The International Trade Committee on Tuesday adopted revised rules for screening foreign investment in the EU

BRUSSELS - Under the new rules, Member States will be obliged to screen more sectors, such as media services, critical raw materials and transport infrastructure, to identify and address security or public order risks related to foreign investment. The procedures applicable to national screening mechanisms will also be harmonised and the Commission will have the power to intervene on its own initiative or in the event of disagreement between Member States on potential security or public order risks arising from a particular foreign investment.

If the screening authority finds that the planned foreign investment project may have a negative impact on security or public order, it will have to either permit the project subject to mitigation measures or prohibit it.

The motion was carried by 31 votes to 7, with 3 abstentions.

Background

The existing framework for screening foreign direct investment came into force on 11 October 2020 in response to growing concerns that some foreign investors were seeking to gain control of EU businesses that supply critical technology, infrastructure or inputs, or hold sensitive information, and whose activities are of critical importance to security or public order at EU level. The rules are designed to help identify and address security or public order risks associated with foreign direct investment that affect at least two Member States or the EU as a whole. In January 2024, the Commission presented a new proposal for screening foreign investment projects in the EU.

Newsletter quote

Raphaël Glucksmann (S&D, FR), rapporteur of the European Parliament, said: "As President of the European Parliament and member of the Foreign Affairs and Security Policy Council, I am pleased that a strong pro-European majority has adopted an ambitious reform of the EU's foreign investment screening mechanism. This reform will create a more predictable system to ensure that foreign investment does not put our security at risk. Investors will benefit from greater clarity of procedures, while the harmonised scope and strengthened role of the Commission will help ensure consistency across the Union."

Next steps

After adoption in the International Trade Committee, the proposal will be voted on by the Parliament as a whole in the upcoming plenary session, after which negotiations with Member States on the final form of the law can begin.

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