Screening foreign direct investments in the EU – First steps taken, but significant limitations remain in addressing security and public-order risks effectively

Summary:

In 2020, the EU established a framework for screening foreign direct investment (FDI) that may pose a threat to security or public order in the EU or its member states.

We assessed whether this framework was effective and efficient and found that the Commission has taken appropriate steps to implement it while the member states are increasingly setting up screening mechanisms and cooperating on an EU-wide basis. However, there remain significant limitations in addressing security and public-order risks effectively. Six member states still do not have a screening mechanism and there are differences in terms of scope, coverage, defining critical sectors, and understanding of key concepts. This creates multiple blind spots compromising the effective protection of the entire EU. Improvements are also necessary in the Commission’s assessments and recommendations.

We recommend strengthening the legal framework, clarifying and streamlining key concepts and reinforcing the Commission’s opinions relating to high-risk cases.

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