This information is derived from the State Department's Office of Investment Affairs, Investment Climate Statement. Any questions on the ICS can be directed to EB-ICS-DL@state.gov.
Last Published: 8/5/2019

The U.S. Department of State’s Investment Climate Statements, prepared annually by U.S. embassies and diplomatic missions abroad, provide country-specific information and assessments of the investment climate in foreign markets.  Topics include: Market barriers, business risk, legal and regulatory system, dispute resolution, corruption, political violence, labor issues, and intellectual property rights.  The statements are available in two ways.  

Openness to, & Restrictions upon Foreign Investment

For specific information on Member States’ openness to foreign investment, please consult the Commerce Department’s Country Commercial Guides of the 28 EU Member States found at the following website: EU Member States' Country Commercial Guides

Bilateral Investment Agreements & Taxation Treaties

The EU as a whole does not yet have any traditional bilateral investment treaties (BITs), though it is currently negotiating BITs with China and Burma, and virtually all the Member States have extensive networks of such treaties with third countries.  Other agreements with preferential trading partners have contained provisions directly addressing treatment of investment, generally providing national treatment after establishment and repatriation of capital and profits.
 
The adoption in December 2009 of the Lisbon Treaty has changed in major respects how the EU treats investment.  Since Lisbon makes foreign direct investment an exclusive EU competence, a broad definition of FDI extends EU authority over much of the subject matter hitherto addressed under member state BITs.  The Council has so far granted the Commission authority to negotiate investment chapters in free trade agreements.  The Commission has indicated that it does not plan to develop a model investment treaty, preferring instead to establish general objectives and principles.

Other regional or multilateral agreements addressing the admission and treatment of investors to which the Community and/or its Member States have adhered include:
  1. The OECD codes of liberalization, which provide for non-discrimination and standstill for establishment and capital movements, including foreign direct investment;
  1. The Energy Charter Treaty (ECT), which contains a "best efforts" national treatment clause for the making of investments in the energy sector but full protections thereafter; and
  1. The GATS, which contains national treatment, market access, and MFN obligations on measures affecting the supply of services, including in relation to the mode of commercial presence.

Legal Regime

The European Commission, which has the sole authority to propose EU-wide laws, publishes an Annual Work Program setting forth its intent to legislate on particular matters in the coming year.  This report can be found at:  Annual Work Program

Inclusion of planned regulation in this list is usually followed by the issuance of a “roadmap” that generally describes possible options and spells out the process for developing a proposal. Such steps include a public consultation intended to inform the Commission’s development of a formal legislative proposal, and a supporting impact assessment. In turn, member state officials examine and amend these proposals in Council, as does the European Parliament; Council and Parliament positions are publicly available. Where those positions differ, the three institutions – Commission, Council, and Parliament –agree on the final text of legislation through closed-door negotiations known as “trilogues.” All adopted measures are published in all EU languages in the EU's Official Journal.

In many instances, the European Commission has broad discretion to promulgate detailed rules with less or no review by other bodies, and with varied procedures depending on context.  For example, EU primary regulations often include authority for the Commission to elaborate additional or more detailed aspects in the form of either “delegated” or “implementing” acts. The Commission’s proposals are subject either to an override by the Council or Parliament, or to approval by Member States.

In 2016, as part of its “Better Regulation” agenda, the Commission began, in at least some cases, to publish the draft texts of these proposed delegated or implementing acts for a four-week public review, which to some extent, coincides with requirements to notify proposed measures to the WTO.  However, many contexts, such as standard setting or chemicals, include upstream procedures to evaluate product hazards that are dominated by member state expert committees and “independent” agencies such as ECHA (European Chemicals Agency) and EFSA (European Food Safety Authority) that are not subject to the new Better Regulation frameworks. Furthermore, many sectors subject to more specific regulations set forth in the secondary legislation described above - delegated and implementing acts - are in effect governed via meetings and processes involving expert groups of member state representatives and designated European companies.
 
Despite new opportunities for public “feedback” and debate in the early phases of rulemaking as part of the “Better Regulation” program, U.S. companies and other stakeholders continue to struggle in their efforts to obtain detailed draft text and key information in a timely manner concerning the Commission’s legislative proposals.  Without this information, stakeholders are limited in their ability to fully understand and determine potential compliance or operational costs to trade and investment in the EU.  As a result, there is no opportunity for the public to comment on the actual text of proposed legislation until after the Commission has sent its formal proposal forward for consideration by its “legislative” branches, the Council and Parliament.  In a manner that is inconsistent with good regulatory practices observed by many OECD member states, the actual draft is not made available during the key phase when the Commission could still make technical amendments.  Rather, Commission directorates issue more general consultation documents, usually accompanied by questionnaires, soliciting public views before a Commission proposal is particularly developed. As it develops the details of its proposal, the Commission may call invitation-only meetings with experts as a means of obtaining specific information; however, these meetings are not necessarily designed to include all potential global stakeholders and may be restricted to only European stakeholders.  Consequently, the impact assessment developed by the Commission during this period is only published with its final proposal, rather than being made available for public review and comment at an earlier stage.

Another example of a systemic lack of transparency and access for U.S. exporters is standards development.  In order to participate in EU standards making, a company must have a physical presence in the European Union.  To the extent EU regulations allow private conformity assessment bodies (CABs) to perform conformity assessment activities for products, they do not recognize U.S. CABs conduct of conformity assessments on U.S. soil, except under the U.S.-EU Telecom MRA, where qualified U.S organizations can obtain Notified Body status under the Radio Equipment Directive and the Electromagnetic Compatibility (EMC) Directive.
 
For specific information on member states' openness to foreign investment, please consult the Commerce Department's Country Commercial Guides of the 28 EU member states found at the following website: EU Member States' Country Commercial Guides

Industrial Policies

EU law provides that Member States may designate parts of the Customs Territory of the Community as “free zones”.  The EU considers the free zones to be mainly a service for traders to facilitate trading procedures by allowing fewer customs formalities.  Information on free zones is contained in Section 3, Article 243 and following of Council Regulation (EU) no. 952/2013 establishing the Community Customs Code, titled, "Free Zones”
The use of free zones varies across Member States.  For example, Germany maintains a number of free ports or free zones within a port that are roughly equivalent to U.S. foreign-trade zones, whereas Belgium has none.  A full list of EU free zones last updated in January 2017.

Protection of Property Rights

For specific information on Member States’ protection of property rights policies, please consult the Commerce Department’s Country Commercial Guides of the 28 EU Member States found at the following website: EU Member States' Country Commercial Guides

Financial Sector

For specific information on Member States’ capital markets and portfolio investment, please consult the Commerce Department’s Country Commercial Guides of the 28 EU Member States found at the following website: EU Member States' Country Commercial Guides

State-Owned Enterprises

For specific information on Member States’ competition from state-owned enterprises, please consult the Commerce Department’s Country Commercial Guides of the 28 EU Member States found at the following website: EU Member States' Country Commercial Guides

Responsible Business Conduct

For specific information on Member States’ responsible business conduct, please consult the Commerce Department’s Country Commercial Guides of the 28 EU Member States found at the following website: EU Member States' Country Commercial Guides

Corruption

Corruption, including bribery, raises the costs and risks of doing business.  Corruption has a corrosive impact on both market opportunities overseas for U.S. companies and the broader business climate.  It also deters international investment, stifles economic growth and development, distorts prices, and undermines the rule of law.

It is important for U.S. companies, irrespective of their size, to assess the business climate in the relevant market in which they will be operating or investing, and to have an effective compliance program or measures to prevent and detect corruption, including foreign bribery.  U.S. individuals and firms operating or investing in foreign markets should take the time to become familiar with the relevant anticorruption laws of both the foreign country and the United States in order to properly comply with them, and where appropriate, they should seek the advice of legal counsel.

The U.S. government seeks to level the global playing field for U.S. businesses by encouraging other countries to take steps to criminalize their own companies’ acts of corruption, including bribery of foreign public officials, by requiring them to uphold their obligations under relevant international conventions.  A U.S. firm that believes a competitor is seeking to use bribery of a foreign public official in international business, for example to secure a contract, should bring this to the attention of appropriate U.S. agencies, as noted below.
 
U.S. Foreign Corrupt Practices Act: In 1977, the United States enacted the Foreign Corrupt Practices Act (FCPA), which generally makes it unlawful for U.S. persons and businesses (domestic concerns), and U.S. and foreign public companies listed on stock exchanges in the United States or which must file periodic reports with the Securities and Exchange Commission (issuers), to offer, promise or make a corrupt payment or anything of value to foreign officials to obtain or retain business. The FCPA also applies to foreign firms and persons who take any act in furtherance of such a corrupt payment while in the United States.  In addition to the anti-bribery provisions, the FCPA contains accounting provisions applicable to public companies. The accounting provisions require issuers to make and keep accurate books and records and to devise and maintain an adequate system of internal accounting controls. The accounting provisions also prohibit individuals and businesses from knowingly falsifying books or records or knowingly circumventing or failing to implement a system of internal controls. In order to provide more information and guidance on the statute, the Department of Justice and the Securities and Exchange Commission published A Resource Guide to the U.S. Foreign Corrupt Practices Act. For more detailed information on the FCPA generally, see the Department of Justice FCPA website.

Other Instruments: It is U.S. government policy to promote good governance, including host countries’ implementation and enforcement of anti-corruption laws and policies pursuant to their obligations under international agreements. Since enactment of the FCPA, the United States has been instrumental to the expansion of the international framework to fight corruption.  Several significant components of this framework are the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions negotiated under the auspices of the OECD (Antibribery Convention), the United Nations Convention against Corruption (UN Convention), the Inter-American Convention against Corruption (OAS Convention), the Council of Europe Criminal and Civil Law Conventions, and a growing list of U.S. free trade agreements.
 
OECD Antibribery Convention: The Antibribery Convention entered into force in February 1999.  As of January 2016, there are 41 parties to the Convention, including the United States.  Major exporters China and India are not parties, although the U.S. Government strongly endorses their eventual accession to the Antibribery Convention.  The Antibribery Convention obligates the Parties to criminalize bribery of foreign public officials in international business transactions, which the United States has done under U.S. FCPA. 

UN Convention: The UN Convention entered into force on December 14, 2005, and there are 178 parties to it as of January 2016.  The UN Convention requires countries to establish criminal and other offences to cover a wide range of acts of corruption, from basic forms of corruption such as bribery and solicitation, embezzlement, and trading in influence on the concealment and laundering of the proceeds of corruption.  The Convention contains transnational business bribery provisions that are functionally similar to those in the OECD Antibribery Convention and contains provisions on private sector auditing and books and records requirements.  Other provisions address matters such as prevention, international cooperation, and asset recovery.

OAS Convention: In 1996, the Member States of the Organization of American States (OAS) adopted the first international anticorruption legal instrument, the Inter-American Convention against Corruption (OAS Convention), which entered into force in March 1997.  The OAS Convention, among other things, establishes a set of preventive measures against corruption, provides for the criminalization of certain acts of corruption, including transnational bribery and illicit enrichment, and contains a series of provisions to strengthen the cooperation between its States Parties in areas such as mutual legal assistance and technical cooperation.  As of January 2016, the OAS Convention has 34 parties and the follow-up mechanism created in 2001 (MESICIC) has 31 members.

Council of Europe Criminal Law and Civil Law Conventions on Corruption: Many European countries are parties to either the Council of Europe (CoE) Criminal Law Convention on Corruption, the Civil Law Convention on Corruption, or both.  The Criminal Law Convention requires criminalization of a wide range of national and transnational conduct, including bribery, money-laundering, and accounting offenses.  It also incorporates provisions on liability of legal persons and witness protection.  The Civil Law Convention includes provisions on whistleblower protection, compensation for damage relating to corrupt acts, and nullification of a contract providing for or influenced by corruption, inter alia.  The Group of States against Corruption (GRECO) was established in 1999 by the CoE to monitor compliance with these and related anti-corruption standards. Currently, GRECO comprises 49 Member States (48 European countries and the United States). As of January 2016, the Criminal Law Convention has 44 parties and the Civil Law Convention has 35.
 
Free Trade Agreements: While it is U.S. government policy to include anticorruption provisions in free trade agreements (FTAs) that it negotiates with its trading partners, the anticorruption provisions have evolved over time.  The most recent FTAs negotiated now require parties to adopt or maintain laws that criminalize the offering of an undue advantage to a public official (or the solicitation of such an advantage by a public official), as well as other acts of corruption in matters affecting international trade or investment. Parties also commit to effectively enforce their anticorruption laws and regulations.  All U.S. FTAs may be found at the U.S. Trade Representative Website.

Local Laws: U.S. firms should familiarize themselves with local anticorruption laws, and, where appropriate, seek legal counsel. While the U.S. Department of Commerce cannot provide legal advice on local laws, the Department’s U.S. and Foreign Commercial Service can provide assistance with navigating the host country’s legal system and obtaining a list of local legal counsel.

Assistance for U.S. Businesses: The U.S. Department of Commerce offers several services to aid U.S. businesses seeking to address business-related corruption issues.  For example, the U.S. and Foreign Commercial Service can provide services that may assist U.S. companies in conducting their due diligence as part of the company’s overarching compliance program when choosing business partners or agents overseas.  The U.S. and Foreign Commercial Service can be reached directly through its offices in every major U.S. and foreign city, or through its website at U.S. Commercial Service  or Foreign Commercial Service.
The United States provides commercial advocacy on behalf of exporters of U.S. goods and services bidding on public sector contracts with foreign governments and government agencies.  An applicant for advocacy must complete a questionnaire concerning its background, the relevant contract, and the requested U.S. Government assistance.  The applicant must also certify that it is in compliance with applicable U.S. law, that it and its affiliates have not and will not engage in bribery of foreign public officials in connection with the foreign project, and that it and its affiliates maintain and enforce a policy that prohibits bribery of foreign public officials. Problems, including alleged corruption by foreign governments or competitors, encountered by U.S. companies in seeking such foreign business opportunities can be brought to the attention of appropriate U.S. government officials, including local embassy personnel, and reported through the Department of Commerce Trade Compliance Center “Report a Trade Barrier" website".   Potential violations of the FCPA can be reported to the Department of Justice via email to FCPA.Fraud@usdoj.gov.

Guidance on the U.S. FCPA: The Department of Justice’s (DOJ) FCPA Opinion Procedure enables U.S. firms and individuals and issuers to request a statement of the Justice Department’s present enforcement intentions under the anti-bribery provisions of the FCPA regarding actual, prospective business conduct.  The details of the opinion procedure are available on DOJ's Fraud Section website and general information is contained in Chapter 9 of the publication A Resource Guide to the U.S. Foreign Corrupt Practices Act. Although the Department of Commerce has no enforcement role with respect to the FCPA, it supplies general information to U.S. exporters who have questions about the FCPA and about international developments concerning the FCPA. For further information, see the Office of the General Counsel, U.S. Department of Commerce website. More general information on the FCPA is available at the websites listed below.

Exporters and investors should be aware that generally all countries prohibit the bribery of their public officials and prohibit their officials from soliciting bribes under domestic laws.   Most countries are required to criminalize such bribery and other acts of corruption by virtue of being parties to various international conventions discussed above.

Anti-Corruption Resources: Some useful resources for individuals and companies regarding combating corruption in global markets include the following:

Information about the U.S. Foreign Corrupt Practices Act (FCPA), including A Resource Guide to the U.S. Foreign Corrupt Practices Act, translations of the statute into numerous languages, documents from FCPA related prosecutions and resolutions, and press releases are available at the U.S. Department of Justice's website and FCPA
  • The U.S. Securities and Exchange Commission FCPA Unit also maintains a FCPA website. The website, which is updated regularly, provides general information about the FCPA, links to all SEC enforcement actions involving the FCPA, and contains other useful information.
  • The Trade Compliance Center hosts a website with anti-bribery resources. This website contains an online form through which U.S. companies can report allegations of foreign bribery by foreign competitors in international business transactions
  • Additional country information related to corruption can be found in the U.S. State Department’s annual Human Rights Report.
  • Information about the OECD Anti-Bribery Convention including links to national implementing legislation and country monitoring reports.
There are many other publicly available anticorruption resources which may be useful, some of which are listed below without prejudice to other sources of information that have not been included. (The listing of resources below does not necessarily constitute U.S. government endorsement of their findings.)

  • Transparency International (TI) publishes an annual Corruption Perceptions Index (CPI)   The CPI measures the perceived level of public-sector corruption in approximately 180 countries and territories around the world. TI also publishes an annual Global Corruption Report which provides a systematic evaluation of the state of corruption around the world.  It includes an in-depth analysis of a focal theme, a series of country reports that document major corruption related events and developments from all continents, and an overview of the latest research findings on anti-corruption diagnostics and tools.  See Transparency.

  • The World Economic Forum publishes every two years the Global Enabling Trade Report, which assesses the quality of institutions, policies and services facilitating the free flow of goods over borders and to their destinations.  At the core of the report, the Enabling Trade Index benchmarks the performance of 138 economies in four areas: market access; border administration; transport and communications infrastructure; and regulatory and business environment.

  • Global Integrity, a nonprofit organization, publishes its annual Global Integrity Report, which typically assesses anti-corruption and good governance mechanisms in diverse countries.

Political & Security Environment

For specific information on political violence in Member States, please consult the Commerce Department’s Country Commercial Guides of the 28 EU Member States found at the following website: EU Member States' Country Commercial Guides

Labor

Issues such as employment, worker training and social benefits remain primarily the responsibility of EU Member States.  However, the Member States are coordinating ever more closely their efforts to increase employment through macroeconomic policy cooperation, guidelines for action, the exchange of best practices, and programmatic support from various EU programs.  The best information regarding conditions in individual countries is available through the labor and social ministries of the Member States.

Helpful information from the EU can be found on the websites for the European Commission's Directorate-General for Employment and Social Affairs and on the Eurostat website.

In general, the labor force in EU countries is highly skilled and offers virtually any specialty required.  Member States regulate labor-management relations, and employees generally enjoy strong protection.  EU Member States have among the highest rates of ratification and implementation of ILO conventions in the world.  Numerous provisions in the Treaty on the Functioning of the European Union (TFEU), EU labor law and policy guidelines aim to strengthen social dialogue and the role of the “social partners” (labor and management organizations) at EU, national, sectoral, local, and company levels.

There is a strong tradition of labor unions in most Member States.  In many cases, the tradition is stronger than the modern reality.  While Nordic Member States (Denmark, Finland, and Sweden) still have high levels of labor union membership, many other large Member States, notably Germany and the United Kingdom, have seen their levels of organization membership drop significantly to levels around 20-30 percent.  French labor union membership, at less than 10 percent of the workforce, is lower than that of the United States.

OPIC and Other Investment Insurance Programs

OPIC programs are not available in the EU as a whole, although individual Member States have benefited from such coverage

Foreign Direct Investment and Foreign Portfolio Investment Statistics

For specific information on Member States’ foreign direct investment statistics, please consult the Commerce Department’s Country Commercial Guides of the 28 EU Member States found at the following website: EU Member States' Country Commercial Guides

Contact for More Information on the Investment Climate Statement

For specific information on contacts for more information on the Investment Climate Statement in Member States, please consult the Commerce Department’s Country Commercial Guides of the 28 EU Member States found at the following website: EU Member States' Country Commercial Guides

Web Resources

DG Internal Market, Industry, Entrepreneurship and SMEs and Services
DG Economic and Financial Affairs
DG Employment and Social Affairs
Office for Harmonization in the Internal Market
EU Anti-Fraud Office
Eurostat - EU Statistical Office
U.S. Bureau of Economic Analysis- Department of Commerce
European Patent Office


 

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.