The impact of European Union trade agreements, policies and legislation on foreign direct investment within member states

Abstract

Foreign Direct Investment has been a key contributor to Member States’ Gross Domestic Product, especially in recent years. This paper highlights the significance of FDI in source and host countries, and how such significance differs from small to large jurisdictions. Since the adoption of the Lisbon Treaty, the Common Commercial Policy has become one of the exclusive competences of the EU, incorporating also the area of FDI. This has led to a number of changes, including the progressive termination of intra-EU BITs and a special procedure for extra-EU BITs. Such treaties are considered important for FDI since they set the ground rulesfor the protection of private investment between citizens of two-party countries. Additionally, the paper highlights the impact of Regulation 2019/452 relating to the establishment of an FDI Screening Framework and Cooperation mechanism between member states and the European Commission. This dissertation highlights also how this has impacted EU member states in their attractiveness to FDI. Included in this study are the different methods adopted by EU countries to implement the provisions of the regulation, although certain elements may be conflicting with screening mechanisms relating to the EU merger regulation. It also provides recommendations on how such issues can be tackled in the near future.