Enhancing European Technological Sovereignty: The Foreign Investment Screening Regulation and Beyond

Sara Poli and Danielle Gallo’s chapter explores the theme of technological sovereignty, understood as referring to the EU’s capacity to use and develop technologies to protect the integrity of the EU and its Members and the importance of Member States being self-sufficient in critical technologies and infrastructure. The premise of the chapter is that the EU is better placed than its individual Member State to address the challenge of achieving technological sovereignty and that the EU and that it can use its competences in this respect without intruding unduly on Member States’ sovereignty to protect national security and public order. The chapter examines the use of Article 114 TFEU as a ‘strategic’ legal basis to protect key strategic assets. Highlighting the importance of the proposed ‘EU Chip Act’, the chapter explores the EU’s regulation on foreign subsidies, the critical entities directive and the recently adopted EU measure on cybersecurity. Rich with contemporary examples, the chapter pays particular attention to legal questions that have been at the heart of Marise Cremona’s work, including the issues of competence and legal basis. The chapter also zooms in on the EU’s Regulation for the screening of foreign direct investments (Regulation 2019/452). It argues that though the measure is of fundamental importance in the manner it elevates the notion of public good from the national to the European level, this transformation has occurred ‘more or less en souplesse in acts of an apparently purely technical nature’. It assesses this complex legal instrument with a view to understanding whether the EU is endowed with sufficient powers in relation to foreign ownership of tech companies or critical infrastructure to protect the EU’s technological sovereignty. They reach a nuanced conclusion in this respect. On the one hand, the authors recognise that national sovereignty over national security and public order make it impossible for the EU to have an intrusive and unified instrument governing foreign direct investment. On the other hand, they argue that by recognising FDI as a matter of common interest, the Regulation has the potential to strengthen European technological sovereignty. The subtle balance of power between the Member States on the one hand and the Member States and the Commission is crucial in this respect. ‘Depending on how the FDI screening mechanism is applied in the future by the Commission, the Union may become an actor in transition toward technological sovereignty or merely a witness to fragmented efforts by individual Member States to preserve national technological sovereignty in Europe.’ (Fonte: editore)