The Council of the European Union has formally transmitted its position on a new regulation to strengthen the screening of foreign direct investments (FDI) into the EU, aiming to protect security and public order. The move, approved by member states' ambassadors, was communicated via a letter to the European Parliament's International Trade Committee on 2 October 2026. This marks a key procedural step in the legislative process to replace the existing Regulation (EU) 2019/452 with a more robust framework.
The proposed regulation, titled "Proposal for a Regulation of the European Parliament and of the Council on the screening of foreign investments in the Union," seeks to enhance the EU's ability to vet foreign investments that could pose risks to security or public order. It builds on the current framework established in 2019, which introduced a cooperation mechanism among member states but left final screening decisions to national authorities. The new text aims to address gaps identified in recent years, particularly in light of geopolitical tensions and the need for a more coordinated EU-wide approach.
The Council's position, now transmitted to the European Parliament, will form the basis for interinstitutional negotiations. The Parliament's International Trade Committee is expected to review the proposal and adopt its own position, after which trilogue discussions between the Council, Parliament, and Commission will commence. The timeline for adoption remains uncertain, but the transmission signals member states' consensus on the need for stricter controls.
The regulation balances security concerns with the EU's commitment to an open investment environment. Key trade-offs include: Security vs. Openness: Stricter screening may deter some foreign investments, potentially reducing capital inflows, but aims to prevent acquisitions that could compromise critical infrastructure or technologies. EU Coordination vs. National Sovereignty: Enhanced EU-level cooperation may limit member states' discretion in approving investments, but ensures a more unified response to cross-border risks. Business Competitiveness vs. Regulatory Burden: New compliance requirements could increase costs for investors and national authorities, but may level the playing field by ensuring all member states apply similar standards.
The European Commission will gain a stronger role in coordinating screenings and issuing opinions, increasing its influence over investment policy. National Authorities: Member states will need to align their screening mechanisms with EU standards, potentially requiring legislative and administrative changes. Foreign Investors: Non-EU entities, particularly from state-owned enterprises or countries with strategic interests, may face longer review times and higher rejection rates for acquisitions in sensitive sectors. EU Businesses: Companies in critical sectors (e.g., energy, defence, technology) may benefit from reduced risk of hostile takeovers, but could also see reduced access to foreign capital.
The European Parliament is expected to adopt its position in the coming months, followed by trilogue negotiations. The regulation, once adopted, will repeal the 2019 framework and introduce new rules likely to take effect in 2027 or later.
← Atlas › News › International trade