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Parliamentary questions
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16 October 2019
Answer given by Ms Malmström on behalf of the European Commission
Question reference: E-002587/2019

In line with the EU’s policy, the Commission does in general not endorse expropriation without compensation. The Commission pursues the interests and protection of EU companies worldwide through its free trade and investment agreements with those partners who are willing to engage.

Over the past years, the Commission has expressed strong concerns about South Africa’s move to terminate its Bilateral Investment Treaties (BITs) with EU Member States in the relevant bilateral dialogues at the highest political level. The EU business community was also very engaged and provided a submission in South Africa’s domestic process on adopting the Protection of Investment Bill voicing its concerns about the formulation of the expropriation clause in the Bill and in the Constitution. The current proposals to allow for expropriation without compensation compound EU concerns, especially in the absence of adequate levels of protection for EU investors.

The Commission and EU business have stressed that the termination of the BITs sends a negative signal concerning the long-term protection of investors and risks discouraging new investments at a time when it is needed to generate growth. According to the World Investment Report 2018 by the United Nations Conference on Trade and Development (UNCTAD), foreign direct investment into South Africa has continually declined since 2014.

The sunset clauses will expire around 2022 for some BITs, while in others protection will cease twenty years after termination. Nevertheless, the Commission will continue to follow closely the implementation and the situation of EU investors and to raise its concerns in the relevant trade dialogues to ensure that EU investors are not discriminated against or treated unfairly.

Last updated: 16 October 2019Legal notice