Vulcan Consulting | European Commission Sets Out Stronger Economic Security Measures

On Wednesday, the EU Commission announced a new approach to economic security, one which aligns the bloc more solidly with Washington’s strategy to counter geopolitical rivals. Five key initiatives are intended to set Europe on a path of “promoting the EU’s competitiveness” while “protecting against risks.” 

“Europe must be a player, not a playground. The whole point of our economic security strategy is to de-risk our economic interdependencies,” said EU Commissioner Margrethe Vestager while presenting the package.

The policy package follows an announcement from June of last year, in which the Commission outlined its intentions to crack down harder on China and Russia. After Russia’s invasion of Ukraine and China’s increased hostilities against Taiwan, Europe looked to decrease its economic dependence on third countries.

This matches the mood across the Atlantic. The US has long been more hostile towards Russia and China than the EU, imposing a sweeping set of semiconductor export controls against China and racing to secure its critical supply chains. Despite initial hesitancy to follow suit, these recent developments out of Brussels show Europe to be increasingly hawkish in the face of geopolitical threats.

In her speech, Vestager outlined five main areas of focus, ranging from export controls to research and development investments:

1. Foreign Investment Screening: Proposals to improve screening of foreign investments for security and public order concerns. This includes harmonising national approaches of Member States, as well as extending screening measures to imports that are controlled by entities from non-EU countries.
2. Outbound Investment Risk Assessment: A Commission White Paper on Outbound Investments aims to provide a systematic analysis of potential risks associated with certain investments in advanced technologies with dual-use potential. No such assessments currently exist.
3. Dual-Use Goods Export Controls:  Certain items can be used in both civil and military contexts, such as advanced electronics, nuclear and missile technology. The Commission proposees coordinated EU controls against these items, and announced a Commission Recommendation for Summer 2024.
4. Research and Development for Dual-Use Technologies: Announcement of a public consultation, to be launched through a White Paper announced in November of last year, on how to enhance support for research and development in technologies with dual-use potential. Next steps to be announced at the end of April 2024.
5. Research Security Enhancement: Acknowledging the vulnerabilities that could arise from the free and borderless exchange of information, the Commission proposed a Council Recommendation to provide guidance and support to Member States on enhancing research security.

The measures mark a cautious but clear shift in tone for the EU. While it might pose new obstacles for foreign investments, it presents opportunities for European industry, research, and development.

Compliments of Vulcan Consulting – A Member of the EACCNY