Australian negotiators agreed to scrap screening of US proposals to set up new businesses and increased the threshold for takeover bids requiring official approval to $800 million.Department of Foreign Affairs and Trade (DFAT) notes also appear to drop banking from the list of exempt industries, raising doubts about whether Aussie banks will be fair game for takeovers.Analysts were still awaiting detail of the FTA Monday, but, if confirmed, the omission would put banks on the same footing as other industries, scrapping the need for special consideration.The Foreign Investment Review Board (FIRB) is currently required to approve takeovers of Australian companies worth more than $50 million, and new business proposals worth more than $10 million.The change in the threshold would allow companies such as gold miner Oxiana, today valued at just under $800 million, to be taken over without having to pass any regulatory hurdles.Firms including newspaper publisher Rural Press and Australia's biggest cement and lime producer, Adelaide Brighton, could also be vulnerable if their share price dipped slightly.The US estimates nearly 90 per cent of investment proposals over the last three years would have escaped scrutiny under the changes.HSBC chief economist John Edwards welcomed the proposed change as he said foreign investment rules were unduly bureaucratic, but warned there could be a political backlash."Unless you wanted to take over Woodside (Petroleum), it would mean most US investment would not be screened at all," he said."We are effectively withdrawing any scrutiny of greenfields projects on in Australia on foreign investment grounds."The investment concessions could also be extended to countries including Japan and New Zealand.Treasurer Peter Costello rejected a $10 billion Royal Dutch/Shell bid to take over Woodside, operator of the North West Shelf natural gas project, in 2001, saying it was not in the public interest.Dr Edwards said there also doubt about whether the FTA would establish a disputes panel, effectively allowing companies to appeal treasurers' decisions.Banks have special status under existing foreign investment rules, along with other sensitive industries such as media, telecommunications, transport and defence.Takeovers and acquisitions of Australian banks are assessed by FIRB on a case-by-case basis.But DFAT notes on the FTA make no mention of banking, although they specifically say foreign investment in property, the media and by foreign governments will continue to be screened regardless of value.Industries exempt from the looser foreign investment rules are listed as telecommunications, transport and defence, while caps on foreign ownership in the media, Telstra, Qantas and airports will stay.The US is the biggest source of foreign investment in Australia, with $30.5 billion worth of proposals lodged in 2002-03.FIRB figures put US direct investment in Australia at $90 billion, while Australian firms invest $74 billion in the US.Treasurer Peter Costello's office was not immediately available for comment.