EU investment screening regulation to become fully operational

The FINANCIAL — The EU framework for screening of foreign direct investment (FDI) will become fully operational as of 11 October 2020. 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. It will now become instrumental in preserving Europe’s strategic interests while keeping the EU market open to investment.

Executive Vice-President Valdis Dombrovskis said: “The EU is and will remain open to foreign investment. But this openness is not unconditional. 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.”

The FDI screening regulation adopted in March 2019 established an EU-wide framework in which the European 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 2020. This has included:

• the notification by EU Member States of their existing national investment screening mechanisms to the Commission
• the establishment of formal contact points and secure channels in each Member State and within the Commission for the exchange of information and analysis
• developing procedures for Member States and the Commission to quickly react to FDI concerns and to issue opinions
• updating the list of projects and programmes of Union interest annexed to the Regulation.

Following recommendations by the Commission in March 2020 guidance, Member States have also agreed to cooperate informally on FDI screening where a foreign investment could have an effect on the EU single market.

Several Member States are also in the course of reforming their screening mechanisms, or adopting new mechanisms.