EU reaches provisional deal on FDI screening

The Council of the European Union (EU) said on Tuesday that a provisional agreement has been reached on an EU framework for screening foreign direct investments (FDI).

Currently, fewer than half of EU member states have legislation in place that allows them to review foreign direct investments, a press release from the Council said.

Under the provisional agreement, EU member states will retain the power to review and potentially block foreign direct investment on security and public order grounds, said the press release.

Existing and new mechanisms will have to meet a number of EU-wide characteristics, such as respect for the principle of non-discrimination, protection of confidential information, right to judicial redress against national authorities' decisions or clearly defined applicable procedural rules, the press release added.

Under the provisional agreement, the European Commission will be able to issue advisory opinions to the member states where it considers that an investment, whether planned or completed, would be likely to affect security or public order in one or more member states.

The text of the provisional agreement also foresees a cooperation mechanism between member states and the European Commission. Member states will need to inform each other and the European Commission of any foreign direct investment that is undergoing screening by their national authority. Upon request, they will also need to make available certain information, such as the ownership structure of the foreign investor and the financing of the investment.

The provisional agreement will be submitted to EU ambassadors for endorsement on behalf of the Council, following technical finalisation of the text. The European Parliament and Council will then be called on to adopt the proposed regulation at first reading.