This presentation was made by Leopoldo Rubinacci from the European Commission during the 21st meeting of the OECD-hosted Freedom of Investment Roundtable on 14 October 2014. It contains a detailed description of the transition arrangements for their Member States’ investment treaties with third countries. Find out more at: http://www.oecd.org/daf/inv/investment-policy/foi.htm

1. EU Foreign Investment Policy
FOI Roundtable, 14 October 2014
Leopoldo Rubinacci (European Commission, DG Trade)

2. The (new) EU competence on FDI
EU competences related to investment:
FDI is explicitly mentioned as forming part of the common commercial policy
(Article 207 TFEU)
Common commercial policy is explicitly mentioned as one of the Union’s
areas of exclusive competence (Article 3(1)e TFEU)
EU role vs. MS role
When the Treaties confer on the Union exclusive competence in a specific
area, only the Union may legislate and adopt legally binding acts, the Member
States being able to do so themselves only if so empowered by the Union (…)
– Article 2(1) TFEU

3. Regulation 1219/2012 establishing
transitional arrangements
for Member States' BITs with third countries
Purpose:
 Grandfathering: Regulation ensures validity under EU law of existing Member States'
BITs (which anyway remain valid under international law)
- Member States may maintain their BITs until they are replaced by the Union's
agreement with the same third countries (replacement)
 Empowerment: Regulation provides the legal basis for empowering Member States to
negotiate (or re-negotiate) and conclude BITs
- Commission may authorize Member States' negotiations/agreement with countries not
immediately scheduled for EU negotiation, provided certain conditions are met
 Relations with EU policy: Commission under obligation to assess whether Member
States' BITs do not undermine imminent or ongoing EU negotiations.
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4. Member States' negotiations
Authorisation can only be refused if Member States' negotiation / agreement:
(a) is in conflict with Union law;
(b) is superfluous, because the Commission has submitted a
recommendation to open investment negotiations at the EU level;
(c) is not consistent with the Union's principles and objectives for external
action; or
(d) constitutes a serious obstacle to the negotiation or conclusion of bilateral
investment agreements with third countries by the Union.
Different approaches on substance are not a legal or institutional problem for
authorisation under the Regulation!
As part of authorisation, Commission may require to include specific clauses
(e.g. so called REIO clause for the EU measures).
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5. Member States' negotiations (cont.)
Stages of authorisation procedure:
 opening of negotiations (article 9),
 signature and conclusion of an agreement (article 11).
By mid-2014, Commission has issued:
• 58 authorisations to open new negotiations and 29 to open re-negotiations
of existing agreements;
• 11 authorisations to sign and conclude new agreements and 7 for
protocols to existing BITs with third countries.
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6. Member States' investment agreements
 There are 1382 bilateral investment agreements signed by Member States
with 149 third countries
Once a year, the Commission publishes list of all Member States' agreements
falling under Regulation (2014 publication in the Official Journal 2014/C
169/01)
 Member States' agreement will stay in force only until replaced by Union's
agreements*
(* by fulfilling current EU negotiating agenda, up to 197 Member States'
agreements shall be replaced)
 Member States shall take any appropriate measures to ensure that their
agreements do not constitute a serious obstacle to the negotiation and
conclusion of EU agreements

7. EU negotiations
Objectives:
Uniform treatment of EU investors (replacement of MS'
agreements)
Better investment opportunities
High level of protection, while continuing to ensure the right
to regulate and pursue public policy objectives
Consistency with objectives and principles of EU external
action including sustainable development and human rights

8. EU negotiations (cont.)
What & with whom:
Investment protection provisions in EU FTAs: Canada (closed), India,
Singapore, Vietnam, Thailand, Malaysia, Japan, Morocco, Tunisia, Egypt,
Jordan, US.
Self-standing investment agreements: China, Myanmar.
Process:
Recommendations from Commission to Council of Ministers on opening
negotiation and negotiating objectives;
Council Decision authorising Commission to negotiate (mandate);
Commission negotiates, supported by a committee of Member States'
representatives;
Once negotiation is concluded, EP consents Council Decision to sign and
conclude EU agreement.

9. TTiP consultations (March-July 2014)
EU-wide public consultation held by Commission on the approach to
investment protection and ISDS in TTIP:
Objective – obtain views from stakeholders on approach to be followed, centred
around 12 key issues
Reason – specific investment relationship EU-US (the biggest in the world) and
several concerns expressed about the inclusion of investment protection in TTIP
Outcome – almost 150.000 replies; most from NGO lead campaigns, but also
strong participation from business, trade unions, consumer organisations, NGOs
Next steps – review of replies ongoing; public report probably end of November

10. Thank you!
More info on EU investment policy:
http://ec.europa.eu/trade/policy/accessing-markets/investment/
Contacts:
Leopoldo.Rubinacci@ec.europa.eu
Marta.Busz@ec.europa.eu