Economic security

Foreign Investment and National Security: Stricter Controls Proposed by the EU and UK

Within the last few weeks, both the EU and the UK have published proposals for greater screening and control of foreign direct investments (FDI) into their territories. In both cases, these proposals seek to balance the protection of critical national infrastructure and technology on the one hand and an open foreign investment environment on the other.

EU Proposals

The EU proposals seek to address an increase in inward investments by individuals and businesses from emerging economies such as Brazil and China, whose share of investment into the EU over the past 20 years has increased by over 1000 percent and 600 percent respectively.

Existing Controls

There is no EU-wide regime for the screening of FDI. Under the current EU merger regime, the European Commission can investigate FDI in the form of mergers, acquisitions, and joint ventures that exceed sizeable financial thresholds.