European Commission President Jean-Claude Juncker on Wednesday said he would seek powers to screen foreign takeovers in strategic sectors, noting that Europeans were not "naive free traders" and would defend their "strategic interests."
In his annual State of the Union speech to the European Parliament, Jucker said: "If a foreign, state-owned company wants to buy a strategic port, or part of our energy infrastructure... this must be done transparently, with scrutiny and debate."
He added that it was the EU's responsibility to know what was happening inside individual member countries to be able to "ensure our collective security."
France, Germany and Italy are said to be backing a draft EU screening framework intended to counter a wave of takeovers by Chinese companies in Europe.
German concerns were sparked by recent acquisitions in the tech sector - most notably household goods maker Midea's takeover of industrial robotics firm Kuka last year. This has raised alarm about valuable knowhow being transferred abroad, especially as robots become increasingly critical in the country's crucial manufacturing industry.
French officials have criticised the sale of a majority stake in Greece's Piraeus port to China's state-controlled Cosco Shipping, saying it raises sovereignty issues for Europe.
The EU proposal includes an "anti-circumvention" clause for takeovers where an investor from outside the EU establishes a European company simply to evade national vetting procedures. Normally, intra-EU takeovers are exempt from such screening processes.
It is planned that European Union governments should be able to assess and block takeovers if it is clear that a foreign investor's tactics amount to "artificial arrangements within the EU that do not reflect economic reality."
In addition, the EU wants to require governments to share information on sensitive takeovers with Brussels, giving regulators the possibility to voice a "non-binding opinion" if it felt a takeover was "likely to affect security or public order in one or more member states."
The EU country concerned would have to "take utmost account of the commission's opinion and provide an explanation in case its opinion is not followed."
Advocates of the plan argue that the United States and other major EU trading partners already have thorough screening processes in place.
Nevertheless, the issue is divisive within Europe, where smaller member states said they were concerned about losing Chinese investments in their economies. Therefore, the EU Commission said that national governments would not be forced to adopt such a system against their will.
uhe/tr (AFP, dpa)