IMPLEMENTATION OF THE EUROPEAN UNION LEGAL FRAMEWORK FOR THE SCREENING OF FOREIGN DIRECT INVESTMENTS DURING THE COVID­19 PANDEMIC

DIMITRIJEVIĆ Duško (Institut za međunarodnu politiku i privredu, Beograd), dimitrijevicd@diplomacy. bg.ac.rs

The European Union’s common trade policy pays special attention to foreign direct investment. This is because foreign direct investment is an important source of economic growth, employment and innovation and a key factor in the Union’s socio-economic development. In the period before the outbreak of the Covid-19 virus pandemic, the European Union was the main investor and the most important destination for foreign investment in the world. The spread of the virus has led to disruptions in global supply chains, destabilisation of financial markets, and then to the negative effects of foreign direct investment resulting from the takeover of assets and technologies in strategically important sectors of the European economy. To avoid a new recession, the European Union has reacted decisively in order to protect its own economic interests. Thus, in March 2019, the European Union adopted Regulation 2019/454, which established a legal framework for screening foreign direct investments from third countries. The operational implementation of this legal framework began on 11 October 2020. The member states of the European Union are authorised to supervise foreign direct investments through the existing and newly established screening mechanisms, calling for reasons of security and protection of public order. Screening mechanisms presuppose compliance of domestic legislation with the adopted legal framework. Its implementation in practice should not lead to more drastic deviations from the usual standards of international business in the field of trade and investment.

Keywords: European Union, foreign direct investments, control mechanisms, security, public order