The European Union is poised to strengthen its defences against potentially hostile foreign investment, following the adoption of sweeping reforms by the European Parliament’s International Trade Committee on Tuesday.
In a decisive vote — 31 in favour, seven against, and three abstentions — lawmakers endorsed a revised set of rules aimed at tightening the screening of foreign direct investment (FDI) across the bloc. The new measures will subject a broader range of sectors, including media services, critical raw materials, and transport infrastructure, to mandatory national-level screening, in a bid to identify and neutralise risks to security and public order.
The reforms mark a significant shift in Brussels’ approach towards foreign investment, reflecting growing unease over the strategic ambitions of certain non-EU investors, particularly in sectors deemed sensitive to Europe’s security and sovereignty.
“The aim is to create a predictable, coherent system that protects European interests without shutting the door to beneficial foreign capital,” said Raphaël Glucksmann, the Parliament’s rapporteur for the file. “This reform will establish a more predictable system that ensures foreign investments do not compromise our security. Investors will benefit from greater clarity on procedures, while a harmonised scope and a reinforced role for the Commission will help ensure consistency across the Union.”
At the heart of the revised framework is a dramatic expansion of the sectors subject to mandatory screening. Previously, Member States had the discretion to screen investments, but under the new rules, they will be required to review transactions in industries now viewed as essential to public order and security.
Transport infrastructure, critical raw materials, and media — sectors not previously within the mandatory net — have been brought into scope. The reforms come amid mounting fears that unchecked foreign acquisitions could leave Europe vulnerable, particularly at a time of increasing geopolitical rivalry and economic fragmentation.
In a significant enhancement of its oversight powers, the European Commission will be able to intervene proactively in cases where national authorities are at odds, or where potential risks transcend national borders. The Commission will also have the authority to initiate investigations independently, adding a layer of supranational scrutiny that reflects Brussels’ broader ambitions to project strategic autonomy.
National screening mechanisms, which until now have varied widely across Member States, will be harmonised under the new framework. The reforms seek to create uniformity in screening procedures, including clearer deadlines and transparent criteria for assessment.
If a national screening authority determines that a proposed investment could harm public security or order, it will be required either to authorise the project with mitigating conditions or to block it altogether. This represents a more assertive stance compared to the previous, largely advisory system.
The move is seen by many as a response to recent high-profile attempts by foreign investors to gain control of European companies specialising in semiconductors, cybersecurity, and other strategically important fields. Policymakers have been particularly wary of acquisitions originating from authoritarian states, where private enterprise often operates under close government direction.
The EU’s existing foreign investment screening framework came into force in October 2020, born out of concerns that Europe’s open market model had left it dangerously exposed. Since then, Member States have notified hundreds of transactions, with Brussels stepping in to coordinate responses where necessary.
However, the Commission argued that gaps remained. In January 2024, it tabled a new proposal aimed at strengthening the regime. Tuesday’s adoption by the Trade Committee is a major milestone on the path to making that proposal law, though final approval by the full Parliament and Member States is still required.
Supporters of the reform say it strikes the right balance between maintaining Europe’s openness to investment and safeguarding its vital interests. Critics, however, warn of the risk of protectionism and regulatory overreach, fearing the measures could chill legitimate investment flows at a time when economic growth remains fragile.
Yet with security concerns increasingly dominating the European political agenda, the momentum behind a tougher stance appears unstoppable.
“We cannot be naive,” Glucksmann warned. “In today’s world, investment is not just a financial transaction. It can be a strategic move — and Europe must be prepared.”
As the EU moves to tighten its grip on foreign investment, the message from Brussels is clear: Europe’s openness remains, but not at the expense of its security.
Main Image: Photographer: Alexis HAULOT © European Union 2025 – Source : EP
