The European Union has approved new rules for its member states for the screening of foreign investment, its first attempt to create an entity similar to the Committee on Foreign Investment in the U.S., which monitors foreign investments on national security grounds.

The new rules, designed mainly with China in mind, will require the 28 E.U. member states to inform the others when they are screening foreign investment projects for security reasons under their national rules. The European Commission will also have the right to issue opinions on how to handle foreign investment where it affects more than one member state or involves an E.U.-wide project, such as the Galileo satellite communication system.

Ministers from the E.U.'s 28 national governments agreed to the new rules on Tuesday. They will take effect in October 2020.

The law comes in response to pressure from French, German and Italian governments for E.U.-level control of foreign investors, especially from China, that buy into European companies. Those countries lobbied the European Commission for an E.U.-level screening mechanism, but there was strong pushback from a number of smaller countries, including Greece, Hungary, Portugal and Finland.

Greece and Portugal, two countries that have been through financial crises in recent years, have turned to Chinese companies as potential buyers of their state-owned and private companies as other international investors have stayed away.

The final agreement was a compromise among the member states. At the heart of the legislation is a cooperation mechanism where member states can share information with each other and the European Commission about acquisitions. Member states will have to inform the others if they are carrying out screening under a national programme. Another member state can request information about the proposed transaction and, in some cases, this information can be shared with all EU members.

The European Commission will be able to give its opinion to member states about how to treat foreign investments where they involve several member states or when EU projects, such as the Galileo satellite system, are involved.

The commission will not have the power to block acquisitions, however. That power will remain with national governments.

National authorities will also be able to decide whether to set up national screening schemes and what form they take.

In an earlier draft of the legislation, all EU countries would have been required to set up a national screening system according to a common set of principles.