EU filtering framework on foreign investment is up and running

Dombrovskis: Our openness is not unconditional

Photo: EU Valdis Dombrovskis.

As of Sunday, 11 October, the EU framework for screening of foreign direct investment (FDI) will become fully operational. Over the last eighteen months following the adoption of the first EU investment screening regulation, the Commission and Member States have put in place an effective coordination framework. 

This agenda is becoming instrumental in preserving Europe's strategic interests while keeping the EU market open to investment.

The EU is and will remain open to foreign investment, but this openness is not unconditional, Executive Vice-President Valdis Dombrovskis said noting that to respond to today's economic challenges, safeguard key European assets and protect collective security, EU Member States and the Commission need to be working closely together. “If we want to achieve an open strategic autonomy, having an efficient EU-wide investment screening cooperation is essential. We are now well equipped for that.”

In the past years there have been growing concerns regarding certain foreign investors seeking to acquire  control  of  or  influence  in  European  firms  whose  activities  have  repercussions  on  critical technologies, infrastructure, inputs or sensitive information, putting security or public order at risk.

This is especially the case when foreign investors are state owned or controlled, including through financing or other  means.

The  framework  for  FDI  screening  ensures  that  while  remaining  open  to investment, the EU is equipped to protect its essential interests.

The regulation on an EU-wide framework for FDI screening was adopted in March 2019. According to it, the Commission and the Member States can coordinate their actions on foreign investments. Following the formal entry into force of the FDI Screening Regulation in April 2019, the Commission and Member States have worked on putting in place the necessary operational requirements for the full application of the Regulation starting 11 October this year.

Notification by EU Member States of their existing national investment screening mechanisms to the Commission and establishment of formal contact points and secure channels in each EU country and within the Commission for the exchange of information and analysis, are among these requirements. Also on the agenda is developing procedures for Member States and the Commission to quickly react to FDI concerns and to issue opinions and updating the list of projects and programmes of Union interest annexed to the Regulation.

Following recommendations by the Commission in guidance, issued seven months ago, Member States have also agreed to cooperate informally on FDI screening where a foreign investment could have an effect on the EU single market. 

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