Keynote speech by Commissioner McGuinness at the forum on protecting and facilitating investment in the single market

(Source: European Commission)

Thank you very much, and good morning everyone, particularly those online, but also those in the room.

And as Klaus said, and thank you for the introductory remarks, as you said it is good that we can gather in physical presence but equally we have the opportunity to engage with more people online.

Because the topic we are discussing is really important, so thanks to Yann and indeed Anne-Françoise, who will address us shortly, and indeed colleagues in DG FISMA for all they work they’ve done on this topic for some time.

To you who are here, thank you for your contribution, because I know the engagement has been extremely strong.

And maybe before I start my formal presentation, just to acknowledge the very strong statement from a number of you in the room, including Business Europe and Eurocommerce, calling for a fresh political engagement to renew economic integration in the single market. This also speaks to the agenda we are addressing today.

Let’s say where we are at. Everyone in this room and online shares a key goal – and that is to facilitate investment in the single market – we may differ on how to achieve that goal – but I think we are clear about the target.

Because of current circumstances, the goal is more urgent that ever. We have a very uncertain climate.

Interest rates are rising, inflation is a reality, and indeed the Covid crisis has not gone away.

We also have Russia’s unprovoked and unjustified invasion of Ukraine, which is exacerbating pressure on growth, impacting on commodity prices and of course supply chains remain disrupted.

We are living in very uncertain times, and my engagement, formal and informal, with business across Europe, speaks to that sense of uncertainty and concern, amongst small and large companies.

So our policy priorities are more important than ever.

We, as you know, need to end our dependency on Russian fossil fuels, and speed up the transition to renewable energy. And we really need to accelerate that, removing blockages that exist, and also mobilising private finance to this absolute urgency.

We need to try and work to sustain the post-COVID economic recovery in Europe. In January, we were quite optimistic about the future. I think when the war broke out on February 24th – that optimism is now tinged with huge concern and much less optimism and more uncertainty.

And that’s why we’re here today, to address all of these issues and look at our priorities.

The regulatory environment in the Union should give investors certainty and stability – including when they invest in a member state you’re not based in, so across the single market.

We want the single market to work for investors.

In the past, investors often relied on bilateral investment treaties to protect investments if they faced difficulties in a different EU country.

And the Commission consistently held the view that there is no place for bilateral investment treaties between Member States within the EU legal system and in the single market – these so-called “intra-EU BITs”.

They overlap with EU single market rules and they discriminate among EU investors.

They create out-of-court dispute resolution systems that are incompatible with EU law.

And this was confirmed, as you know, by the Court of Justice in the Achmea case.

Following that judgement, the Commission stepped up our work with all Member States, calling on them to take action to terminate any intra-EU BITs.

And Member States are finalising the termination of those treaties.

Their formal termination clarifies the situation and brings legal certainty for investors.

And it allows us to turn the page and to consider how we can best provide the right regulatory environment for investors.

Fundamentally, EU law and single market rules offer investors an effective and complete system of protection.

We have the four freedoms in the single market – the free movement of capital, services, goods and labour.

Those give you the right to establish a business, to invest in a company or to provide services and goods across the whole of the single market.

EU investors are protected by the rules of the single market.

At the same time, EU law allows for markets to be regulated to pursue legitimate public interests such as security, public health, social rights, consumer protection or protecting the environment.

These legitimate goals may have direct consequences for investors.

But we should not be complacent.

We know that EU law does not always solve all issues and that investors may still face problems when they invest in other EU countries.

And I really want to emphasise that we do take investors’ concerns very seriously.

For example, our 2022 Eurobarometer survey on investment protection shows that only 56 percent of companies are confident that their investments are protected by the law and courts in the country of their investment if something goes wrong.

So clearly there is room for improvement.

For this reason, we announced that we would explore the need to provide some additional guarantees to those who want to invest across the single market, but have some concerns.

In recent years, we carried out an extensive consultation, launched an independent study and built up the evidence base.

So investors reported issues in 4 key areas:

  • Property protection and compensation for expropriation;
  • The quality of the law-making process,
  • Good administration,
  • And effective courts.

We carefully analysed a range of options to address issues in these areas, including some legislative solutions.

However, the evidence we gathered does not suggest these issues are systematic or sufficiently material to warrant specific legal action at EU level.

We also balanced the perspectives of all stakeholders – not only looking at investor problems.

We acknowledge civil society concerns about avoiding preferential treatment for investors compared to, for example, workers or consumers.

And of course we support the right of governments to regulate in the public interest.

Weighing different options, we have concluded that a legislative response is not justified.

EU law already protects investments in the single market and, in particular, provides for judicial remedies when something goes wrong.

National courts should remain the main forum for investors if they have to seek redress against measures introduced by Member States.

And the European Court of Justice is there to ensure that EU law is correctly applied.

In the Commission, we want to support the enforcement of EU rules.

Ensuring that EU rules are applied in practice also ensures effective protection of investments.

We will not come forward with legislation – but we do intend to take action.

So let me lay out what the Commission plans to do.

The pre-condition for consistent application of EU rules is clarity. Rules should be clear for all actors.

We are ready to communicate more on the existing rules.

And this will help prevent Member States adopting measures that infringe EU rules, and assist investors invoking their rights before public administrations and national courts.

It can also help legal practitioners apply EU rules.

Now beyond providing clarity, we want to maximize the benefits of existing EU tools and mechanisms.

We will call this the ‘toolbox for investment protection and facilitation’.

So first, we want to give some of our existing structural mechanisms an investment protection dimension.

This should address some of the structural problems that investors told us about.

The Rule of Law Report is a yearly report by the Commission that looks at all Member States.

It promotes the rule of law: the goal is to address and prevent any problems, looking at all Member States equally.

It seeks to strengthen the rule of law by stimulating a constructive debate and encouraging all Member States to examine how challenges can be addressed.

The EU Justice Scoreboard presents an annual overview of indicators on the efficiency, quality and independence of judicial systems.

Its purpose is to help Member States improve the effectiveness of their national justice system by providing objective, reliable and comparable data.

And the European Semester is our framework for monitoring and coordinating economic and employment policies across the European Union.

So we plan to give these mechanisms – the Rule of Law report, the EU Justice Scoreboard, and the European Semester – an investment protection dimension.

And that means we will be able to see what the situation is across all Member States when it comes to investment protection.

And the Commission will then be able to work constructively with Member States to address any issues that might be found.

Second, we are looking at existing mechanisms that provide help in individual cases, such as SOLVIT.

We understand that investors do not use SOLVIT to its full potential for various reasons, including lack of awareness or concerns about its suitability to deal with complex investment cases.

So we are reflecting on how SOLVIT could be adapted to investor needs.

Third, we want to hear from investors.

Collecting robust data is vital to inform the tools we can use.

We need and want to improve our understanding of the issues on the ground and practical problems that may affect investments in the single market.

We have many channels for that purpose, including:

  • questionnaires for stakeholders on the Rule of Law report,
  • country visits conducted by Commission officials,
  • formal complaint mechanisms,
  • and your national representatives in the different Single Market networks, among others.

Now fourth, beyond those specific tools, in its role as guardian of the Treaties, the Commission could address investor protection problems through infringement procedures.

Infringements are a key tool for the Commission to ensure that EU law is correctly implemented.

In 2020, the Commission opened over 900 new infringement cases. Many of these cases are solved through a constructive dialogue with Member States.

Infringements are a step of last resort. We always favour a collective and collaborative approach.

And that’s why we created a high-level forum – the Single Market Enforcement Taskforce – to discuss the most pressing single market barriers.

In this Task Force, the Commission and Member States can identify how to deal with barriers and together devise solutions.

This Task Force is the fifth part of our toolbox that I want to mention.

This toolbox, which I’ve just introduced, and which we will discuss together today, offers effective, flexible and proportionate instruments to tackle various investment protection issues.

We can address problems in a structural way and follow up with targeted action, if and when issues arise.

I believe that our approach will help nurture a positive investment environment within the EU.

And it will be most effective if we work together.

While I have seen a lot of different and divergent views on this file, I believe that all of us support the need for massive private investment.

Geopolitical tensions, macro-economic risks, the climate crisis and the digital transition – for all of these, we need to spend money to address this complex set of challenges.

rivate investment requires investor confidence and the right regulatory environment.

It is vital to gather all stakeholders with different views around the same table, and to foster a constructive dialogue.

I want to encourage the search for solutions with a cooperative spirit – at national and EU level.

Your active involvement today and indeed in previous engagement, and your contribution over recent times, is essential for the successful implementation of this approach.

And I really look forward to very fruitful exchanges. I am sure there will be disagreements. But that’s the nature of our job.

But I do think that if we start from the premise of our shared objective, which is to foster investments, to encourage more private investment, not least in the whole renewable energy sector, then I think we will find solutions that work for all.

Thank you.

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