Trade: Coreper endorses the Council’s negotiating position on FDI screening revision

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Member States’ representatives (Coreper) endorsed today the Council’s negotiating mandate on the revision of the Foreign Direct Investment (FDI) screening regulation. Negotiations with the European Parliament will start to finalise this legislation.

<p>Michał Baranowski, Undersecretary of State at the Ministry of Economic Development and Technology of Poland, responsible for Trade</p> <p>«><br /> </figure> <div> <span class=

Foreign investments into the EU are a major source of growth and jobs. The EU has one of the world’s most open investment regimes and is one of the most attractive destinations for foreign investment globally. However, in exceptional cases, foreign investments may pose risks to security or public order. This new legislation will ensure an open investment environment, safeguard the internal market, and, at the same time, strengthen the EU’s ability to react when risks to security are identified.

<p>Michał Baranowski, Undersecretary of State at the Ministry of Economic Development and Technology of Poland, responsible for Trade</p> <p>«><br /> </figure> <p> <cite><span class=

Michał Baranowski, Undersecretary of State at the Ministry of Economic Development and Technology of Poland, responsible for Trade

Enhanced screening and harmonisation

The new legislation aims to strengthen the efficiency and effectiveness of the current foreign direct investment screening system. It will also ensure a higher degree of harmonisation across EU Member States. Reducing divergence is essential to ensure predictability for investors and to lower associated compliance costs.

The new rules will:

  • Ensure that all member states have a screening mechanism in place, with more harmonised national rules.
  • Identify a minimum sectoral scope where all member states must screen foreign investments.
  • Extend EU screening to include investments by EU investors ultimately controlled by individuals or businesses from a non-EU country.

Justified restrictions

Any restrictions arising from the screening mechanism or decisions, such as the imposition of mitigating measures or the prohibition or unwinding of a foreign investment, should be justified by reasons of public policy or public security, including genuine and sufficiently serious threats to a fundamental interest of society.

Main contributions of the Council

The Council supported the Commission proposal to have all member states equipped with a screening mechanism and to cover intra-EU investments by EU subsidiaries of foreign investors (i.e. an anti-circumvention measure).

The Council made changes to the scope (limited to just military goods and dual-use goods) to focus on the key issues where national security concerns are most likely and to minimise the disruption to the vast majority of foreign investment into the EU. It has also simplified the EU coordination mechanism to ensure that the system is as efficient as possible, and has clarified that the final screening decision is taken by the relevant member state.

Next steps

Representatives from the Council, the European Parliament, and the Commission will hold interinstitutional negotiations (trilogues), with the aim of reaching a political agreement on the final text of the revised regulation.

Background

On 24 January 2024, the Commission introduced several initiatives to strengthen the EU’s economic security. One of these initiatives is the revision of the current FDI screening regulation, aimed at improving screening of foreign investment into the EU.

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