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4. Barriers to investment
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There are few restrictions found in investment policies among the EU Member States. Most members grant national treatment to foreign-funded enterprises although some barriers to investment do exist in certain Member States.

4.1 Restrictions on access

The French legislation only allows French nationals, nationals of the EU Members States or nationals of countries with bilateral agreements to operate in certain sectors, including private research institutions, insurance brokerages, casinos and gambling clubs, forwarding agencies, public market trading, AV and communications, commodity brokerages, tobacco retailing, beverage retailing, publication companies engaging in the French language, security enterprises, telecommunications, performing and pharmacists.

Spain requires investment in the following fields be approved by DG Trade Policy of the Department of Economy (with the exception of investment from other EU members), including investment in "sensitive industries", such as gambling, television, broadcasting, air transport and national defense; foreign government investment or investment by foreign enterprises directly or indirectly controlled by the government; and investment by foreign state-owned enterprises.

The articles of association of many Swedish corporations provide the clause of "restrictions on the ownership of foreigners", stipulating at least 60 percent of the equity and 80 percent of the voting rights should be retained by the Swedes. If no such clause is included in the articles of association, the company is regarded as a foreign company. Foreign companies are not allowed to own Swedish natural resources such as mines, oil fields, farms, forests and water resources, neither can they have more than 20 percent voting rights of other corporations owning the said natural resources. Foreigners can not possess Sweden-registered ships or airplanes. Foreigners are not allowed to operate Swedish domestic airlines, nor can they hold shares of banks and military factories. In addition, there are more restrictions on access to other sectors such as maritime operation, strategic materials, publication and insurance.

In the Czech Republic, industries subject to investment restrictions include military products, extraction of nuclear fuels, mortagage bank ing, asset management companies, passenger airlines, passenger and cargo road transportation, bonds underwriting, and construction engineering service. In seven years following the EU accession, foreign nationals will not be allowed to purchase agricultural farmland in the Czech Republic.

Hungary restricts foreign ownership to varying degrees in civil aviation, television and broadcasting. In ten years following the EU accession, Hungary will prohibit foreigners from purchasing its domestic land.

Foreign investment in banking should gain administrative approval in advance in Poland. Permit should be granted by competent government authorities if foreign investment is engaged in the areas of mine exploration and extraction, the production and operation of ammunition and military products, tolled highways, broadcasting and television. Most commercial sectors do not have any limits to the cap on foreign ownership, yet in the fields of television and broadcasting, the cap on foreign ownership of non-EU firms is 49 percent. The cap on foreign ownership in civil aviation is also 49 percent. No foreign investment is currently allowed in gambling.

4.2 Others

In March 2004, France published 10 new measures aiming at attracting foreign investment, mainly involving the simplification of procedures, the exemption of businessman identity card and the reduction and exemption of tax. However, the above measures for facilitating and encouraging investment are only applicable to enterprises of OECD members. Chinese enterprises investing in France are not covered. Besides, some Chinese-funded enterprises in France complain that the French side lacks confidence in letters of guarantee provided by Chinese banks, which has affected the operation of Chinese-funded enterprises in France. The harsh examination on qualifications of Chinese enterprises by the French side has, to a certain extent, affected the normal business activities of the Chinese-funded enterprises in France. Besides, the rigid labor system and high cost have increased the difficulty of business management and operation of the Chinese-funded enterprises. The German legislation provides that foreign investment in Germany should gain the approval of the competent German trade associations. According to the regulations, if the foreign investment is likely to affect the development of the existing German enterprises, the foreign investment in question may not be approved. In addition, it takes too much time for the approval of setting up Chinese- funded enterprises in Germany to be approved. The lengthy approval process, the complicated procedures and the lack of transparency have affected the normal business operation of Chinese-funded enterprises in Germany.

There are too many laws governing taxation and investment which are subject to frequent changes in Greece. Take the investment promotion law and taxation law for example, over the past 20 years, ten investment promotion laws have been promulgated. On average, there is one such law every two years. In terms of taxation law, there is almost one law promulgated every year. Besides, it usually takes 60 days and involves 6.5 procedures on average for a foreign investment project to be examined and approved. However, the law stipulates that the duration for government examination and approval should be two years. The frequent changes in legislation and the lengthy period required for government administrative examination and approval have added the investment risks for enterprises.

In the Czech Republic, it is required that nationals of non-EU members should register a company (a legal entity) prior to purchase real estate either for commercial or for residential use, but there are exceptions for permanent residents or nationals with spouses of the Czech Republic. This means if a Chinese company wants to purchase land for investment purpose, it should set up a new company in the Czech Republic so as to be the owner of the land.

The above regulations and practices have, to varying degrees, constituted barriers to business activities of Chinese-funded enterprises in those countries.

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