EU Urges Member States to Increase Foreign Investment Screening During COVID-19 Pandemic

European Union countries should closely monitor attempts to acquire European medical goods and technology through foreign direct investment and should increase investment screening tools, the European Commission said March 25. The EU’s “openness to foreign investment” needs to be “balanced by appropriate screening tools … now more than ever,” the commission said in guidelines to EU member states. The commission urged member states to be “vigilant” and “use all tools available … to avoid that the current crisis leads to a loss of critical assets and technology.”

“We have the tools to deal with this situation under European and national law and I want to urge Member States to make full use of them,” commission President Ursula von der Leyen said in a statement. “The EU is and will remain an open market for foreign direct investment. But this openness is not unconditional.”

The commission urged member states to “set up a fully-fledged screening mechanism” and “address” cases in which foreign investments could create national security risks for the EU. Member states should work with each other to screen investments and the commission “follow closely developments on the ground and stands ready to discuss and ensure coordination on any foreign investment case with a larger European impact.” The European Council planned to discuss foreign investment screening during a March 26 videoconference.

The COVID-19 pandemic is likely to lead to more strict reviews of foreign direct investments across the globe, including in the U.S., according to the Treasury Department’s former deputy assistant secretary for investment security (see 2003250033). A Treasury spokesperson said the Committee on Foreign Investment in the U.S. will continue to review transactions normally. “”CFIUS applies the same national security analysis to the particular facts and circumstances of every transaction that it reviews,” the spokesperson said in a statement.