To enhance security
The International Trade Committee of the European Parliament has approved new, revised rules for screening foreign investments within the European Union (EU). Approved on April 8, 2025, the updated regulations are designed to protect EU security and public order by expanding the sectors subject to mandatory screening and harmonising national screening procedures.
Under the new framework, EU member states will enhance scrutiny of a broader range of sectors, including media services, critical raw materials, and transport infrastructure. The aim is to identify and address potential risks arising from foreign investments that could compromise the security or public order of the EU.
The proposal was approved by a substantial majority in the International Trade Committee, with 31 votes in favour, seven against, and three abstentions.
The next step in the legislative process will be a vote by the European Parliament, followed by negotiations with EU Member States on the law’s final version.
Raphaël Glucksmann (S&D, FR), the rapporteur for the proposal, welcomed the adoption of the revised rules. He said: “I am pleased that a substantial pro-European majority has adopted an ambitious reform of the EU’s foreign investment screening mechanism.
“This reform will establish a more predictable system that ensures foreign investments do not compromise our security. Investors will benefit from greater clarity on procedures, while a harmonised scope and a reinforced role for the Commission will help ensure consistency across the Union.”
A significant feature of the revised rules is introducing a mechanism that grants the European Commission the power to intervene proactively in potential risk cases. The Commission can step in if EU member states disagree with foreign investment. The updated rules are expected to ensure greater consistency in screening foreign investments across the EU, making the process more transparent and predictable for investors.
Suppose a national screening authority determines that a foreign investment could negatively impact security or public order. In that case, it will be required to either approve the investment subject to specific mitigating measures or prohibit it altogether. This will provide a more transparent legal framework for scrutinising foreign investments, addressing growing concerns about external influence on critical sectors within the EU.
The EU’s existing foreign direct investment (FDI) screening framework was enacted on October 11, 2020. This framework was introduced in response to increasing concerns about foreign investors attempting to gain control over EU firms involved in critical technologies, infrastructure, or industries holding sensitive data. These firms are essential in maintaining security and public order across the Union.
The Commission’s January 2024 proposal aimed to update the screening process in response to emerging threats and to better safeguard the EU from investments that could undermine its security interests. The revised rules will ensure that foreign investments are assessed more rigorously, particularly those that could affect the stability of strategic sectors such as defence, energy, and communication.
The next stage is for the European Parliament to vote on the proposal during an upcoming plenary session. If the proposal is approved, negotiations with EU member states will follow, allowing for the finalisation of the law and its implementation across the Union.
The new rules are expected to strengthen the EU’s resilience against external influence in critical sectors while providing clarity and consistency for investors.
Image: Under the new framework, EU member states will enhance scrutiny of a broader range of sectors, including media services, critical raw materials, and transport infrastructure. Credit: EU
