Tech Export Deals Face Rising Scrutiny | National Security Concerns
Brussels is intensifying scrutiny of foreign investment deals, particularly those involving technology with potential military applications, following a recent review that flagged concerns over a semiconductor plant in Italy partially owned by Chinese investors. The move, confirmed by officials this week, signals a broader effort by the European Union to safeguard strategic assets and limit the transfer of sensitive technologies to countries perceived as potential adversaries, a trend mirroring growing anxieties about economic security.
The Italian semiconductor facility, initially approved in 2023, is now subject to a deeper assessment under the EU’s foreign direct investment (FDI) screening regulation. This regulation, established in 2019, allows member states to block investments that threaten security or public order, but its implementation has been uneven. The current reassessment reflects a growing consensus within the EU that a more coordinated and assertive approach is needed, particularly in light of China’s technological advancements and its stated ambitions outlined in initiatives like “Made in China 2025.” As noted by the Council on Foreign Relations, the “Made in China 2025” plan aims to make China a global leader in key technologies, raising concerns about unfair competition and potential security risks.
The increased vigilance isn’t limited to China. EU officials are also examining investments from other countries, including those with close ties to Russia, and are broadening the definition of “strategic technologies” to encompass areas like artificial intelligence, quantum computing, and advanced materials. This expansion is driven by a recognition that technological dominance can translate into geopolitical leverage.
The EU’s push for economic security is unfolding alongside a broader debate about the balance between openness and protectionism. Whereas the EU remains committed to free and fair trade, officials argue that safeguarding strategic industries is essential to maintaining its competitiveness and autonomy. This shift in thinking is partly a response to lessons learned from the COVID-19 pandemic, which exposed vulnerabilities in supply chains and highlighted the importance of domestic production capacity.
The Akin law firm, specializing in global trade and investment, has observed a significant increase in client inquiries related to FDI screening and export controls. Their analysis indicates that companies are increasingly seeking legal guidance to navigate the complex and evolving regulatory landscape.
The EU’s new plan, as reported by fDi Intelligence, moves economic security “into higher gear,” focusing on protecting critical infrastructure and key technologies. However, the effectiveness of the plan will depend on the willingness of member states to fully implement the FDI screening regulation and to cooperate on enforcement. The European Commission has yet to announce specific timelines for the completion of the reassessment of the Italian semiconductor plant, leaving the future of the project uncertain.