Conference Report: BDI/CELIS German Chapter – Investment Screening Conference
From 27th to 28th March, the BDI and CELIS German Chapter organized the second joint conference on investment screening in Berlin. The conference took place against the backdrop of a rapidly changing geopolitical environment since the beginning of Donald Trump’s second presidency. Only a few days earlier, the US administration had unexpectedly announced the imposition of tariffs on automotive imports. The so-called reciprocal tariffs announced on 2nd April by the US even accelerate this radical departure from the recent decades of globalization. These developments strongly emphasize the need for measures to strengthen economic security in the EU and the member states. Only recently, however, the EU has also demonstrated its ambitions to enhance industrial policy and resilience with the White Paper on the future of European defence and the Preparedness Union Strategy. The BDI/CELIS German Chapter Investment Screening Conference provides a suitable forum to facilitate the necessary dialogue between academia, industry and politics.
Acting against protectionism and bloc formation
Wolfgang Niedermark, member of the BDI's Executive Board, and Roland Stein, Director of the CELIS Institute, opened the conference on the 27th March. In the following first panel discussion moderated by Matthias Krämer (BD), Noah Barkin (Rhodium Group), Stefan Rouenhoff (Member of the Bundestag, CDU/CSU), Eckart von Klaeden (Mercedes Benz Group) and Dr. Sabine Weyand (European Commision) elaborated on actions against protectionism and bloc formations. In addition to the current state of implementation of the European Economic Security Strategy and across its three pillars (“promote”, “protect” and “partnering”), the panel explored the hitherto drastic impact of Donald Trump’s second presidency. It was noted that the US administration has announced new trade and investment restrictions on a weekly basis, which steadily erodes trust in the rules-based multilateral order. The panel agreed that the EU must remain committed to a rules-based multilateral trading system based on WTO law. This includes supporting plurilateral initiatives while also continuing negotiations on comprehensive bilateral free trade agreements. Furthermore, a deeper integration of the EU’s internal market – especially with regard to the freedom of services and the completion of the Capital Markets Union – is seen as crucial for strengthening the EU’s global competitiveness. The views diverged, however, on whether the EU is sufficiently prepared to meet the challenges posed by the new U.S. foreign economic policy. Nevertheless, negative economic consequences of the announced tariffs were expected for international economic relations. Ultimately, the role of China within this new balance of power, as well as its economic relations with the U.S. and the EU, remained unclear at this point.
International and EU Regulation in Practice
The second day kicked off with a keynote by Dr Christian Forwick (BMWK) on economic security in times of geopolitical fragmentation. In the first panel, Peter Sandler (European Commission) Commission), Florentine Kessler-Grobe (BMWK), Gordon Christian (Siemens) and Philipp Reinhold (Saarland University) discussed international and EU regulations on investment screening in practice. The debate focused on the objectives and the current status of the reform of the EU FDI Screening Regulation. The European Commission’s draft for the revision of the FDI Screening Regulation was presented as part of the Economic Security Package on 24 January 2024. While it seems that the positions of the Council and the European Parliament converge on several aspects, differences remain with regard to the minimum requirements of Member State screening mechanisms and the scope of mandatory investment screening. There panel largely agreed that investment screening must be limited to the protection of security interests in order not to establish a protectionist instrument. Likewise, the administrative burden for unproblematic investments needs be reduced to facilitate capital access for start-ups. Criticism was voiced over tendencies to centralize investment screening at EU level as proposed in the first report of the European Parliament’s INTA Committee. Moreover, the increasing complexity of multinational transactions due to diverging investment screening regimes and other regulatory requirements was also highlighted in the debate. In particular, the extensive application of the EU co-operation mechanism entails lengthy procedures if several member states are concerned. Thus, it appears that there are still many hurdles to overcome before the revised regulation can be adopted.
Investment Screening in Germany and Regulatory Requirements in Light of the Recent Developments in the US
Moderated by Dr Falk Schöning (Hogan Lovells), the 3rd panel involving Dr Christian Forwick (BMWK), Dr Karoline Kampermann (BDI), Sarah Bäumchen (ZVEI) and Prof Steffen Hindelang (Uppsala University; CELIS) was dedicated to the current legal framework in Germany and the recent developments in the US trade and investment policy. The current geopolitical upheavals, which increasingly exert pressure the rules-based order, formed the starting point of the discussion. Initially, it was clarified that geopolitical developments can already be taken into account under the current legal regime. While investment screening in Germany is designed in a country-agnostic manner, it was made clear that economic security must be viewed holistically. However, the use of vague legal terms that are difficult to operationalize still poses practical issues. An increase in foreign investment in the USA fueled by the US Inflation Reduction Act was also discussed. However, the current US foreign trade policy is leading to great uncertainty among companies, which is also making foreign investment in the US increasingly less attractive. It is clear that further measures to strengthen competitiveness and resilience will be necessary in order to strengthen the EU's economic security. In this context, recent industrial policy measures such as the EU Chips Act and the omnibus simplification package were addressed. With respect to the newly established US outbound investment screening mechanism, it was stated that the EU should be cautious that other states than China might be listed as ‘countries of concern’ too. Overall, it was agreed that further steps regarding the new US outbound policy would need to be awaited for a further assessment. In particular, this relates to the question of which countries will benefit from fast-track market access procedures in the future.
Economic Security and Technology Competition
On the final panel, chaired by Prof. Lena Hornkohl (University of Vienna; CELIS), David Wilkens (BMWK), Dr Svend Buhl (NXP) and Caroline Bürsgens (QUTAC) discussed economic security issues within the quest for technology competition. In addition to the EU’s recommendation on outbound investment screening that is currently implemented by the Member States, recent EU industrial policy measures were debated. It was argued that the focus has so far been on the so-called ‘protect’-pillar of the European Economic Security Strategy. In recent years, however, there has also been progress regarding the ‘promote’-pillar to strengthen EU competitiveness. This includes initiatives such as the EU Chips Act, which contains financial and regulatory incentives for semiconductor production in the EU. Moreover, the concept of Important Projects of Common European Interest (IPCEI) was mentioned as an instrument providing significant impetus for industrial development. Nevertheless, it was argued that further simplification and an expansion towards technologies such as robotics and quantum technology would be desirable. Likewise, the need for deepening the internal market in order to guarantee the necessary financing was pointed out. As the European market is also too small for the effective development of cutting-edge technologies, the EU was called upon to also develop further the 3rd pillar of the European Economic Security Strategy (‘partnerning with like-minded countries’). Close cooperation would already exist with the UK, Japan, Singapore and Canada. New free trade agreements, however, would be required in this regard too.
The next opportunity for a stakeholder exchange on current topics in the area of economic security will take place on 27 May at a Round Table organized by the CELIS German Chapter together with Dentons. The next BDI/CELIS Investment Screening Conference is planned for spring 2026.
