EU deal to tighten screening of investments

Representatives of MEPs and EU government have reached agreement on an updated screening regime for foreign investments) into the EU. 

The current EU regulation on the issue is aimed at addressing potential threats to “security and public order” posed by some investments from third countries. 

Under the new rules provisionally agreed by the European Parliament and EU Council, foreign investments in “sensitive” sectors such as defence, semiconductors, artificial intelligence, critical raw materials, and financial services will be subject to mandatory screening by member states. 

Under the deal, there will also be harmonised national rules to ensure consistent screening across the EU, as well as a common minimum scope for deals. 

The new law will also cover transactions within the EU where the investor is ultimately owned by individuals or entities from a non-EU country. 

Economic security 

Welcoming the deal, the European Commission said that it would make investment-screening more robust, coherent, and strategic. 

“This is an important step toward reinforcing Europe’s economic security, and ensuring that foreign investment supports, rather than threatens, our long-term interests,” said trade commissioner Maroš Šefčovič. 

The commission said that the new regulation was expected to apply to more transactions, as it would also cover intra-EU deals. It added that the common minimum scope was likely to require some member states to expand their screening mechanisms. 

‘Intense’ talks 

The parliament’s rapporteur on the issue, Raphaël Glucksmann, described the negotiations as “intense”, due to “strongly diverged views” between MEPs and the EU Council on the concept of economic security. 

A council statement stressed that the agreement confirmed that screening decisions remained “the exclusive responsibility” of the member state in which the investment was being made. 

The agreement must now be formally adopted by MEPs and the EU governments.