CELIS Update on Investment Screening and Economic Security – January 2026
By Helene Schramm with the help of intern Maria-Arancha Simiuc
INVESTMENT SCREENING MECHANISMS
United States – Washington Targets Sensitive Tech Investment Abroad Under New COINS Act
On 18 December 2025, the Comprehensive Outbound Investment National Security (COINS) Act 2025 was signed into law as part of the Fiscal Year 2026 National Defense Authorization Act. The Act requires enforcement by the Department of Treasury through implementing regulations. It also expands its competency to regulate outbound investments.
The required regulations should prohibit certain outbound investment and make others subject to notification. Regulations should address investments by US persons and their controlled entities in foreign persons from countries of concern that are working on sensitive technologies. Sensitive technologies are to be identified by Treasury from sectors including semiconductors, artificial intelligence systems, and quantum information technologies. Countries of concerns set out by the COINS Act are China, Russia, Iran, North Corea, and Cuba. It is unclear whether investments in Venezuela remain covered following recent political developments. Both the list of countries of concern and of technology sectors of concern have been expanded in comparison to earlier outbound investment regimes.
The COINS Act further authorizes a significant budget of $ 150 Million for the regulation of outbound investments in the following two fiscal years.
Japan – Planned Amendments to Japan’s Foreign Exchange and Foreign Trade Act Unveiled
On 7 January 2026, the advisory of the Japanese Ministry of Finance published a report on planned amendments to Japan’s Foreign Exchange and Foreign Trade Act. The amendments are expected to be signed into law shortly.
The report suggests narrowing the scope of regulation regarding businesses and transactions while introducing additional screenings, including indirect investments through foreign parent companies of Japanese subsidiaries. A distinction is made between high-risk investors and other investors. High-risk investors notably include investors connected to China. The proposed regulations, such as a two-step call-in mechanism, depends on the category the investor falls under. The report further addresses effective enforcement and post-transaction monitoring.
European Union – Provisional Deal on Stronger FDI Screening Rules, Targeting 2027 Entry into Force
On 11 December 2025, the Council of the European Union and the European Parliament reached a provisional agreement on the revision of the EU FDI screening regulation. The revision is expected to take effect in 2027, with formal approval still pending.
The updated regulation includes an obligation to establish national FDI screening frameworks across the EU. So far, FDI screening was not mandated by the EU FDI screening regulation. It further introduces a minimum scope for mandatory screening. Sensitive areas falling under the minimum scope are (i) dual use items and military equipment, (ii) hyper-critical technologies, such as artificial intelligence, quantum technologies and semiconductors, (iii) critical raw materials, (iv) critical entities in energy, transport and digital infrastructure, (iv) electoral infrastructure, and (v) a limited list of financial system entities.
Nevertheless, the member states maintain the authority to ultimately make the decisions on FDIs, the regulation only makes it mandatory to have a screening framework and include certain investments within its scope. As a response to the ECJ’s Xella ruling, the scope of the regulation is extended to EU investors owned or controlled by non-EU investors.
Furthermore, the revised FDI screening regulation includes provisions aimed at improving cooperation and interoperability as well as streamlining processes. For the purposes of information sharing between authorities, a shared database is to be established.
ECONOMIC SECURITY STRATEGIES
European Union & India – The World’s Largest Free Trade Zone Takes Shape
The EU–India trade agreement marks a strategic shift from tariff-cutting to economic security, resilience, and long-term diversification. Negotiations, first launched in 2007 and relaunched in 2022 amid rising EU–China tensions and the fallout from Russia’s invasion of Ukraine, were now concluded in January 2026, underscoring the deal’s strategic timing.
European Commission President Ursula von der Leyen called it the “mother of all deals,” while Prime Minister Narendra Modi described it as “historic,” reflecting its political as well as economic weight. Together, the EU and India represent nearly two billion people – about a quarter of the world’s population – and roughly 25% of global GDP, making this the world’s largest free trade zone. Beyond boosting trade, the agreement strengthens Europe’s economic security by diversifying supply chains away from concentrated dependencies in an era of geopolitical fragmentation. EU–India trade already surpasses €180 billion a year, supporting close to 800,000 jobs across the EU, and the agreement is projected to more than double EU goods exports to India by 2032. With around 90% of tariffs eliminated or reduced, European exporters stand to save roughly €4 billion annually while securing preferential access to the world’s largest and fastest-growing major market. The agreement also creates a more predictable business environment through simplified customs procedures, strong intellectual property protection, and preferential access to services markets such as finance and maritime transport. Crucially, it protects sensitive EU agricultural sectors while maintaining Europe’s strict health and food safety standards.
Looking forward, the draft text will be published by the European Commission following legal review and translation into all official EU languages. The Commission will then submit proposals on signing and concluding the agreement to the Council of the EU and the European Parliament. Formal signature will follow Council approval, after which the European Parliament must give its consent, while India completes its own internal approval procedures. The agreement will enter into force once both sides have completed these steps and exchanged notifications, with the final date published in the Official Journal of the European Union.
Alongside the free trade agreement, negotiations on geographical indications and investment protection – launched in parallel with the 2022 relaunch – are still ongoing, underscoring that the EU–India economic partnership is evolving beyond a single trade deal into a broader strategic framework.
United Arab Emirates and Qatar – Gulf States Join U.S.-Led Tech and Supply Chain Pact
In January 2026, Qatar and the United Arab Emirates signed the Pax Silica Agreement. Pax Silica is a technology-focused economic partnership aimed at strengthening supply chain security and reducing reliance on China for critical resources and infrastructure. The initiative is led by the United States to promote collaboration on AI and supply chain security.
The other signatories are Australia, Greece, Israel, Japan, the Republic of Korea, Singapore, and the United Kingdom. Canada, the EU, the Netherlands, the OECD, and Taiwan participate as non-signatory partners. Pax Silica is framed as a basis for future cooperation, including summits and shared principles, with the possibility of joint projects.
The new signatories, Qatar and the UAE, are important strategic partners due to their financial resources, energy supply, and geographical location along the India–Middle East–Europe Corridor.
European Union – EU Targets Raw Material Vulnerabilities With RESourceEU Action Plan
The RESourceEU Action Plan forms part of the EU’s efforts to reduce dependency for critical raw materials (CRMs). It was published by the European Commission on 3 December 2025 and follows the objective of diversifying CRM supply chains and minimizing disruptions. The RESourceEU Action Plan aims to accelerate the achievement of the goals set out by the 2024 Critical Raw Materials Act.
The European Commission has committed to promoting strategic projects contributing to the achievement of these objectives by supporting financing and implementation, for instance by streamlining and accelerating funding processes. To this end, partnerships with like-minded third countries are encouraged while risks of foreign interference by other third countries are highlighted. A particular concern is the dependency on China for CRM. The strategic partnership with like-minded third countries is suggested as a possible solution. The Action Plan sets out further concrete actions for diversifying CRM supply, including on circularity and the protection of the single market.
