European Union moves swiftly toward adopting regulation on screening foreign direct investment

On November 20, 2018, the European Parliament, Council and Commission reached political agreement on an EU framework for screening FDI, and on December 11, 2018, the International Trade Committee of the European Parliament endorsed the political agreement. The stated objective of the framework is to protect the strategic interests of the EU, its member states and enterprises—including security and public order—while remaining open to foreign investment.

The draft EU Regulation will create a cooperation mechanism for the exchange of information between EU member states and the commission. It will also encourage international cooperation on screening policies, including sharing experiences, best practices and information on investment trends. Importantly, it reaffirms EU member states have the last word on whether a specific operation should be allowed or not in their territory.

The EU Regulation is expected to enter into force once the European Parliament and the Council conclude the respective ongoing approval procedures.