MPs have strongly criticised the government for failing to prepare a policy on international investment agreements ready for Brexit, which the new administration has pledged will happen “come what may” on 31 October.
The International Trade Committee (ITC) said it was “alarmed” that ministers have not set out “even basic lines of policy” on issues such as the degree of regulation there should be on investment from firms that might pose a security risk.
Britain will have to negotiate all of its trade and investment agreements for itself once it leaves the European Union. International investment agreements are treaties that set out the rights of investors and responsibilities of governments.
They have been highly controversial in recent years due to rules on protecting and liberalising investment. For example, the US-EU TTIP deal, which has been put on hold, drew fire for proposing that companies could sue governments for lost profits.
The ITC, which scrutinises the Department for International Trade (DIT), said in a report today that the UK must work out its position on foreign investment “so it is ready to strike deals in the event of a no-deal Brexit”.
A spokesperson for investment managers body the Investment Association said: “The report makes important recommendations on investment protections and we know that it is an issue the government are looking at closely.”
DIT has said it cannot establish a policy on international investment until it has left the EU due to the bloc’s rules. But the report said there is “no credible legal basis for this argument”.
A DIT spokesperson said: “The UK is an incredibly attractive destination for foreign direct investment, as shown by a range of analysis by independent experts.
“As the Prime Minister has said, we are ready for no deal. We are building on the 90 bilateral investment agreements we have already secured with countries across the world.”
The report also argued for a degree of regulation concerning inward investment that risks economic harm or damage to national security, as is alleged by some in the case of Huawei’s potential involvement in the UK’s 5G network.
The Committee’s report says it is important to “balance promotion of inward investment with safeguarding national security”. It recommends the government sets out an “investment screening regime” and picks a minister who will take “the ultimate decision on whether to block an investment”.