Central and Eastern Europe (CEE) has long been an attractive destination for foreign investment, particularly in manufacturing industries such as automotive, batteries, electronics and defence. Korean companies have played an important role in this development, establishing production facilities and joint ventures in countries such as Hungary, Poland, the Czech Republic and Slovakia.

In recent years, however, economic security has become an increasingly important policy priority for the European Union (EU). While the EU remains committed to attracting foreign investment, it is also seeking to strengthen its oversight of investments that may affect security or public order, particularly in strategic sectors such as critical infrastructure, advanced technologies, energy, raw materials and defence.

The EU introduced its first EU-wide framework for foreign direct investment (FDI) screening under Regulation (EU) 2019/452, which became fully applicable in October 2020. However, the existing framework left considerable discretion to individual Member States, resulting in significant differences in national screening regimes.

To address these differences, the EU adopted Regulation (EU) 2026/1386 on the screening of foreign investments in the Union on 17 June 2026. The Regulation was published in the Official Journal on 26 June 2026 and entered into force on 16 July 2026. Most of its substantive provisions will apply from 17 January 2028, giving Member States time to adapt their national legislation.

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