Screening outbound investments: first remarks the new frontier of economic-security public functions

Abstract

The paper concerns the economic-security function of outbound investments screening, subject of a White Paper published by the European Commission and an Executive Order in the US. The paper aims to investigate the role this possible administrative power may have in the Italian legal system, on the basis of what competencies and in what relationship with the current economic-security functions: Italian FDI screening regulation (“golden power”) and dual-use items regulation.

A study of early regulatory interventions and European and U.S. security strategies enables the elaboration of three categories of objectives for which outbound investment control is functional. These are countering technology leakages and the pursuit of economic autonomy and technological supremacy. Each of these objectives is related to a particular scope of application and in relation to the other economic-security functions. The first two objectives are characterized by defensive needs in the face of geopolitical risk, while the third, that of technological supremacy, evident in U.S. regulation and not unrelated to EU strategy as well, is more clearly situated in the perspective of interstate competition. It will be shown how pursuing this goal in turn requires a fundamental political decision inherent in the countries to which the regulation under consideration is to be applied, according to a list approach peculiar to the U.S. Executive Order but unlikely to be adopted in the EU system.

Based on the purposes to be pursued, the contribution then investigates the relationship with the economic-security functions of “golden power” and dual-use items regulation. In doing so, it finds that, also in light of the current irrational overlap between “golden power” and export control regulation, the current economic-security functions already enable the pursuit of most of the goals of outbound investment control. There are transactions and cases falling outside the scope of current regulations, but the monitoring of these events presents issues under the the principle of proportionality.

The relationship with other economic-security functions also allows for an assessment of how outbound investments control should be regulated considering the relationship between national and EU competencies. Control of inbound investments and dual-use items offer two different models, both of which are based on the relationship between common trade policy - an exclusive EU competence - and national security. It seems that, pending the adoption of any EU regulation, member states may adopt national measures, and, in any case, any EU regulation can only delegate the administrative decision to the national authority.

It remains that the economic-security function under consideration and others already regulated at the EU and national levels are based on a problematic relationship between national security and economic regulation, and the concept of “economic security” now governing EU action reflects the constitutive ambiguity of the concept of “security.” Any discussion of the relationship that may be shaped between EU and Italy, and between State and market, demonstrates the need to define what is meant by a securitarian requirement, and how far a line can be drawn between market protection and fundamental community interests. The regulations on outbound investments control, which are still at an early stage, could shift this boundary, extending the national or EU interest also to the development of economic activities abroad.