BRUSSELS (Chatnewstv.com) — European Union governments and lawmakers have reached a political agreement to overhaul the bloc’s rules for screening foreign direct investment, aiming to better protect security and public order while keeping Europe open to global trade and capital.
The provisional deal, struck between the EU Council’s presidency and representatives of the European Parliament, revises the bloc’s foreign direct investment screening regulation, which has been in force since 2020.
The updated framework strengthens the EU’s ability to identify, assess and address risks linked to certain foreign investments, particularly in sensitive sectors, while seeking to reduce fragmentation and administrative burdens across the bloc.
“Today’s agreement strengthens the EU’s capacity to protect its security and public order, while ensuring Europe remains an attractive destination for investors,” said Morten Bødskov, Denmark’s minister for industry, business and financial affairs. “We achieved a balanced and proportionate framework, focused on the most sensitive technologies and infrastructures, respectful of national prerogatives and efficient for authorities and businesses alike.”
Under the agreement, all EU member states will be required to operate investment screening mechanisms covering a common minimum set of sensitive areas. These include dual-use items and military equipment, advanced technologies such as artificial intelligence, quantum technologies and semiconductors, as well as critical raw materials.
The scope also covers critical entities in energy, transport and digital infrastructure, electoral infrastructure such as voter databases and voting systems, and a limited group of financial system entities, including central counterparties, central securities depositories and operators of payment systems.
Foreign investments carried out through EU-based subsidiaries will also fall under the revised rules, closing gaps that officials say could previously be exploited to bypass scrutiny.
While the new framework increases coordination and transparency, the agreement preserves national control over final decisions. Screening outcomes will remain the sole responsibility of the member state where the investment takes place, including whether to approve, condition or block a deal.
If other member states or the European Commission raise concerns, the host country will be required to explain how those views were taken into account, including reasons for any disagreement, without compromising sensitive national security information. The Commission may also assist national authorities in gathering relevant data.
The deal also streamlines procedures by introducing a shared database to help authorities exchange information and prevent circumvention. An optional single electronic filing portal may be created if at least nine member states request it. The agreement further clarifies risk factors to be used when assessing foreign investments.
The provisional accord must still be formally endorsed by the Council and the European Parliament. Once adopted, the new rules will apply 18 months after they enter into force.
The EU introduced its first bloc-wide investment screening framework in October 2020, enabling cooperation among member states and the Commission on investments that could affect security or public order. Since then, more countries have adopted national screening systems, but differences in scope and procedures have created uncertainty for investors and potential risks for the single market.
EU officials say growing geopolitical tensions, threats to critical infrastructure and rapid advances in dual-use technologies made an update necessary. The revision forms part of the European Commission’s 2024 package aimed at strengthening the EU’s economic security.
