EU framework for FDI screening

08-02-2019

On 13 September 2017, the European Commission adopted a proposal for a regulation establishing a framework for screening foreign direct investment (FDI) inflows into the EU on grounds of security or public order. The proposal is a response to a rapidly evolving and increasingly complex investment landscape. It aims to strike a balance between maintaining the EU's general openness to FDI inflows and ensuring that the EU's essential interests are not undermined. Recent FDI trends and policies of emerging FDI providers have cast doubt on the effectiveness of the current decentralised and fragmented formal system of FDI screening in place, and in use in only some EU Member States, to adequately address the potential (cross-border) impact of FDI inflows on security or public order without EU-coordinated cooperation among all EU Member States. The proposal's objective is neither to harmonise the formal FDI screening mechanisms currently used by half of the Member States, nor to replace them with a single EU mechanism. Instead, it aims to enhance cooperation and information-sharing on FDI screening between the Commission and Member States, and to increase legal certainty and transparency. The European Parliament's Committee on International Trade (INTA) and the Council adopted their positions in May and June 2018 respectively, and interinstitutional negotiations concluded in November 2018 with a provisional text. That was first endorsed by the Member States' Permanent Representatives (Coreper) and then by INTA in December 2018, and the text will be submitted for a vote in the European Parliament's plenary session of February 2019. Third edition. The ‘EU Legislation in Progress’ briefings are updated at key stages throughout the legislative procedure. Please note this document has been designed for on-line viewing.

On 13 September 2017, the European Commission adopted a proposal for a regulation establishing a framework for screening foreign direct investment (FDI) inflows into the EU on grounds of security or public order. The proposal is a response to a rapidly evolving and increasingly complex investment landscape. It aims to strike a balance between maintaining the EU's general openness to FDI inflows and ensuring that the EU's essential interests are not undermined. Recent FDI trends and policies of emerging FDI providers have cast doubt on the effectiveness of the current decentralised and fragmented formal system of FDI screening in place, and in use in only some EU Member States, to adequately address the potential (cross-border) impact of FDI inflows on security or public order without EU-coordinated cooperation among all EU Member States. The proposal's objective is neither to harmonise the formal FDI screening mechanisms currently used by half of the Member States, nor to replace them with a single EU mechanism. Instead, it aims to enhance cooperation and information-sharing on FDI screening between the Commission and Member States, and to increase legal certainty and transparency. The European Parliament's Committee on International Trade (INTA) and the Council adopted their positions in May and June 2018 respectively, and interinstitutional negotiations concluded in November 2018 with a provisional text. That was first endorsed by the Member States' Permanent Representatives (Coreper) and then by INTA in December 2018, and the text will be submitted for a vote in the European Parliament's plenary session of February 2019. Third edition. The ‘EU Legislation in Progress’ briefings are updated at key stages throughout the legislative procedure. Please note this document has been designed for on-line viewing.