Ana Novik
OECD Directorate for Financial and Enterprise Affairs, Investment Division
Joachim Pohl
OECD Directorate for Financial and Enterprise Affairs, Investment Division
Nicolás Rosselot
OECD Directorate for Financial and Enterprise Affairs, Investment Division
Foreign investment brings benefits to home and host countries and societies. It contributes to spurring growth, employment and development. However, recent geoeconomic and geopolitical developments and rapid technological advances have drawn greater attention to security implications of certain foreign investments. To manage these implications, many governments, especially in advanced economies, have adjusted their investment policies.
Investment security is a component of governments’ broader efforts to strengthen their economic security and aligns closely with more recent efforts to address risk associated with international economic interactions. Historically, investment-related tools have been in place in many countries for decades, well before the more recent surge in economic security concerns triggered policy changes in other areas such as supply-chain resilience and the like. As a forerunner, instruments developed to manage security concerns for investment may inspire and inform economic security initiatives in other areas.
As an area of economic security where developments began early and progressed swiftly, investment security may provide important insights for policy considerations in other areas where economic security considerations emerge. Experiences may be transferable to areas such as research co‑operation and international researcher exchanges, outward investment, as well as some aspects of trade.
This chapter traces how investment security tools have developed and endeavours to project how they may evolve. The chapter documents the important role that internationally agreed policy principles, such as the OECD 2009 Guidelines on Investment Policies related to National Security, and peer-learning play in developing policies that reconcile the continued imperative of openness to international investment with the growing priority to manage security implications of this openness. Experience gathered in this pioneering field may also allow governments to anticipate emerging needs and consider other components of holistic economic security policies.
Foreign investment contributes to prosperity in all stages of economic development, and governments continue their decades-long endeavour to open their economies to foreign capital. As a result, remaining barriers to international capital flows are progressively being reduced, and today, few restrictions to international investment remain.1
This drive for greater openness coexists with the need for governments to address risks that may be associated with certain foreign investments and that may threaten their security interests. For the most part and until recently, policies to manage this risk existed merely on the books and in most economies played a negligeable role in practice.
Several factors have driven a historically unprecedented change of heart and policy in this area in the past decade. Geopolitical and geoeconomic developments have increased concerns about security implications of foreign investment. A growing role of state-driven or state-supported investors that participate in international investment, explicit programmes to acquire know-how in sensitive sectors, more assertive attitudes in economic and military dimensions in some regions, and global crises have all contributed to greater risk-awareness by demonstrating the consequences of dependencies and vulnerabilities. The rapid development of certain technologies, their potential for military applications, and the massive expansion of sensitive, personalised data have also fuelled concerns that foreign investments may occasionally entail substantial risk. These include traditional aspects of espionage and sabotage that a foreign presence in the country could facilitate in certain circumstances, especially in border areas or near sensitive sites; the potential outflow of sensitive technologies or information that could be exploited by malign actors or to advance foreign countries’ military capabilities; and dependencies from certain foreign economies, especially in strategic sectors.2
Many governments, especially in OECD economies, have nuanced their stance of hitherto almost unconditional openness to international investment in light of these developments. They have introduced new policies to manage security risks and have strengthened existing policies considerably. Even countries that felt little exposure only a few years ago have taken a closer look at the security implications of certain foreign investment projects. These efforts continue in many advanced economies but there is considerable variation across the OECD area and beyond, with some governments showing greater reluctance to introduce measures to manage investment related security risks.
In most OECD countries, investment-related risks continue to play a central role in economic security strategies. Such strategies document the preoccupation with the presence of foreign investors in sensitive locations such as border areas3 or significant shareholdings in sensitive enterprises such as those operating critical infrastructure where it could facilitate espionage or sabotage, or grant leverage over host-state governments.4 Economic security strategies also point to access to sensitive data in host countries as well as unwanted technological leakages,5 and to the potential generation of economic and financial dependencies.6
Figure 5.1 documents the dynamic development of policy changes in 72 advanced, emerging market and developing economies.7 The figure shows annual aggregates of the introduction of new and reform of existing policies to manage investment-related risk beginning in 1990, documents a significant acceleration after 2014 and the continued dynamism of policymaking. Announcements of reforms in the economies included in the sample suggest that the reform drive will remain important, at least in the near future.8
Note: Sample includes 72 advanced, emerging, and developing economies from within the subset of 83 economies. More than one measure may be counted for a given country in a year. A new mechanism or reform is associated with COVID-19 if the government explicitly justified its introduction, at least in part, with the pandemic or its fallout.
Source: OECD.
Recent crises have shaped the developments in foreign inward investment policy to different degrees. The Global Financial Crisis of 2008/09 had little immediate impact on developments in this area and, if anything, occupied investment policymakers with managing the immediate fallout of that crisis rather than management of security implications. The COVID-19 pandemic in turn has triggered a substantial number of policy changes that were explicitly linked to the crisis (OECD, 2020[1]).9 Russia’s war of aggression against Ukraine has also been associated with some new policy changes in 2022, but has overall affected policy dynamics to a lesser extent (OECD, 2022[2]). This is likely because the war caused fewer economic disruptions in a limited number of countries, policies had just been strengthened and remained in place from the preceding crisis, and sectors associated with military conflict were already covered by investment policies related to national security interests in most countries.10
Policy developments did not take place in all countries at the same time. While most advanced and major emerging economies have introduced new policies or carried out reforms in this area since 2014, emerging and developing economies began to carry out similar reforms as of 2020 (e.g. Moldova, the Philippines, South Africa and Viet Nam). Reforms are currently under consideration in Bosnia and Herzegovina and North Macedonia, for example.
The question how investment-related risks is best managed has found different responses in different jurisdictions and at different times. In earlier decades, instruments to manage security risks showed great diversity in approaches and had idiosyncratic features. Such instruments include golden shares, foreign ownership ceilings, administrative authorisation requirements for acquisitions in designated asset groups, security assessments at the establishment or registration of enterprises, and investment screening mechanisms (OECD, 2020[3]). In addition to such instruments that seek to manage risks by controlling acquisition of ownership of sensitive assets, some jurisdictions maintain licensing requirements for sensitive activities (e.g., for the provision of certain services or distribution of certain products), restrictions related to participation in public procurement, or ineligibility for aids and subsidies for security reasons.
The relative frequency of uses of different instruments is evolving as new mechanisms are brought into effect, and older mechanisms are phased out or replaced. Figure 5.2 shows the evolution of the relative distribution of four of the most frequent approaches to manage security risks associated with foreign investment in OECD members over last three decades. It documents an earlier dominance of administrative authorisation requirements and, to a lesser extent, foreign ownership ceilings. Golden share arrangements have played and continue to play only a marginal role. Administrative authorisation requirements and foreign ownership ceilings combined accounted for about three quarters of all mechanisms in operation during most parts of the 1990s. Recent policymaking efforts have led to a relative decline of the share of these types of policies, and investment screening is now the single-most frequently used type of policies to address national security concerns that are associated with certain international investments in OECD countries.
Note: Data for OECD members, showing relative frequency of approaches, counting individual mechanisms separately; “100%” corresponds to the total number of distinct mechanisms of one of the four categories in force in a given year. One economy may have several mechanisms contemporaneously.
Source: OECD.
International exchanges at the OECD as well as guidance enshrined in the 2009 OECD Guidelines for Recipient Country Investment Policies relating to National Security (2009 Guidelines) have led to a greater similarity of the instruments’ designs and implementation overall. Investment screening, understood as implying a case-specific review from a class of potentially problematic transactions, has become the most frequently used instrument to address risks associated with inward investment.
In OECD countries, almost all newly introduced investment policies related to national security employ investment screening approaches. More than four out of five OECD members now operate investment screening mechanisms, up from 55% at the end of 2020 and from only just over 42% a decade ago. The preference for investment screening has likely been shaped by recommendations set out in the 2009 Guidelines and the principles of non-discrimination, transparency, predictability, proportionality and accountability, which has also inspired EU rules – the Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for the screening of foreign direct investments into the Union (EU Regulation 2019/452).
Preferences for the use of certain instruments and approaches to manage security implications continue to evolve. New approaches are introduced, reflecting evolutions in investor strategies and behaviour, changing risk perception, and evolving economic realities. For example, many advanced economies now focus their review mechanisms on mergers and acquisitions, while some emerging economies are more focused on the security risks associated with newly established or registered enterprises.
Evolutions in the geopolitical and geoeconomic environment and a changing assessment of sources of risk and needs have also brought about a change in the scope of application of investment review mechanisms. While in earlier decades, most mechanisms used to be sector-specific or limited to a few sectors, cross-sectoral or multi-sectoral mechanisms have recently become more common. Cross-sectoral mechanisms consider security implications of investment in any sector, while multi-sectoral mechanisms, apply to many economic sectors that are considered sensitive. Single-sector mechanisms often remain in force besides mechanisms that apply to multiple or all sectors. The trend towards cross or multisectoral application of policies, observed since the early 1990s, has recently further accelerated, and that well beyond OECD members (Figure 5.3).
Note: Data shows investment review mechanisms in effect in a subset of 61 economies from within the 72 economies considered overall.
Source: OECD.
The evolution of sectoral coverage of investment review mechanisms has led to significant changes in the composition of sectors that can attract scrutiny. Until the 1990s, policies almost exclusively focused on defence industries and real estate in sensitive locations, often addressed in single-sector mechanisms. The sectoral coverage has diversified markedly since. Critical infrastructures – where not covered by some economy-wide screening mechanisms – were explicitly included in the scope of some mechanisms since the beginning of the 1990s, and critical and emerging technologies appeared separately towards the end of the 1990s. More recently, transactions in the energy and raw materials sectors have increasingly been subject to investment screening (Figure 5.4).
While some of the sectoral additions absorb risks that result from longer-term processes such as privatisation of critical infrastructure, other changes reflect responses to newly identified risks. For example, health infrastructure and biotechnologies were rapidly included in the scope of mechanisms to manage security implications of foreign investment in many economies in 2020 when severe shortages of vaccines and medical equipment appeared during the COVID-19 pandemic (OECD, 2020[1]).
Sector covered (share of economies that operate any mechanisms in a given year)
Note: Graphs show aggregate occurrence of coverage of the indicated sector in investment policies related to national security interests in a given year in OECD members. Legislation may frame these sectors in different terms, and aggregations were made to enhance readability. The grey area shows the proportion of economy-wide mechanisms which cover the indicated sectors but do not mention them specifically.
Source: OECD.
Recent global crises focused governments’ attention on enterprises operating in certain critical sectors and globally integrated industries. This led to greater scrutiny of acquisitions of enterprises operating in critical and emerging technologies (CET) and those that supply certain critical inputs, such as critical raw materials, energy and food, and where this was not previously the case, has brought these under the scope of investment screening mechanisms.
The sensitivity of CET-related enterprises has been recognised for decades and considerations whether to control their acquisition date back to the 1980s. In some countries, the sector was covered under economy-wide mechanisms, and already in the early 2000s, CET sectors were mentioned explicitly in the scope of mechanisms to manage security implications of foreign investment, a trend that has markedly accelerated since 2015. Artificial Intelligence (AI), a foundational technology with dual-use applications, has most recently entered the list of sectors that are explicitly covered by screening mechanisms (OECD, 2021[4]). Several individual subsectors of CET such as semiconductors, quantum technologies, and robotics are now covered by around 40% of OECD countries’ mechanisms that have any such policies, and in many countries, these sectors are singled out specifically. Figure 5.5 shows a breakdown by subsector and the historical evolution since 2000.
Sector covered (share of economies that operate any mechanism in a given year)
Note: Data for OECD members show aggregate occurrence of coverage of the indicated sector in investment policies related to national security interests in the subset of jurisdictions that have any policy in that year. Legislation may frame these sectors in different terms and aggregations were made to enhance readability. The grey area shows the proportion of cross-sectoral mechanisms which cover the indicated sectors but do not mention them specifically.
Source: OECD.
Supply and access to CETs are also the focus of initiatives at national and international levels. These include, at domestic level, initiatives to identify and anticipate future technologies that warrant foreign investment control or related measures,11 that subject advanced technologies to more stringent review,12 or subject these technologies to specific rules and mechanisms altogether.13 These initiatives add to efforts to establish or strengthen international co-operation to regulate access to these technologies where they may have national security implications.14
Growing concerns about foreign access to CETs is also reflected in caseload statistics15 and in particular in the share of in-depth scrutiny and risk mitigation measures.16
Shocks to supply chains have focused governments’ attention since 2020, when the COVID-19 pandemic led to shortages of essential products and services whose availability had hitherto been taken for granted. Russia’s war of aggression against Ukraine heightened concerns further. Foreign investment has an ambivalent relationship with the resilience of supply chains: It can reduce dependencies by broadening the supplier-base but can also lead to concentrations of supplies with fewer suppliers or bring supply under control of potentially unreliable enterprises. Several countries have thus begun to adjust their investment policies to mobilise investment screening and similar instruments in favour of greater resilience of their supply chains.
The concern is not new as such, as the historical focus on defence production documents. Several countries have had restrictions on foreign participation in defence production for this reason. What is new is the expansion of the list of industries whose inclusion in the scope of screening is motivated by concerns about supply chain resilience which now include, among others, the supply of critical raw materials, energy, food and health-related goods and services. Figure 5.6 documents the relative frequency of selected areas in the coverage of mechanisms to manage security implications of foreign investment between 1990 and 2024.
A further change that concerns about supply chain resilience has brought about is its explicit recognition as a risk factor during investment review processes. Screening authorities are now expected to consider factors such as the resulting concentration of ownership or control by foreign investors in critical supply chains, the presence of alternative suppliers at national and international levels, and the security implications for supply relationships with other critical industries or government entities affected by the transaction.
Recent screening legislations in Estonia, Luxembourg, Malta or Slovakia for example explicitly include the consideration of supply of critical inputs as being a factor for authorities to consider in the assessment of the security risks of a given transaction. The United States and Japan, among others, have issued policy statements or guidelines to include these considerations and to provide additional guidance on the factors that reviews need to consider. The number of screened transactions in which critical inputs played a role has risen markedly over the past years, according to official government figures.17
Sector covered (share of economies that operate any mechanism in a given year)
Note: Data for OECD countries show aggregate occurrence of coverage of the indicated sector in investment policies related to national security interests in the subset of jurisdictions that have any policy in that year. Legislation may frame these sectors in different terms, and aggregations were made to enhance readability. The grey area shows the proportion of cross-sectoral mechanisms which cover the indicated sectors but do not mention them specifically.
Source: OECD.
The number of transactions that have been screened has grown significantly since 2017, especially in Europe but also in Japan and Canada (Figure 5.7). This was partly because of the introduction of new mechanisms and the expansion of their scope. However, in several jurisdictions, the number of transactions has recently plateaued, potentially due to declining global FDI flows in 2022 and 2023 (OECD, 2024[5]).
Note: Time-series reflect official data made available by governments by February 2025. Indicators differ and depend on data availability and are not comparable across jurisdictions. They also depend on designs of review mechanisms. Data as reported for calendar years for all countries, including those where data are reported for fiscal years that run from July to June. For better readability, data for Japan are plotted on the right axis. Data for Germany refer to reviews under either of its two mechanisms under the Foreign Trade and Payments Act (AWG) and Ordinance (AWV) – §§ 55-59 and 60-62 AWV, respectively; for France, to applications filed; for Italy, to notifications; for the United States, to notices and declarations; for Japan, to the total number of prior notifications.
Source: OECD based on data reported by governments.
The proportion of transactions subject to review as a share of all inward investment transactions has also grown in some jurisdictions for which such data are available. For example, in Finland, the share of investment proposals subject to review in overall inward investment proposals has increased sixfold between 2017 and 2023, from 3.7% of all investment projects in 2017 to 22% in 2023.18 France has reported a twofold increase between 2017 and 2020 (from 11% to 23%), before this indicator plateaued in 2021 at 20%.19
Governments have identified several reasons for this overall upward trend. These include: the broader scope of mechanisms,20 greater knowledge of notification obligations among investors and associated greater compliance,21 as well as exposure of some assets to foreign takeovers under the conditions of the COVID-19 pandemic.22 In EU Member States, the information-sharing under the co‑operation mechanism under EU Regulation 2019/452 has also been cited as a source of growing case numbers.23
More granular information on transactions notified to and reviewed by authorities are becoming available for ever more jurisdictions (OECD, 2021[6]). Data for 2022 show that investments originating in OECD countries account for the largest share of reviewed transactions (Figure 5.8), which is likely the result of the large share of transactions by OECD investors in transactions overall. Most of these cases appear to be cleared by authorities with no further intervention; denial and mitigation remain rare in most OECD jurisdictions.24
Share of country groups in total transactions subject to review in 2022
Note: Indicators vary and depend on the format and content of data aggregation by reporting countries: Austria: origin of investor in reviewed case; Canada: origins of investment filings; Finland: origin of notifications; Japan: prior notifications; the United Kingdom: eligible transactions; the United States: notices and declarations. Data on origins of investors for Canada, Germany, Japan and Spain exclude investors from unspecified EU and EEA countries due to the unavailability of disaggregated data. The numbers for the United Kingdom exclude domestic investors that are subject to the National Security Investment Act 2021. Data for Austria and Japan explicitly refer to the beneficial ownership of investors. The data are not normalised for the number of transactions originating in the country-groupings, a factor that likely contributes to the distribution.
Source: OECD based on official data reported by governments.
Policy dialogue at the OECD and disciplines developed by its policy community have played an important role in shaping investment policies related to national security and ensuring designs that are effective in managing security concerns while keeping markets open for international investment. These mechanisms were particular important in a field where most countries had limited prior experience and where developments took place at a high pace.
The 2009 Guidelines for Recipient Country Investment Policies relating to National Security (OECD/LEGAL/0372, 2009 Guidelines) encourage governments that are introducing investment policies to safeguard security interests to apply the principles of non-discrimination, transparency, predictability, proportionality and accountability. These principles are recognised for their usefulness as a benchmark for policy design. Exchanges of experience among policymakers, facilitated by the OECD, can also help governments to adopt best‑practice solutions, drawing on a large set of examples and reforms in this area. Analytical, comparative studies on different aspects of policy design and regular updates on policy developments complement the guidance and policy dialogue among governments.
In the past decade, geopolitical and geo-economic changes have led many governments to reconsider the implications of foreign investment and foreign ownership in sensitive parts of their economies. This process has led to a historically unprecedented policy making activity in this area. Governments have introduced mechanisms to review individual investment proposals, expanded the scope of application of these mechanisms, and have progressively tightened the rules governing the review. The number of transactions that are subject to review and potentially intervention has grown manifold in the space of only a few years.
An assessment of the impact of these mechanisms on international investment in general, on specific sectors or specific economies is difficult and will remain difficult due to lack of fine-grained information, absence of valid indicators, and limited information – given the parties interest in discretion and the sensitive nature of the considerations that underpin government decisions, little is known or can be deducted as to the implementation practice across jurisdictions.
Despite the growth of security concerns in a complicated geopolitical environment and a succession of crises, governments remain interested in attracting foreign capital and in openness to foreign investment. International co-operation on policy design as hosted by the OECD as well as policy guidance and standards help governments reconcile the need to manage security implications of certain foreign investments with their continued stance to openness.
[5] OECD (2024), FDI in Figures, https://www.oecd.org/content/dam/oecd/en/topics/policy-sub-issues/fdi/FDI-in-Figures-April-2024.pdf/_jcr_content/renditions/original./FDI-in-Figures-April-2024.pdf.
[2] OECD (2022), International investment implications of Russia’s war against Ukraine, https://www.oecd.org/en/publications/international-investment-implications-of-russia-s-war-against-ukraine_a24af3d7-en.html.
[4] OECD (2021), OECD Business and Finance Outlook 2021: AI in Business and Finance, OECD Publishing, Paris, https://doi.org/10.1787/ba682899-en.
[6] OECD (2021), Transparency, Predictability and Accountability for investment screening mechanisms, https://www.oecd.org/en/publications/transparency-predictability-and-accountability-for-investment-screening-mechanisms_61175d59-en.html.
[3] OECD (2020), “Acquisition- and ownership-related policies to safeguard essential security interests: Current and emerging trends, observed designs, and policy practice in 62 economies”, OECD Working Papers on International Investment, No. 2020/1, OECD Publishing, Paris, https://doi.org/10.1787/d35bdcb0-fr.
[1] OECD (2020), Investment screening in times of COVID-19 and beyond, https://www.oecd.org/content/dam/oecd/en/publications/reports/2020/07/investment-screening-in-times-of-covid-19-and-beyond_c3324953/aa60af47-en.pdf.
← 1. See for country-specific information the OECD FDI Regulatory Restrictiveness Index (FDI RRI) at https://www.oecd.org/en/data/indicators/fdi-restrictiveness.html
← 2. More details about these developments and the emerging concerns are available in (OECD, 2020[3]).
← 3. Lithuania’s National Security Strategy (as amended in 2021) recognises the need to “develop and to effectively implement a system of control over foreign investments and transactions in strategic (…) and their protection zones come only from investors who (…) have passed the national screening mechanism.”
← 4. The European Economic Security Strategy underlines concerns associated with certain foreign investment that can generate “Risk of disruptions or sabotage of critical infrastructures, such as pipelines, undersea cables, power generation, transportation, electronic communication networks, that undermine the secure and reliable provision of goods and services or data security in the EU.” Similarly, the Netherland’s 2023 Security Strategy highlights needs to “Strengthen the protection of critical infrastructure against unwanted foreign takeovers, mergers and investments by bringing newly designated critical providers under the scope of the Investments, Mergers and Acquisitions Security Screening Act”.
← 5. The Swedish 2024 National Security Strategy recognises the need to increase “awareness of intelligence-related threats and the risks of undesirable investments, acquisitions and unlawful technology transfers is an important instrument to strengthen economic security”.
← 6. As an example, in the context of a recent reform of its investment screening legislation, Canadian authorities announced that: “The Government of Canada has committed to promoting economic security and combatting foreign interference by modernizing the ICA [the Investment Canada Act] to strengthen the national security review process and better mitigate economic security threats arising from foreign investment.” Similarly, Lithuania’s National Security Strategy (as amended in 2021) mentions: “The influence of foreign states in creating and maintaining economic and energy dependence and the threats that such dependence poses to national security remain relevant, and their management requires particular attention in terms of assessing compliance with national security interests.”
← 7. This chapter is based on policy observations in 83 economies: Andorra, Argentina, Australia, Austria, Belgium, Brazil, Bosnia and Herzegovina, Bulgaria, Brunei Darussalam, Cambodia, Canada, Chile, P.R. China, Colombia, Costa Rica, Croatia, Czechia, Denmark, Ecuador, Egypt, El Salvador, Estonia, Fiji, Finland, France, Germany, Greece, Guatemala, Honduras, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Japan, Jordan, Kazakhstan, Korea, Kosovo, Lao PDR, Latvia, Lithuania, Luxembourg, Malaysia, Malta, Mauritius, Mexico, Moldova, Morocco, Myanmar, the Netherlands, New Zealand, North Macedonia, Norway, Panama, Paraguay, Peru, the Philippines, Poland, Portugal, Romania, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Chinese Taipei, Thailand, Timor-Leste, Tunisia, Türkiye, Ukraine, the United Kingdom, the United States, Uruguay, Viet Nam, and the European Union. For certain aspects, a subset of jurisdictions is chosen.
← 9. On 25 March 2020, the EU Commission published a Communication that provides guidance to Member States on how to achieve adequate protection of assets that are crucial for European security and public order in the context of the economic shock caused by the COVID-19 pandemic. For instance, France, Germany, Japan, Poland and Spain made permanent changes to their investment screening mechanisms in response to the new situation.
← 10. Without always making explicit changes to rules and legislation, some countries announced that they would pay careful consideration to foreign acquisitions by investors controlled by or subject to influence by Russia or Belarus when implementing their investment screening mechanisms (and perhaps even more so in sectors that are currently particularly vulnerable to security risks, including the defence sector, the energy sector and dual‑use technologies). Canada published a Policy Statement on 8 March 2022 in that regard and the European Commission called on all EU Member States to pay particular attention to these threats in a Communication of 6 April 2024.
← 11. For instance, lists of critical and emerging technologies presenting potential security risks were made public in the United States and in the European Union.
← 12. Under the Investment Safety Assessment Act, mergers and acquisitions (VIFO Act), the Netherlands introduced a screening framework that applies more stringent rules to operations resulting in direct or indirect possession or control of no less than 10% of the voting rights in companies active in a list of “highly sensitive technologies” annexed to the Decree on the scope of application of sensitive technology.
← 13. Korea maintains rules under its Act on the Prevention of Divulgence and Protection of Industrial Technology which include a technology-specific mechanism to oversee foreign acquisitions of certain emerging and critical technologies. Under Executive Order 14105, the United States has established a new national security programme that prohibits certain transactions and requires notification of certain other transactions by US persons into certain entities located in or subject to the jurisdiction of a country of concern and involved in semiconductors and microelectronics, quantum information technology, and artificial intelligence.
← 14. For instance, the EU-US Trade and Technology Council, which includes foreign direct investment screening as an area of co‑operation, serves as a transatlantic forum for the EU and the United States to collaborate and co‑ordinate different approaches on key technology issues.
← 15. For example, Italy saw a thirty-fold increase of notifications related to CETs between 2014 and 2022, with only four such transactions notified in 2014, against 122 in 2022. For Italy, CETs include those categorised in its annual reports to the Italian Parliament as: defence technology; communications; aviation and aerospace; telecommunication engineering; defence industry components; 5G technologies; pharmaceuticals and biotech; laser technologies; engineering technologies; cybersecurity; drone manufacturers; robotics; and cloud computing.
← 16. In Canada, the number of cases resulting in Section 25.3 orders grew from seven cases in 2016 to 33 cases in 2022. For Canada, its Annual Reports categorize its investments as: communications equipment manufacturing; architectural, engineering and related services; scientific research and development services; investigation and security services; and computer systems design and related services, some of which include CET investments.
← 17. Developments in Spain are illustrative of this trend: The government recorded just one notification related to a company involved in the supply of critical inputs in 2020, but over 50 in 2023. For Spain, critical inputs include those categorised as “fundamental inputs” (“insumos fundamentales”). Recorded declarations and notices for the United States in critical inputs sectors as designated by the OECD’s formulation more than doubled from 20 in 2019 to 49 in 2022. For the United States, the OECD identified “critical inputs” to include the following sectors in CFIUS’ annual reports: oil and gas extraction; non-metallic mineral mining and quarrying; electric power generation, transmission and distribution; mining (except oil and gas); petroleum and coal products manufacturing; and other non‑metallic mineral product manufacturing. In Canada, the number of cases related to metal ore mining and non-metallic mineral mining and quarrying that were subjected to increased scrutiny under the Section 25.3 orders rose from five in 2016 to 28 in 2022. Critical minerals fall into the category ‘metal ore mining and non-metallic mineral mining and quarrying’, but which of the recorded cases relate to critical minerals cannot be identified in the publicly available deducted from the reported case numbers.
← 18. Parliament of Finland, “The Government's proposal to Parliament to amend the Act on the Monitoring of Foreign Acquisitions” (2020), p.5. Data for 2023 calculated based on Finnish Ministry of Economic Affairs and Employment “Screening of foreign corporate acquisitions in Finland – Annual report 2023”, 14 June 2024.
← 19. Ministère de l’Économie et des Finances, “Les chiffres clés des IEF en 2020”, 24 March 2021. The share in total investment projects, not communicated by the Ministry in the context of the key figures is revealed in France Stratégie (2021), “Comité de suivi et d’évaluation de la loi PACTE-Deuxième Rapport”, p.103. It is not clear how the overall annual number of FDI transactions is assessed, that is, which criteria need to be fulfilled to include a given transaction in the count of the base number of annual transactions.
← 20. For France, Fiche d’impact générale on the Décret relatif aux investissements étrangers soumis à autorisation préalable (ECOT18167RD) (October 2018). Germany: Draft 1st Amendment of the Foreign Trade and Payments Act (AWG) (2020), p.3. The Government of Italy noted that the inclusion of certain communications assets under the scope of the review mechanism has contributed to increasing caseload (Relazione concernente l'attività svolta sulla base dei poteri speciali sugli assetti societari nei settori della difesa e della sicurezza nazionale, nonché per le attività di rilevanza strategica nei settori dell'energia, dei trasporti e delle comunicazioni (Anno 2019), p.18).
← 21. E.g. Italy (Relazione concernente l'attività svolta sulla base dei poteri speciali sugli assetti societari nei settori della difesa e della sicurezza nazionale, nonché per le attività di rilevanza strategica nei settori dell'energia, dei trasporti e delle comunicazioni (Anno 2019), p.19).
← 22. E.g. Italy, Presidenza del Consiglio dei Ministri, “Relazione sulla politica dell’informazione per la sicurezza 2020” (February 2021), p.47.
← 23. Bundesministerium Digitalisierung und Wirtschaftsstandort, “Schramböck: Erste positive Bilanz nach einem Jahr Investitionskontrollgesetz und neun Monaten EU-Kooperationsmechanismus”, media release, 9 August 2021.
← 24. In 2022, the overwhelming majority of transactions subject to scrutiny appear to be authorised without obligations or conditions in most jurisdictions that report data on the implementation practice of their screening regimes (e.g., 98% in Germany, 92% in Italy, 86% in Spain and 98% in the United Kingdom). In some jurisdictions, the share of transactions to which obligations are attached is significantly higher (e.g., France reports a share of 44% for 2023, Direction Générale du Trésor, “Contrôle des Investissements Étrangers en France – Rapport annuel 2024”). Different designs of screening policies are likely to contribute to different outcomes, which are thus not directly comparable.