US Should Renew Investment Screening Work With EU, Think Tank Says
Although the U.S. has had “limited success” in coordinating foreign investment screening with the EU, partly due to a lack of consensus among the bloc’s member states, recent developments suggest that the U.S. should try again, the Atlantic Council said in a new report on China policy.
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Among the developments cited were the EU’s growing recognition of the risks of Chinese investment, the European Commission’s recommendation in January that member states review ongoing and past outbound investment in certain sectors (see 2501150061), and the Treasury Department’s issuance of a new U.S. outbound investment rule in late 2024 (see 2410280043).
“Based on these developments, we recommend that the United States re-engage Brussels to establish common threat perceptions and to cautiously explore member states’ willingness to coordinate on fortifying Europe’s defenses against Chinese security risks,” the Atlantic Council wrote.
The report, released Nov. 10, recommended that the Committee on Foreign Investment in the U.S. and its European counterparts create a forum to expand intelligence sharing on Chinese investment. It also urged the U.S. and Europe to work together on inbound and outbound investment controls to “reduce asymmetries."
To further contain China, the report called for closer coordination on export restrictions for semiconductors, chipmaking tools, AI, quantum and “defense-relevant technologies.” It also suggested treating "China’s support for Russia’s war in Ukraine as an urgent U.S.-EU enforcement priority." It noted that the new U.S.-EU trade framework envisions increased export control cooperation (see 2508210017).
The report also advocated for reviving the U.S.-EU Trade and Technology Council, which facilitated transatlantic dialogue on export controls during the Biden administration. The Trump administration's head of the Bureau of Industry and Security said in March that his agency was ending its work with the council (see 2503280039).
To counter Chinese industrial overcapacity and dumping, the report recommended creating a U.S.-EU forum “to discuss trade defense tools, share evidence of Chinese state subsidies, and seek to synchronize remedies.” To strengthen restrictions on goods suspected of being made with forced labor, the report called for coordinating enforcement of the U.S. Uyghur Forced Labor Prevention Act and the EU’s new Forced-Labour Regulation (see 2403050035).
In remarks at an event launching the report, House Select Committee on China Chairman John Moolenaar, R-Mich., said he's concerned that some European countries may be unwilling to "draw a hard line" on China. If a Chinese company is allowed to build a proposed large wind turbine factory in the U.K., it "would defy common sense" and would give China "even more leverage" over the U.K., he said.