FDI Recalibrated: EU and New Zealand Refine Investment Gateways with Strategic Conditions and Risk-Based Screening

Major Western economies are recalibrating their approach to foreign direct investment (FDI), shifting from broad restrictions to more nuanced frameworks that balance a pro-investment stance with strategic national interests. The European Union and New Zealand have recently unveiled new measures that exemplify this trend, focusing on conditional approvals and risk-based assessments.

 
On March 4, 2026, the European Commission proposed the ‘Industrial Accelerator Act,’ a new set of measures designed to bolster the EU’s industrial base. While affirming its openness to FDI, the proposal introduces specific conditions for large foreign investments of at least €100 million in strategic sectors like electric vehicles, batteries, and critical raw materials. According to the Commission, these conditions apply to investors from non-EU countries that control over 40% of the global manufacturing capacity in these areas. To gain approval, such investments must demonstrate the creation of high-quality jobs, drive innovation, facilitate technology transfer, and adhere to local content requirements, ensuring value is created within the EU.

Meanwhile, New Zealand is implementing a new directive aimed at streamlining its investment process while sharpening its focus on security. Effective March 6, 2026, a new Ministerial Directive Letter resets how the Overseas Investment Act is applied, confirming a “pro-investment stance,” according to a brief from Russell McVeagh. The directive mandates the Overseas Investment Office (OIO) to adopt a risk-based approach, granting consent as quickly as possible for low-risk transactions to support the government’s ‘Going for Growth’ program. Conversely, the directive calls for heightened scrutiny of investments that could pose a risk to national security or public order, particularly those involving opaque ownership structures or strategically sensitive assets. This dual approach signals a move towards a more permissive but highly risk-focused overseas investment regime, reflecting a sophisticated global trend of actively shaping, rather than simply blocking, foreign capital inflows.