PURPOSE :
to establish the terms, conditions and the procedure under which Member States
are authorised to maintain in force, amend or conclude bilateral agreements
with third countries relating to investment.
PROPOSED
ACT : Regulation of the European Parliament and of the Council.
BACKGROUND :
the Treaty on the Functioning of the European Union (the TFEU) establishes
the EU's exclusive competence on foreign direct investment, as part of the
common commercial policy . Prior to the entry into force of the TFEU, Member
States concluded more than 1000 bilateral agreements relating to investment
with third countries, which relate in part or in full to foreign direct
investment. Such agreements include Bilateral Investment Treaties (BITs)
which provide guarantees on the conditions of investment in Member States and
in third countries, in the form of specific commitments that are binding
under international law. Although agreements remain binding on the Member
States as a matter of public international law, in the light of the entry
into force of the TFEU the existence of Member States' agreements relating to
investment should be addressed from the perspective of the EU's exclusive
competence on foreign direct investment. In the absence of an explicit
transitional regime in the TFEU clarifying the status of Member States'
agreements, this proposal will authorise the continued existence of all
investment agreements currently in force between Member States and third
countries.
LEGAL BASE :
Article 207(2) TFEU.
IMPACT
ASSESSMENT : the Commission evaluated a number of options without carrying
out a formal impact assessment. The proposal stresses the importance of legal
certainty and notes that soft-law instruments, such as a declaration or
statement by the Commission services or by the College on the validity of
bilateral investment agreements, would not establish the legal certainty that
is required to guarantee the agreements concerned.
CONTENT : the
draft Regulation provides for an explicit guarantee of legal certainty as
regards the conditions under which investors operate. In recognition of the fact
that Member States may be required to amend investment agreements, in
particular to bring them in compliance with Treaty obligations, the proposal
also establishes a framework to empower Member States to enter into
negotiations with a third country with a view to modifying an existing
bilateral agreement relating to investment. This framework is also available
to Member States to negotiate, under certain conditions, a new bilateral
agreement with third countries relating to investment. Given that the EU is
exclusively competent for foreign direct investment, and that an EU
investment policy will be gradually developed, the procedure established by
this proposal must be regarded as an exceptional transitional measure.
Objective: this is to authorise the continuation in force of international
agreements relating to investment concluded between Member States and third
countries and to establish conditions and a procedural framework for the
negotiation and conclusion by Member States of such agreements.
Chapter I sets out the subject matter and scope of the Regulation.
Chapter II provides for authorisation for existing bilateral agreements that
Member States have concluded with third countries to remain in force.
The
provisions:
- require
Member States to notify to the Commission of all agreements that they
wish to maintain, including agreements which have been concluded but not
entered into force;
- authorise
the maintenance in force of all existing agreements between Member
States and third countries relating to investment that have been
notified by Member States, starting upon the entry into force of this
Regulation;
- provide for
the annual publication of all notified agreements in the Official
Journal, to ensure that the exact scope of the legal coverage provided
by the Regulation is known by all stakeholders;
- provides for
the review of agreements which have been notified. The Commission will
assess whether the agreements conflict with the law of the Union,
undermine negotiations or agreements relating to investment between the
Union and third countries, or undermine the Union's policies relating to
investment, including in particular the common commercial policy. No
later than five years after the entry into force of the Regulation, the
Commission will present a report based on the review of the agreements
and any possible recommendations to discontinue the application of the
provisions of Chapter II or to modify these provisions;
- detail the
possible withdrawal of the authorisation granted under this Chapter. A
withdrawal of authorisation may be necessary for agreements with a given
third country when (i) these agreements conflict with the law of the
Union, or (ii) overlap with an agreement of the Union with that third
country; or (iii) undermine the Union's policies relating to investment,
including the common commercial policy (e.g. where the existence of
agreements undermines the willingness of a third country to negotiate
with the Union), or (iv) where the Council has not taken a decision on
the authorisation to open negotiations concerning investment within one
year of the submission of a recommendation by the Commission.
Chapter III provides for the modification of existing agreements and the
conclusion of new agreements.
This Chapter:
- provides for
the general framework under which Member States may conclude or modify
bilateral agreements relating to investment;
- requires the
notification to the Commission of a Member States' intent to modify an
existing or to conclude a new bilateral agreement with a third country.
Member States are requested to provide all relevant documentation
relating to the re-negotiation or negotiation of an agreement, which can
be made available to other Member States and the European Parliament
subject to the requirements of confidentiality;
- details the
substantive grounds on the basis of which the Commission would not
authorise the opening of formal negotiations by Member States, which
include notably the ground that a Member State initiative could
undermine the objectives of EU negotiations or EU policy. The Commission
may require a Member State to include in a negotiation appropriate
clauses, for example with respect to (a) the termination of the
agreement in the event of the conclusion of a subsequent agreement
between the Union with the same third country (see for example the
denunciation or replacement clauses in Regulation
662/2009); (b) transfer provisions or (c) most-favoured nation
treatment with to ensure equal treatment of all EU investors in the
relevant third country;
- requires
that Member States keep the Commission informed of negotiations that
have been authorised. In addition, the Commission may request to
participate as an observer in the negotiations concerning investment between
the Member State and the third country;
- provides for
the procedure under which Member States can be authorised to sign and
conclude an agreement;
- provides for
the review of authorisations that would be made pursuant to Chapter III
of the Regulation.
Chapter IV sets out certain requirements regarding the conduct of Member
States with regard to agreements covered by this Regulation.
The Chapter:
- requests
Member States provide information with respect to meetings which take
place under the auspices of covered agreements, and to inform the
Commission of any request for dispute settlement and to cooperate with
the Commission as regards the activation of dispute;
- provides
that Member States may indicate whether any of the information they
provide is to be considered confidential and whether it can be shared
with other Member States;
- creates a
new committee which shall assist the Commission in the management of the
Regulation and stipulates the procedures under which this committee
shall operate.
FINANCIAL
IMPLICATIONS : The proposal has no implication for the EU Budget.