European policy on foreign investment: a missed opportunity?

This article seeks to contribute to the broader topic of the EU’s role in shaping international regulatory norms or standards. The EU could be said to possess normative power when the following conditions are satisfied: (a) there is an enduring consensus on the overall aims and shape of the EU acquis; (b) there is de jure competence under the treaties; and (c) there is also an acceptance of de facto EU competence by the Member States. De facto competence exists when there is an agreed, well established regime for decision-making and negotiation with respect to international economic negotiations. Normative power is however unlikely to be sufficient as a means of shaping the positions of other parties (states) in international negotiations. This is clearly illustrated in the EU’s attempts to provide leadership of the multilateral trade negotiations for the decade stretching from the mid-1990s until the Global Europe strategy of 2006, when the EU switched (back) to a multi-level approach to trade negotiations. Market power is also required in trade and investment negotiations, and the EU’s relative market power has been in decline for some time due to: (a) the rise of the emerging countries with their market potential and relatively closed markets; (b) the openness of the EU market following the de facto unilateral opening of the 1980s, especially in investment; and (c) the limited scope for the EU to use ‘negative’ threats of closure to enhance its market power (due to de facto consensus based or even QMV decision-making).