The European Parliament approved new rules on Tuesday that significantly tighten the screening of foreign investments across the EU, primarily to protect strategic sectors. The Strasbourg vote passed the package by a large margin: 508 in favour, 64 against and 90 abstentions.
Purpose: detect security and public‑order risks
The regulation aims to help the European Union better identify investments that could pose security or public‑order risks while remaining open to foreign capital. Under the agreement, every member state will be required to operate a national screening mechanism in sensitive areas specifically highlighted by the rules.
Sectors and transactions covered
The regulation covers, among others:
- the defence industry,
- semiconductors used in both high‑end and everyday digital devices,
- artificial intelligence,
- critical raw materials,
- financial services.
The rules will not apply only to direct foreign investments: certain intra‑EU transactions will also fall within the screening scope if the ultimate owner is an actor from outside the Union.
Coordination and simplification
A central element of the new system is strengthened coordination between member states. National authorities and the European Commission will share information more closely and act jointly to tackle cross‑border security risks. At the same time, the procedures will be simplified to reduce bureaucratic burdens and provide a more predictable environment for investors.
Political and geopolitical context
The Covid pandemic, the Russian‑Ukrainian war, and strategic competition between the EU and China have all highlighted the Union’s vulnerability to certain foreign takeovers, especially in critical infrastructure and technologies. The measure is therefore seen as another step toward the often‑cited goal of strategic autonomy.
Further measures from the European Commission
As part of the agreement, the European Commission committed to developing additional conditions for foreign investments in certain strategic sectors. As a first step in that direction, it presented an industrial acceleration draft in March, linked to the "Made in EU" industrial policy efforts and to strengthening Europe’s economic sovereignty.
Political reaction
Raphaël Glucksmann, the Parliament’s rapporteur, said that several non‑EU countries had consciously tried to gain control over sensitive sectors of the European economy, and that the new regulation closes a chapter of European naivety.
Next steps and deadlines
The regulation still needs formal approval by member state leaders in the Council. After the Council’s approval, member states will have a transition period—expected to be 18 months—before they must implement the national screening systems developed during that time.
Key figures and dates
- European Parliament vote: 508 yes, 64 no, 90 abstentions.
- Commission’s industrial acceleration proposal: presented in March.
- Expected implementation: approximately 18 months after Council approval.
The change will have significant implications for foreign investors and transactions involving sensitive technologies or infrastructure, while the Union seeks to balance risk management with maintaining attractiveness to outside capital.
