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Bilateral Reations

The European Union (EU) actively engages in bilateral relations and dialogues on financial regulation with key global partners, including candidate countries seeking EU membership. These efforts aim to promote convergence with EU financial regulations, ensure mutual recognition of standards, and facilitate free capital movements.

Bilateral Dialogues on Financial Regulation:

• Partners: The EU conducts regular talks with the USA and other international partners.
• Objectives: These dialogues focus on monitoring regulatory developments, identifying potential legislative impacts, converging towards international standards, exploring mutual recognition of standards, and coordinating the implementation of the G20 roadmap.

Specific Dialogues and Agreements:

• With the USA: Discussions encompass various aspects of financial services regulation.
• With Canada: Within the CETA Financial Services Committee.
• With Switzerland: Covering areas including non-life insurance through specific agreements.
• With Japan and the United Kingdom: Focused on aligning financial regulations.

Bilateral Relations on Insurance:

• EU-US Dialogue: Addresses specific insurance regulatory issues.
• EU-Switzerland Agreement: Focuses on non-life insurance.

Bilateral Dialogues on Capital Movements:

• Investment Dialogues: These dialogues address concerns and solutions for investment conditions and aim to promote mutually beneficial investment flows.
• Bilateral Trade Agreements: The EU negotiates agreements that typically cover capital movements and payments, ensuring unrestricted payment operations and transactions related to direct investment, with safeguard measures in exceptional cases.

Negotiations with EU Candidate Countries:

• Compliance with EU Standards: Candidate countries must demonstrate their ability to comply with EU rules and regulations.
• Detailed Analysis: The European Commission examines each policy area, including financial services and free movement of capital, to assess the readiness of candidate countries.
• Implementation of EU Law: This includes rules for the authorization, operation, and supervision of financial institutions in areas like banking, insurance, pensions, investment services, and securities markets.
• Adapting to EU Regulations: Candidate countries must align their laws with EU rules on capital movements, based on the Treaty on the Functioning of the EU and related directives (Directive 88/361/EEC).
  

​Through these bilateral relations and dialogues, the EU aims to foster a globally harmonized financial regulatory environment, facilitate open investment, and ensure the free movement of capital, both within the EU and with its international partners.

Investments outside EU

​The European Union engages in a comprehensive investment strategy that encompasses various types of foreign investment, policy objectives, negotiation of investment rules, investment facilitation, dispute resolution reforms, and participation in international investment forums.

Types of Foreign Investment:

• Foreign Direct Investment (FDI): Involves setting up or buying a controlling share in a company in another country.
• Portfolio Investment: Entails buying shares or debt of a foreign company without controlling it.
• The EU is a leading provider and destination for global foreign investment.

Objectives of EU Investment Policy:

• Ensure a level playing field for EU investors abroad.
• Create a predictable, transparent business environment.
• Support investment that adheres to sustainable development, human rights, and high labor and environmental standards.
• Attract international investment into the EU while safeguarding essential interests.
• Preserve the right to regulate economies in the public interest.

EU Investment Negotiations:

• negotiating or implementing investment rules in trade agreements or standalone investment agreements.
• Focus on enterprise setup, favorable regulatory framework, and protection of established investments.
• Participation in modernizing the Energy Charter Treaty (ECT) to reflect modern investment standards.

Investment Facilitation:

• Aims to create a transparent, efficient, and predictable climate for investors.
• Targets to benefit small and medium enterprises and developing countries.
• Contributing to WTO discussions on investment facilitation.

EU Reforms on Investment Dispute Resolution:

• Adopted a reformed approach in 2015, introducing the Investment Court System for clear, transparent, and balanced investment protection.
• Leading efforts to establish a multilateral investment court for investment disputes.

Screening Framework for FDI:

• In 2019, the EU adopted a regulation  for cooperation and information exchange on non-EU investments affecting security or public order. More on investment screening

Investment Agreements Between EU Member States and Non-EU Countries. In 2012, the European Union (EU) adopted a regulation to establish transitional arrangements for bilateral investment agreements between individual EU Member States and non-EU countries. This regulation aimed to ensure that these agreements align with EU competences and the overarching EU investment policy. On 6 April 2020, the Commission submitted a report on the application of the regulation.

The regulation allows EU Member States to maintain bilateral investment agreements signed before the entry into force of the Lisbon Treaty, and sets the conditions for EU Member States to modify those agreements, and to negotiate or conclude new ones. Those conditions are:

• that the agreement is not in conflict with EU law;
• that the agreement is consistent with the EU’s principles and objectives for external action;
• that the Commission did not submit (or decide to submit) a recommendation to open EU-wide negotiations with the same third country, and;
• that the agreement does not create a serious obstacle to the EU negotiating or concluding bilateral investment agreements with non-EU countries.

Drawing on the EU's approach to investment protection agreements – and on Member States' best practices – the Commssion has developed Model Clauses to guide Member States in their negotiation (or re-negotiation) of bilateral investment agreements. 
​From March 2020, the Commission publishes its implementing decisions on authorisations granted to individual EU members for bilateral investment agreements.

EU Participation in International Fora:

• Organisation for Economic Cooperation and Development (OECD): Investment Committee
• United Nations Conference on Trade and Development (UNCTAD): World Investment Forum
  
• World Trade Organization (WTO): Committee on Trade-Related Investment Measures (TRIMs), Structured discussions on investment facilitation for development
  
• United Nations Commission on International Trade Law (UNCITRAL): Working Group III on Investor-State Dispute Settlement Reform
  
• International Centre for Settlement of Investment Disputes (ICSID)
  
• Energy Charter. The European Union formally announced its decision to withdraw from the Energy Charter Treaty (ECT) in November 2022. The withdrawal process was initiated by the European Commission, reflecting the growing concerns about the treaty's incompatibility with the EU's climate objectives.
  

​This multifaceted approach reflects the EU's commitment to fostering a stable, transparent, and fair global investment environment, balancing investor protection with the need for sustainable and responsible investment practices.