Screening of foreign investments in the Union [EU Legislation in Progress]

Written by Gisela Grieger (1st edition).

On 24 January 2024, the European Commission published a legislative proposal under the ordinary legislative procedure for a new regulation on the screening of foreign investments in the Union. It seeks to revise and repeal Regulation (EU) 2019/452 establishing a framework for the screening of foreign direct investments into the Union.

Parliament’s committee on international trade is expected to be in the lead to draft a report with contributing opinions from other committees; once adopted by the plenary, this will serve as Parliament’s position for the trilogue negotiations with the Council based on the position of the EU Member States. Once a common position is achieved, Parliament and the Council will adopt it separately, after which the new regulation can enter into force.

Regulation (EU) 2019/452 was adopted in March 2019 and has been applied since October 2020. It has struck a delicate balance between the EU’s strong belief in the benefits of open markets for its economic prosperity, and the acknowledgment of risks that may be associated with some foreign direct investment (FDI) in terms of security or public order. The Commission’s evaluation of the 2019 FDI screening regulation’s operation has revealed that the significant substantive and procedural discrepancies between national FDI screening mechanisms have undermined the effectiveness and efficiency of the legal instrument. It has therefore proposed a revision of the EU framework to enhance regulatory convergence.

Complete version

• September 2024: Screening of foreign investments in the Union (1st edition)