Brussels, 11 June 2025 — In a significant step toward reinforcing the European Union’s economic security, the Committee of Permanent Representatives (Coreper) has endorsed the Council’s negotiating position on the revision of the EU’s Foreign Direct Investment (FDI) screening regulation. This decision paves the way for formal negotiations with the European Parliament to finalize the updated legislation.
The revised regulation is part of a broader set of initiatives launched by the European Commission on January 24, 2024, aimed at enhancing the EU’s capacity to identify and mitigate risks linked to foreign investment while preserving its open economy.
Michał Baranowski, Undersecretary of State at Poland’s Ministry of Economic Development and Technology and responsible for Trade, emphasized the importance of maintaining a balanced approach: “Foreign investments into the EU are a major source of growth and jobs. The EU has one of the world’s most open investment regimes and remains one of the most attractive destinations globally. However, in exceptional cases, such investments may pose risks to security or public order. This new legislation will ensure an open investment environment, safeguard the internal market, and strengthen our ability to react when risks to security are identified.”
Enhanced Screening and Harmonization
The proposed revision seeks to enhance the efficiency and effectiveness of the current FDI screening system, which was first established in 2019. A key objective of the reform is to harmonize national screening mechanisms across all EU Member States to reduce legal fragmentation and improve predictability for investors.
Under the new rules:
- All Member States would be required to maintain a functional FDI screening mechanism.
- A minimum sectoral scope would be defined, requiring all Member States to screen investments in specific sensitive sectors.
- The screening framework would extend to certain intra-EU investments where the ultimate investor is from outside the bloc—closing potential loopholes that could allow circumvention of national controls.
Justified and Proportionate Measures
Any restrictions imposed as a result of the screening process—such as mitigation measures, prohibitions, or unwinding of transactions—would need to be justified on grounds of public policy or public security, including threats to fundamental societal interests. This ensures that any intervention remains proportionate and transparent.
Council’s Key Contributions
The Council largely supported the Commission’s original proposal but introduced several refinements. Most notably, it narrowed the scope of mandatory screening to focus primarily on investments involving military goods and dual-use items—those that can be used for both civilian and military purposes. This targeted approach aims to address genuine security concerns without unduly burdening the vast majority of non-sensitive investments.
In addition, the Council streamlined the EU-level coordination mechanism to make it more efficient and clarified that final decisions on investment screenings remain the responsibility of individual Member States.
Trilogue Negotiations to Begin
With Coreper’s endorsement secured, the next phase involves interinstitutional negotiations—known as trilogues—between representatives of the Council, the European Parliament, and the European Commission. These discussions aim to reach a political agreement on the final text of the revised regulation as swiftly as possible.
The outcome of this legislative process will have far-reaching implications for how the EU manages strategic foreign investments, particularly amid growing global tensions and increasing scrutiny of capital flows from third countries.
As the EU continues to walk the fine line between openness and security, this reform represents a decisive move toward a more unified, robust, and responsive investment screening framework.
Member States’ representatives (Coreper) endorsed the Council’s negotiating position on FDI screening revision.
