The European Commission will propose next week a law requiring all European Union member states to scrutinize foreign investments in order to determine whether they pose a security risk, as part of the bloc’s efforts to boost its economic security, Reuters has reported.
The EU has obliged member states that have national screening systems in place to exchange information on potential security or public order threats from investments, if they affect neighbors or the bloc as a whole, since 2020.
The Commission can then issue opinions if it sees risks to critical areas such as ports, nuclear power plants or the semiconductor sector.
However, EU countries are not currently required to put such a system in place if they do not already have one. Six had not done so as of last September.
The European Court of Auditors (ECA) said in December that the EU’s scrutiny of foreign investments suffers blind spots because some member states do not carry out screening and those that do have widely different approaches.
The ECA stated that 92% of the 886 cases reported to the Commission from 2020 to 2022 came from just six countries, including France, Germany, Italy and Spain, the rest from nine countries, with a further 12 either not screening or not reporting cases.
The original screening law did not name China, but its proponents’ complaints about and technology transfers and investments by state-owned enterprises, such as Shanghai-based COSCO Shipping’s privileges in the port of Piraeus, were clear references to Beijing.
A Commission report said some common standards and time lines were needed to ensure a level playing field, reduce compliance costs for foreign investors and prevent the emergence of new obstacles for investments.
EU countries where investments are planned would still have the final say but would be required to give any comments or opinions of the Commission or other member states the “utmost consideration.”