Earlier this week, the EU’s International Trade Committee adopted revised screening rules for foreign investments. The updated rules will establish mandatory screenings for transactions in sectors such as the media, critical raw materials and transport infrastructure to guard against security or public order risks.
The new rules also give the Commission power to intervene in cases where member states are in disagreement over the risks posed by a certain investment. If the regulating body finds that a foreign investment poses a certain security or public order risk, it will have the power to impose mitigating measures or prohibit the transaction.
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The screening framework that is currently in place was adopted on 11 October 2020. It responded to concerns about foreign investments in European companies in sectors such as critical technology, infrastructure or sensitive information storage. It aimed to identify and address risks relating to foreign direct investment between two member states or the EU as a whole.
The Commission introduced an updated proposal for foreign investment screening measures in January 2024, saying the new rules were important for the bloc’s economic security.
The European Parliament’s rapporteur said: “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 establish a more predictable system that ensures foreign investments do not compromise our security. Investors will benefit from greater clarity on procedures, while a harmonised scope and a reinforced role for the Commission will help ensure consistency across the Union.”
The proposal was approved with 31 votes in favour, seven against and three abstentions by the International Trade Committee. Now, parliament as a whole must vote on the proposal before final talks with member states can begin.
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