Macron and allies head for EU clash on foreign takeovers
Leaders want powers to restrict buyouts in strategic sectors
French president Emmanuel Macron is heading for a clash with pro-free trade member states at his first EU summit over his push for a “protective Europe” that would give Brussels the power to restrict foreign takeovers of key industries.
In his campaign for the Elysée Palace Mr Macron backed a clamour by Paris, Berlin and Rome for a European mechanism against unwanted foreign takeovers in strategically important sectors.
Such demands reflect pressure to curb takeovers by Chinese state-backed groups of prized technology companies in Europe and the lack of equivalent opportunities in China’s market for European companies.
At a Brussels summit next week that will mark Mr Macron’s arrival on the European stage after his election in May, EU leaders will discuss whether steps should be taken to screen foreign takeovers on national security grounds.
Mr Macron has powerful allies in the form of Angela Merkel, German chancellor, and Paolo Gentiloni, Italy’s prime minister — even though any European intervention remains politically contentious and legally difficult.
A draft communiqué prepared for the summit, seen by the Financial Times, committed EU leaders to explore measures “to screen foreign investments where necessary in order to mitigate risks to national security”.
But pro-trade member states have pushed back strongly against the idea of a European mechanism against foreign takeovers. The Netherlands, the Nordic countries and the Baltic countries were swift to raise objections when the text was circulated, said a diplomat. “There was a fair amount of pushback.”
European trade advocates are fearful that such measures against foreign takeovers would bolster protectionism in the bloc and detract from any EU pushback against US president Donald Trump’s economic nationalism.
But officials said EU leaders also wanted to make a clear statement about the need for free trade to be balanced with fair trade.
Political debate is “moving towards more robust policy on the fair trade side,” said a senior Brussels official. “Clearly there is movement.”
Such steps would give the EU a mechanism similar to long-established powers in the US, where the Committee on Foreign Investment considers the national interest and security implications of overseas investment in US companies.
Still, a second European official said the parameters of any screening by Brussels of foreign takeovers on national security grounds remained unclear.
The question is under discussion but Brussels sidestepped proposals for specific steps when calling in a recent paper for tougher trade rules.
Some officials in Brussels are concerned about creating a tit-for-tat situation in which other countries would prevent acquisitions by state-controlled European companies. Others believe takeover curbs could curtail the flow of foreign direct investment into Europe.
Some trade experts have warned that the bloc has no power to deal with takeovers on national security grounds.
“The proponents and the commission need to deal with the fact that national security concerns are not within the scope of the EU,” said Hosuk Lee-Makiyama, director at the European Centre for International Political Economy think-tank in Brussels.
“Some [member states] have more or less concern about Chinese investment . . The reason in particular Germany is concerned about is not because of national security. There is an inherent view in Germany that if the German authorities decide not to do business with China then no one in Europe should.”