In this final chapter of Part II, we analyse the key legal issues related to the allocation of international investment competence within the EU and examine their implications for policy efficiency and choices in external EU trade and investment relations. Following the Lisbon Treaty of 2009, the EU has gained competence for international investment treaty-making, which previously fell within the scope of the Member States’ competence. Given the relevance of international investment for the EU, on the one hand, and the cross-cutting nature of investment within the range of domestic policy areas on the other, the exercise of competences relating to foreign investment has been surrounded by controversies. Importantly, treaty-making procedure in the EU is not a matter of political inter-institutional preference but it is defined by the delineation of competences, grounded in primary law. The focus of our analysis in this chapter is placed on the internal EU institutional framework regarding competences between the EU and its Member States for investment and the conclusion of EU international investment agreements, and the role of the CJEU in defining the scope of EU policy. The content of EU international investment policy is then analysed in Part III.

This chapter provides a reassessment of competence allocation and exercise under the UK constitution. It shows how the existing allocation needs to be understood through the prism of EU membership, and supports previously provided by the EU’s governance system. In particular, the EU’s commitment to subsidiarity, under which decisions should be taken at the lowest effective level, and its openness to regional concerns, carved out space for the exercise of devolved competence within a system of cooperative multilevel governance. This is in stark contrast to the near autonomous coexistence of the different governments within the UK nation state. As the UK embarks on the process of leaving the EU, its internal distribution of power is subjected to a recentralisation of competence. Informed by the literature on comparative federalism, it argues that there is a need for an effective domestic replacement for the shared competence space previously provided by the EU’s cooperative federalist system of governance. Powerful challenges have come from an attachment to the model of autonomous coexistence of central and devolved levels of government, reinforced by a resurgent principle of Westminster parliamentary sovereignty. Without an effective commitment to shared governance however, the Union’s future is in serious doubt.