The European Commission's plan to fence off the EU's industrial crown jewels from state-backed foreign buyers may breach WTO rules, while its ambiguous standards create legal uncertainties, lobbying group the China Chamber of Commerce to the EU said in feedback to the proposal.
The European Union's executive laid out its plan in June, saying new measures were needed because existing foreign direct investment screening rules and trade defence measures were not enough to ward off a potential post-coronavirus buying spree of cheap assets.
It subsequently gave companies and other interested parties until Sept. 23 to provide feedback before deciding on legislation.
"The new legal tools proposed in the white paper lack a clear legal basis under EU treaties, will overlap with a number of existing EU and member states' instruments, and produce 'double standards' in their enforcement," the Chamber said.
"The proposed legal tools could also potentially be incompatible with the EU's WTO obligations including principles such as national treatment, most favoured nation status, and non-discrimination," it said.
Brussels-based CCCEU has up to 70 members and chambers in EU member states, covering about 1,000 Chinese companies in the EU.
It said a proposed threshold of 200,000 euros in subsidies received by companies over three years that has to be reported to the Commission should be higher to "achieve substantive justice".
The Commission should also take into account Chinese investments in Europe that followed invitations by some EU countries in the wake of the European debt crisis, the Chamber said.
"The favourable terms they enjoyed at the time should be legitimately protected and exempted from future scrutiny," it said.
(Reporting by Foo Yun Chee; Editing by Alex Richardson)