Parliament finalises foreign investment screening reform this week to better protect EU strategic sectors
Strasbourg – The European Parliament holds this week, during its 18-21 May 2026 plenary session in Strasbourg, the final vote on the revised EU Foreign Investment Screening Regulation. The new framework aims to better protect strategic EU sectors against acquisitions by non-EU entities — particularly Chinese, Russian, and Gulf-region investors with politically sensitive ties.
The original FDI Screening Regulation (Regulation 2019/452) established for the first time a coordinated mechanism at EU level for the review of foreign direct investments deemed potentially threatening to security or public order. The revision now finalised by Parliament strengthens this mechanism in several decisive ways.
Key changes in the revised regulation
The new text introduces six core changes:
- Mandatory screening in all Member States — currently, only 24 of 27 Member States have a national FDI screening regime. The revision makes screening obligatory across the entire EU territory by mid-2027
- Expanded sectoral scope — the list of strategic sectors is broadened to include critical raw materials, AI infrastructure, quantum technologies, biotechnology and pharmaceuticals, satellite communications, undersea cable infrastructure, and ports
- Reverse-flow screening — for the first time, certain outbound investments by EU companies (toward jurisdictions presenting risks of technology transfer) are also subject to a review mechanism, modelled on the US Outbound Investment Executive Order
- Greenfield investment coverage — the screening now covers not only acquisitions but also greenfield investments above defined thresholds in strategic sectors
- Tighter deadlines — the Commission’s coordination procedure is streamlined to enable faster reviews (60 days vs current 90+)
- Sanction enforcement — penalties for non-notification or non-compliance can reach 10% of the investor’s global turnover
Political context
The revision has been shaped by several recent developments: persistent Chinese acquisition attempts in European tech (Ant Group in fintech, BYD in automotive supply chains, Huawei in telecom infrastructure), heightened security concerns following sabotage incidents on undersea cables and energy infrastructure, and lessons learned from the 2024 Czech case where a Russian-linked investor attempted to acquire stakes in a strategic energy company.
The rapporteur, Sandra Kalniete (EPP, Latvia), described the revision as “an instrument of European economic sovereignty whose time has come.” The Commission, represented during the debate by Vice-President Stéphane Séjourné, has signalled strong support for the parliamentary text.
Business reactions
European industry has expressed mixed reactions. BusinessEurope and ECCO Network (representing pan-European companies) have welcomed the strengthened framework but cautioned against over-screening that could deter beneficial inward investment. Trade unions have lobbied for explicit inclusion of public health and food security as protected categories — a request partially accommodated in the final compromise text.
If adopted as expected on Thursday 21 May, the new rules enter into force in summer 2026 with full mandatory application by mid-2027.
