The European Parliament has approved sweeping new rules to strengthen the European Union’s ability to scrutinise foreign investments in strategic industries, amid growing
concerns over economic security and geopolitical tensions.
MEPs voted on Tuesday by 508 votes to 64, with 90 abstentions, to endorse an agreement with member states that will make investment screening mandatory across the bloc in sensitive sectors including defence, semiconductors, artificial intelligence, critical raw materials and financial services.
The legislation aims to help EU countries identify and address potential threats to security or public order while maintaining openness to foreign investment.
Under the revised framework, all member states will be required to operate national screening mechanisms, with procedures streamlined to reduce administrative complexity and improve consistency across the EU. The rules also strengthen coordination between national authorities and the European Commission, allowing for closer cooperation on cross-border security risks.
The scope of the regulation will extend to transactions taking place within the EU when the investor is ultimately controlled by individuals or entities from outside the bloc.
The agreement reflects a broader shift in Brussels toward a more assertive economic security policy following the COVID-19 pandemic, Russia’s invasion of Ukraine and rising global geopolitical tensions.
As part of the deal, the European Commission committed to proposing additional measures to manage risks linked to foreign investment in strategic sectors. It has already presented a draft Industrial Accelerator Act, unveiled on 4 March 2026, aimed at setting conditions for foreign investments in key industries.
Parliament’s lead negotiator, Raphaël Glucksmann, said the vote marked “the end of European naivety” toward foreign economic influence.
“Certain foreign states are seeking to weaken us,” he said, adding that the EU could no longer allow foreign actors to gain control over sensitive parts of the European economy.
The EU’s current foreign direct investment screening system has been in force since October 2020. The European Commission proposed reforms in January 2024 after identifying weaknesses in the existing framework.
The legislation must still receive formal approval from the Council before entering into force. The new rules are expected to apply 18 months after adoption.