British Foreign Investment Policy Post-Brexit: Treaty Obligations vs. Bottom-Up Reforms

Abstract

Although the competence to negotiate investment protection treaties was partially delegated to the EU with the Lisbon Treaty, Brexit is likely to put the competence back in the hands of Whitehall. This raises two questions. First, what should the British government do with its existing stock of bilateral investment treaties (BITs)? And second, how should the UK approach negotiation of new investment treaties? Answers to both questions require the government to carefully assess whether investment treaties provide considerable net benefits compared with other foreign investment policies. This is particularly important given the scarce bureaucratic resources and political capital available to pursue international economic policies post-Brexit. To help with this assessment, the government should consider undertaking two preliminary analyses before deciding on the course ahead: (i) a comparison of the protections offered under international investment law with those offered in UK law; and (ii) a comprehensive and carefully construed survey of British foreign investors regarding the role of investment treaties for their operations pre- and post-establishment. The latter task is particularly important in order to understand whether, and to what extent, investment treaties do in fact provide tangible benefits to a broad section of British outward investors compared with other initiatives to assist with the promotion and protection of foreign investment.