EU Commission to Propose Screening of Foreign Investments for Security Risks

The European Commission is preparing to introduce new regulations aimed at safeguarding key industries within the European Union by screening foreign direct investments (FDIs). This move is aimed at strengthening the economic security of the EU. The rules will require member states to assess investments in sectors such as semiconductors, artificial intelligence, quantum computing, and biotechnology, ensuring they do not threaten national security.

New Screening Rules

The proposed rules will establish common criteria for all EU countries to evaluate foreign investments. These criteria are designed to create a unified approach across the EU for screening FDIs. Currently, while member states are encouraged to cooperate, the implementation of screening measures is optional and dependent on individual countries' decisions. Not all member states have established mechanisms to screen FDIs, which may leave vulnerabilities unaddressed.

Expanding Scope

The new draft legislation not only mandates the screening process but also broadens the types of investments subject to scrutiny. It will cover companies controlled by foreign entities which could have an impact on public order and security. The Commission will also encourage enhanced information sharing between member states and the introduction of 'Own Initiative Procedures' (OIP), allowing for the examination of investments that affect more than one country or EU programs.

Greenfield Investments

Additionally, the draft includes provisions for screening greenfield investments where new facilities are developed within the EU by foreign investors. Such investments will also be evaluated for their potential impact on security and public order, particularly in sensitive sectors. This could notably affect investments in renewable energy technologies and the semiconductor industry.

EU, Investments, Security