2021, the energy crisis significantly rewrote the circumstances, and energy prices and the costs of construction materials began to rise. In this situation, it was necessary to reconsider the importance of energy efficiency for buildings due to the maintenance costs. This article aims to assess changes in payback periods over the past 13 years and conduct life cycle cost evaluations by comparing energy-efficient residential buildings with traditional houses. The analysis considers variations in construction materials and labor costs in Romania, as well as energy price changes during the building’s operational phase. Through these methodologies, it has been demonstrated that the implementation of energy-efficient buildings offers a cost-effective solution already in the medium term, providing incentives for investors and future houseowners to reduce their dependence on energy and pursue long-term decarbonization.

The Legality of EU Sanctions Under International Investment Agreements

The ‘unilateral turn’ in EU trade and investment policy is also reflected in the EU’s adoption of restrictive measures or sanctions following the Russian invasion of Ukraine. EU sanctions do not only target the Russian government but also Russian individuals and companies with investments in the EU. They can also indirectly affect the economic activities of other foreign investors running businesses in the territory of Member States. This raises unexplored questions about the interaction between EU sanctions and certain disciplines of international economic law, such as international investment protection law. Member States have undertaken obligations under international investment agreements (IIAs) signed with Russia and other states in respect of investments made in their territory by Russian and non-Russian investors. This article examines whether, and if so to what extent, the EU’s unilateral turn in the form of sanctions can fall within the scope of international investment law. It shows that this policy can trigger claims against Member States under a different set of IIAs. This article also examines potential defences that Member States can invoke against investment treaty claims resulting from the implementation of sanctions. Sanctions, Russia-Ukraine conflict, international law, international investment agreements, ISDS, nationality, third-party countermeasures, essential security interests

The EU Solidarity Contribution and a More Proportional Alternative: A Study Under EU and International Investment Law

This paper reviews the EU Solidarity Contribution that was recently introduced by the Council Regulation on Emergency Intervention to Address High Energy Prices and proposes a more proportional alternative. It is argued that the legitimacy of the EU Solidarity Contribution might be disputed. The role that Member States have played in driving up energy prices by filling their natural gas storages much more than the EU’s filling trajectory prescribes raises questions as to whether the EU Solidarity Contribution could be in conflict with the proportionality principle and whether all formal requirements of Article 122(1) Treaty on the Functioning of the European Union (TFEU) have been fulfilled. Furthermore, it is argued that the EU Solidarity Contribution may compromise protection of investments under international investment agreements (IIAs) as the current design might entail elements that violate fair and equitable treatment (FET). As an alternative to the EU Solidarity Contribution, the article proposes the following. First, a legal commitment should be introduced for fossil fuel companies to invest 100% of their realized excess profit for decarbonizing the economy under the threat of taxing away those excess profits in their entirety should it become apparent that the investments are not actually realized. Second, in lieu of the EU Solidarity Contribution, the incidental financial support measures for vulnerable households could be financed with the excess (windfall) revenue collected from Value Added Tax (VAT) and excise due to the high inflation in the EU in 2022. EU tax policy, EU law, international investment law, EU solidarity contribution, proportionality, emergency intervention, energy prices, fair and equitable treatment