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(BRUSSELS) – A set of new rules to scrutinise foreign direct investments on the grounds of security or public order will come into force from April, following their green light Tuesday by the EU Council.
The Council today adopted a regulation establishing a framework for the screening of foreign direct investments into the EU. This is the first time that the EU is equipping itself with such a comprehensive framework, while its major trading partners already have comparable rules in place.
Council approval was welcomed by the European Commission. “The EU gains a lot from foreign investment and it plays a vital role in our economies,” said Trade Commissioner Cecilia Malmstroem: “However, we have seen a recent increase in investment in our strategic sectors and this has led to a healthy public debate on the issue. With this new framework we are in a much better position to monitor foreign investments and safeguard our interests.”
The new framework will:
- create a cooperation mechanism where Member States and the Commission will be able to exchange information and raise concerns related to specific investments;
- allow the Commission to issue opinions when an investment poses a threat to the security or public order of more than one Member State, or when an investment could undermine a project or programme of interest to the whole EU, such as Horizon 2020 or Galileo;
- encourage international cooperation on investment screening, including sharing experience, best practices and information on issues of common concerns;
- set certain requirements for Member States who wish to maintain or adopt a screening mechanism at national level. Member States also keep the last word whether a specific investment operation should be allowed or not in their territory;
- take into account the need to operate under short business-friendly deadlines and strong confidentiality requirements.
The regulation will be published on 21 March 2019. The new rules will enter into force twenty days later and will apply 18 months later.
The EU has one of the world’s most open investment regimes, as acknowledged by the OECD in its investment restrictiveness index. The EU is the main destination for foreign direct investment in the world: foreign direct investment stocks held by third country investors in the EU amounted to 6,295 billion at the end of 2017.
