Written answers

Wednesday, 27 May 2020

Department of Jobs, Enterprise and Innovation

EU Regulations

Photo of Robert TroyRobert Troy (Longford-Westmeath, Fianna Fail)
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470. To ask the Minister for Jobs, Enterprise and Innovation if there is a mechanism to screen foreign investment here being considered by her Department in view of the way the Covid-19 crisis has underlined the importance of protecting strategic assets, for example, life sciences including medical research and pharmaceutical ingredients; and if proposals are being examined to introduce an investment screening mechanism to safeguard critical national assets and technology in the current crisis which would require primary legislation. [8081/20]

Photo of Heather HumphreysHeather Humphreys (Cavan-Monaghan, Fine Gael)
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Ireland is one of approximately 13 EU Member States that do not currently have a formal Investment Screening mechanism in place. However, the issues around any possible Irish mechanism are currently under active consideration.

An EU Regulation on Investment Screening is due to take effect from 11 October 2020. The aim of the Regulation is to establish a cooperation framework within the European Union for the screening of foreign direct investments.

The Regulation is a response to growing concerns within Europe about the potential acquisition of, and investment in, strategic European companies by foreign-owned firms that may undermine a Member State’s security or public order.

As the Deputy notes, Investment Screening has recently assumed greater political focus both globally and within Europe as a result of Covid-19. The EU is concerned that strategic European investments are currently experiencing severe economic vulnerability and low share prices and could be vulnerable to being acquired by third countries. As such, Investment Screening has been the subject of recent Guidance from the Commission calling upon Member States that already have an existing screening mechanism in place to make full use of tools available to them under EU and national law to prevent capital flows from non-EU countries that could undermine Europe's security or public order. In the Guidance, the Commission also calls on the remaining Member States to look at establishing a fully-fledged screening mechanism.

While the EU Regulation provides a framework for cooperation through which Member States and the European Commission can exchange information and raise specific concerns about a potential foreign investment, it does not require Member States to adopt or maintain a screening mechanism for foreign direct investment. It does, however, contain a number of mandatory requirements - including a requirement to nominate national contact points in each Member State and to comply with certain annual reporting requirements.

As I indicated in my response to the Deputy's earlier question on Investment Screening on 27 April last, in advance of the Regulation taking effect in October, my Department has already established a dedicated Unit, the Investment Screening Unit comprising of 2.5 staff members. This Unit has been notified to the European Commission as the designated national contact point for Ireland. The Unit will undertake and fulfil the cooperation and reporting obligations under the Regulation and is also developing a range of policy options for consideration by Government.

As part of this ongoing work on investment screening, my Department has established and chairs an interdepartmental group comprising key Departments that are likely to have an interest in the screening of Investments. A range of bilateral consultations on Investment Screening have also been held with key stakeholders and Government agencies, and the models employed in range of other countries are being examined by officials.

Any formal screening mechanism would need to be designed and tailored so that is appropriate to Ireland’s needs while also meeting our obligations under the EU Regulation. In particular, any mechanism would need to balance Ireland’s continued attractiveness as a location for inward investment, with a robust, but proportionate Investment Screening Mechanism that protects security and public order.

A proposal to introduce a screening mechanism would require a Government decision and would also require the introduction of domestic legislation in this regard. As noted, it is intended to bring proposals in this regard before a new Government, when formed, outlining the policy options and the legislative requirements needed to introduce any formal Screening mechanism.

In the meantime, to further build on our analysis and research, and to ensure that the policy options presented to Government are as comprehensive as possible, my Department undertook a public consultation on Investment Screening. This consultation affords an opportunity to all interested stakeholders to contribute to the development of policy in this area. This closing date for submissions has just passed and officials are currently reviewing the content received.

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