World ECR | EU strengthens foreign investment review

The European Union is increasing its efforts to scrutinize foreign direct investments (FDI) that may pose risks to security or public order, according to a report released by the European Commission on October 17.

The report shows that “the number of notifications to EU cooperation mechanisms has increased by 18% since the implementation of the EU Framework in 2020”, an increase that reflects growing concerns about potential security risks associated with investment in third countries.

The document highlights “increasing concerns about the risks that certain investments from third countries may pose to the EU’s security or public order and/or to projects and programs of common interest to the EU,” the European Commission said in a press release. release.

“Of the 488 cases notified in 2023, the vast majority (92%) were closed by the committee within 15 days, while only 8% required so-called Phase 2, which involves a more detailed security assessment,” the report states.

It also highlighted the progress made in implementing screening mechanisms across the EU: “Following the enactment of relevant legislation by a further six Member States in 2023, 24 EU Member States now have screening mechanisms in place, with the remaining three (Croatia, Cyprus and Greece) have taken concrete steps to achieve this effect.

The report also noted differences in notification rates: “Not all member states notify transactions at the same rate – in 2023, 85% of notifications came from just seven member states.”

Executive Vice President and Trade Commissioner Valdis Dombrovskis emphasized the critical role of FDI screening: “FDI screening has become an important component of our broader economic security strategy. The fourth annual report is further evidence of the growing importance of EU cooperation in assessing and responding to collective security risks.”