Tit for tat approach to foreign investment expected in 2017, as governments prepare to get hands on with markets gone wrong

 
Hayley Kirton
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"Thank but no thanks": Governments are expected to take a closer look at overseas investment this year (Source: Getty)

This year could mark a move towards more protectionist attitudes, with governments closing the door on countries they feel give their own firms a raw deal, a report out today cautions.

Law firm Freshfields Bruckhaus Deringer's Global Antitrust report highlights a shift towards protectionism, as new trade deals begin to take shape following both Donald Trump's surprise election victory and the UK's vote to depart the EU last year, along with an increased willingness of governments to step in and fiddle with markets they deem not to be working as they should.

Deirdre Trapp, a partner in the firm's antitrust, competition and trade practice, told City A.M. that governments would increasingly be looking for "reciprocity between partner countries".

"In situations where a domestic company would not have the opportunities abroad that a company in that third country wants to try and obtain here, I think they could face a more sceptical and critical review now," Trapp added.

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Trump has already said he is less than impressed with AT&T’s $85bn (£69.8bn) acquisition of Time Warner, and that he would be willing to put his foot down to stop the mega deal going through.

Freshfields believes businesses should assess what risks they will be exposed to should there suddenly be more pushback from their global trading partners, and should prepare to make any "asks" clear to the government before it pulls its chair up to the Brexit negotiating table.

However, the report also notes that, although governments may wish to take a closer look at global deals, particularly in key industries such as pharmaceuticals, telecoms and energy, they might not have the resources to actually do so.

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Soon-to-be President Trump has already indicated a hiring freeze for federal agencies, while the needs of the UK's Competition and Markets Authority could be placed on the backburner as the country turns its attention to the process of leaving the EU.

Trapp added Brexit threw an additional spanner in the works as it raised question marks around what level of worksharing the UK could hope for with the EU on big cases going forward.

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