24th Mar 2018

EU states seek protection for high-end technology

  • Berlin blocked takeover of German firm Aixtron on grounds its microchips could be used in Chinese nuclear weapons (Photo: dolmansaxlil)

France, Germany, and Italy have urged the European Commission to better protect EU states from foreign countries seeking to acquire high-end technology.

EU countries can already block foreign investments on national security grounds, but the three countries’ economy ministers said in a joint letter to EU trade commissioner Cecilia Malmstroem that they should also be able to do it for “economic” reasons.

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  • "We are worried about the lack of reciprocity and about a possible sell-out of European expertise" ministers said (Photo: Tambako the Jaguar)

"EU law gives the right to member states to prohibit foreign investments which threaten public security and public order," they said, according to the Reuters and DPA news agencies.

"What is needed is additional protection based on economic criteria taking into account, and with reference to, the Commission's expertise.”

They said EU states “should have more scope to investigate individual takeovers and, where applicable, block them”.

They added that the kinds of deals that should be targeted were “unfair  ... because they rely on state funds or are aimed at buying up important technologies”.

They also complained that foreign states abused EU open markets by closing their doors to European investors.

“We are worried about the lack of reciprocity and about a possible sell-out of European expertise, which we are currently unable to combat with effective instruments," the ministers, representing the eurozone's three largest economies, said.

The letter did not mention China, but China was recently in the spotlight in Germany on technology-transfers and is notorious for blocking EU investments in its firms.

Berlin blocked the takeover of German electronics firm Aixtron by China’s Fujian Grand Chip Investment last year on grounds that its microchips could be used in Chinese nuclear weapons.

German chancellor Angela Merkel also complained about lack of reciprocity after the €4.5 billion buy-out of German robotics firm Kuka by Chinese electrical appliance maker Midea.

Germany’s deputy economy minister, Matthias Machnig, told the Financial Times newspaper on Tuesday that foreign companies should be obliged to “show that their investments in Germany are not driven by the state, and that financing for their deals is in keeping with the market”.

“It is a principle that we want to establish in Europe, together with France and Italy,” he said.

He told German daily Handelsblatt that: “Germany is for open markets. We support the investment of foreign companies in Germany”.

He added, however: “Our companies are in a tough competition with countries that themselves are not as open as Germany and Europe.”

Russian investors

Russia is also on the radar of some EU states over different types of investment.

Finnish authorities this week announced that they would investigate suspect land purchases by private Russian nationals after a warning by Supo, the Finnish intelligence service, that they posed a threat.

The concern is that landowners could install infrastructure that could be used by Russian troops in the event of an attack.

Suna Kymalaisen, a Finnish MP, told the Yle broadcaster that some transactions, such as purchases of summer cottages near airports, could be cancelled following a probe by the defence ministry.

"It may be necessary to block some real estate transactions entered into by foreigners if the purchased property is located near strategic facilities,” Kymalaisen said.

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