International Trade Committee launches probe into UK investment policy as Brexit approaches

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IBS Intelligence | 2 May 2018

International Trade Committee launches probe into UK investment policy as Brexit approaches

The International Trade Committee today launches an inquiry concerning the UK’s investment policy, which will examine the Government’s performance in promoting and facilitating inward and outward investment and its approach, upon UK exit from the EU, to negotiating agreements that liberalise and protect foreign investment.

International Trade and Investment (ITI) is the directorate within the Department for International Trade (DIT) responsible for providing support for exports and promoting and facilitating inward and outward investment. This role was previously carried out by UK Trade and Investment, but was absorbed within DIT following its creation in July 2016. A new Director General Investment post has recently been created, to support inward and outward investment.

ITI provides investors with a range of services to facilitate their entry into and retention in the UK. In addition, according to DIT’s Annual Report, the DIT Northern Powerhouse Team works to promote the North to attract inward investment, a Venture Capital team helps promotes investment in innovative UK businesses, and a digital investment service exists as part of the ‘Invest in GREAT Britain’ campaign. Since the Brexit referendum, there has been debate about the effect this work has had on levels of investment in the UK.

Investment liberalisation is largely pursued via bilateral investment treaties and free trade agreements (FTAs), which increase market access for investors of one party to other contracting parties’ markets and provide protection for foreign investors from certain actions by host states. One element of such agreements that has been particularly controversial is investor-state dispute settlement (ISDS). In response to criticisms regarding ISDS during the EU-US Transatlantic Trade and Investment Partnership and EU-Canada CETA negotiations, the EU has introduced the so-called ‘Investment Court System’ into CETA and the EU-Vietnam FTA.

Launching the inquiry, Committee Chair Angus Brendan MacNeil MP said:

“We have heard much about the value that the Government places on setting an independent trade policy, and in an unpredictable trading environment, the importance of getting this right is increasingly clear. In this uncertain environment, Government support is vital to maintain a healthy flow of investment into – and out of – the UK.”

“With all the talk about new trade deals, the important work of helping to identify investment opportunities and making them a reality can be forgotten, and our inquiry will seek to determine how the Government’s performance in this area should be measured, what markets should be prioritised, and how Brexit will impact on its current and future strategy.”

The Committee is seeking submissions on the following questions:

• How effective is DIT at promoting and facilitating inward and outward investment? How should its performance be measured?
• What kind of inward and outward investment, including in what sectors, should DIT prioritise in its investment promotion work?
• Which markets should DIT prioritise in promoting and facilitating inward and outward investment?
• How should the Government be working with the Devolved Administrations in promoting and facilitating inward and outward investment?
• What is the potential effect of Brexit on future investment flows to and from the UK? How should the Government respond?
• How is investment currently dealt with in the EU’s trade agreements, including in terms of both investment liberalisation and investment protection?
• What is the effect of the UK’s existing bilateral investment treaties (BITs) on investment flows and the UK’s ability to regulate in the public interest?
• What provisions on investment should the UK seek in future trade and investment agreements?