EU should regulate investment cautiously

In the last 60 years, the European Union has expanded from six members to 28, but the battle over the responsibilities of Brussels and individual EU states has not abated. The latest skirmish is over Brussel’s eagerness to centralize the approval process for European companies’ takeovers by foreign enterprises amid an explosion of Chinese investment in the EU.

Brussels wants to strengthen the approval procedures for foreign investors that target “key technologies for security reasons”, and European Commission President JeanClaude Juncker is likely to announce regulation options in September.

Some EU member states argue such a move is not necessary because many of them already have such screening process in place. There are many reasons why Brussels considers such regulation important. However, there is a need for the EU to be cautious while it is in the process of shaping the bloc’s future.

The United Kingdom’s decision to break away from the EU was at the heart of the debate over the responsibilities of the EU and its members states. Hence, the EU must consider whether adding another layer of red tape will put internal cohesion, efficiency and economic growth at risk.

It is now for the EU to decide whether building trade barriers is conducive to the economic growth of the bloc and the rest of the world or harmful to all.