New Foreign Investment Screening Regulations Implemented in the EU
Revised rules aim to enhance security for foreign investments across various sectors, including critical infrastructure.
The European Parliament has approved new regulations concerning the screening of foreign investments across the European Union, with a decisive vote of 31 in favor, 7 against, and 3 abstentions.
This legislative move extends mandatory screening processes to additional sectors including media services, critical raw materials, and transport infrastructure, aiming to identify and mitigate potential security or public order risks associated with foreign investments.
Under the newly adopted rules, each EU Member State will be required to screen foreign investment projects.
If found to pose a negative impact on security or public order, the screening authority will have the options to either authorize the project with specific mitigating measures or outright prohibit it.
The European Commission will now have the authority to intervene in these screening processes, particularly when disagreements arise among Member States or when the Commission identifies security concerns independently.
These regulations build on a framework that was initiated on October 11, 2020, which sought to address growing trepidations regarding foreign acquisitions of EU companies with critical technologies and sensitive information essential to security and public order.
This new proposal, submitted by the Commission in January 2024, is aimed at creating a more consistent and predictable investment climate across the EU while ensuring that foreign investments do not compromise national or union-wide security.
Raphaël Glucksmann, the rapporteur for the proposal from the Socialists and Democrats group, commented on the importance of the reform, stating that it establishes a clearer and more consistent framework for foreign investments that enhances security measures and provides clarity for investors.
Following the International Trade Committee's adoption of the proposal, the European Parliament is set to vote on it in a forthcoming plenary session, which will be followed by negotiations among EU Member States to finalize the regulations.
This legislative move extends mandatory screening processes to additional sectors including media services, critical raw materials, and transport infrastructure, aiming to identify and mitigate potential security or public order risks associated with foreign investments.
Under the newly adopted rules, each EU Member State will be required to screen foreign investment projects.
If found to pose a negative impact on security or public order, the screening authority will have the options to either authorize the project with specific mitigating measures or outright prohibit it.
The European Commission will now have the authority to intervene in these screening processes, particularly when disagreements arise among Member States or when the Commission identifies security concerns independently.
These regulations build on a framework that was initiated on October 11, 2020, which sought to address growing trepidations regarding foreign acquisitions of EU companies with critical technologies and sensitive information essential to security and public order.
This new proposal, submitted by the Commission in January 2024, is aimed at creating a more consistent and predictable investment climate across the EU while ensuring that foreign investments do not compromise national or union-wide security.
Raphaël Glucksmann, the rapporteur for the proposal from the Socialists and Democrats group, commented on the importance of the reform, stating that it establishes a clearer and more consistent framework for foreign investments that enhances security measures and provides clarity for investors.
Following the International Trade Committee's adoption of the proposal, the European Parliament is set to vote on it in a forthcoming plenary session, which will be followed by negotiations among EU Member States to finalize the regulations.
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