MEPs agree on new rules on the screening of foreign investments to prevent security risks

Under the new rules informally agreed by the European Parliament and Council foreign investments in sensitive sectors such as defence, semiconductors, artificial intelligence, critical rawmaterials and financial services will be subject to mandatory screening by member states,in order toidentify and address potential security or public order risks.

The procedures applicable to national screening mechanisms will be streamlined, thereby reducing complexity and making the EU a more attractive place to invest. Cooperation among national screening authorities and with the Commission will be enhanced, facilitating coordination and joint action on cross-border security risks. 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.

In a statement adopted as part of the political agreement on the new regulation, the European Parliament and the Commission agree on the need for further action at Union level to address economic security risks resulting from foreign investments. The Commission also commits to take an initiative to set out conditions for foreign investments in specific strategic sectors.

French MEP Raphaël Glucksman said: “These were intense negotiations because we had strongly diverged views between Parliament and Council on the concept of economic security and the Union’s role in safeguarding it. The spirit of compromise ultimately prevailed, and the outcome will deliver important improvements in the way foreign investment is handled by Member States and the Commission. Clearer and faster procedures will enhance the EU’s attractiveness, while a streamlined cooperation mechanism will ensure that all Member States can raise their security concerns effectively. Our debates with Council underscored the need for further action at European level to ensure not only that foreign investments do not pose immediate security risks, but also that they bring added value to the Union. We welcome the Commission’s commitment to work on this matter. The Parliament is ready.”