It is probably fair to say that the Trade and Cooperation Agreement between the EU and UK has received a ‘mixed’ welcome from the various business sectors since its conclusion on Christmas Eve, and its entry into force on 1 January.
But for the digital and tech sector in the UK, the upsides of the deal are real.
According to Neil Ross, Head of Policy at UK business association techUK, the very presence of the deal, with its seven-page chapter covering digital trade in the EU UK deal is welcome news for tech entrepreneurs.
“We have quite a positive story to tell,” Ross told Borderlex in an interview.
The EU’s recent trade agreements do not go very far in matters digital trade. “What the UK got was a full digital trade chapter which covers areas like data flows and non-discrimination. It’s the most ambitious agreement on data that the EU has ever agreed in an FTA.”
While there were digital trade provisions included within the EU-Japan FTA, these were very publicly upgraded by Tokyo and London when the two sides concluded what was otherwise a ‘rollover’ of the EU-Japan deal in the second half of 2020.
‘We had less to lose than other sectors’
But why was the UK tech sector apparently so much more successful than other sectors in lobbying for a satisfactory outcome to the fraught TCA negotiations?
“Both the UK and EU wanted to become a bit more ambitious on digital trade. That made lobbying easier,” Ross noted. Given that the EU’s digital single market itself is not complete, “We had less to lose than other sectors did”.
A critically important element in the EU-UK digital trade relationship is ‘adequacy’ – the process whereby the EU acknowledges that a third country’s data protection provisions are sufficiently robust as to allow free transfer of data between the two parties.
However, in the negotiations prior to concluding the TCA the European Commission made great play of the fact that the adequacy ruling would be determined autonomously by EU officials, and would not form part of the TCA.
“But that’s not entirely true,” countered Ross. “The TCA does make reference to adequacy. The Partnership Council [the still-dormant body which will oversee the future EU-UK trade relationship] has powers, in its terms of reference, to make decisions on data flows. And that clause makes reference to any follow-up agreement in this area – i.e. adequacy.”
UK data adequacy ruling ‘will be delivered’
The current situation is that the EU has granted a de facto six-month extension of the status quo while the EU makes its decision on whether or not to grant adequacy. But Ross is clearly not losing sleep on the subject.
“There will be an adequacy decision given in the next six months,” he forecast.
“The main reason why the EU will want to grant us adequacy is that it makes the security partnership between us that much easier to manage. And ultimately, the UK and the EU have the same rules governing data security – the Global Data Protection Regulation. The UK is not going to move away from GDPR any time soon.”
Ross also pointed out that two other third countries with important tech links with the EU – Japan and New Zealand – have their own adequacy status coming up for renewal by the Commission soon.
“Frankly, if the UK fails to get agreement on this, then these other countries don’t stand much chance either,” the techUK official commented.
‘Same rules, different interpretation’ on GDPR
But how confident can the UK tech sector really be in this area, given the UK government’s strong ideological commitment to regulatory autonomy, and its apparent willingness to take radical steps to diverge from EU rules if it sees commercial or political benefit in doing so?
“There is no chance of the UK breaking away from GDPR,” Ross asserted firmly. “The UK was instrumental in designing those rules. In any case, adequacy is about providing equivalent levels of protection, not identical levels of protection.”
But Ross noted that GDPR was “very flexible”, and suggested that the UK was likely to take a fresh and less rigid approach to the application of the regulation.
“Same rules, different interpretation, is my prediction. I actually think the UK will manage GDPR better than the EU does.”
TCA ‘tilts balance in favour of trade’
The TCA’s provisions on tech include rules which outlaw the geo-location of data storage in either party’s territory, and which provide for the validity of e-signatures on most contracts, among other provisions.
“We’re really happy with the agreement,” Ross said. “It went further than some EU agreements – for example, there is a positive obligation to facilitate transfers. That’s very useful, as it tilts the relationship in favour of trade relationships.”
The audio-visual sector was excluded from the scope of the TCA – as from every other EU FTA – but Ross said that this was “not a massive loss,” noting that a lot of audio-visual sector trade was in any conducted at present via an extra-EU arrangement.
He judged the data provisions in the deal to be “roughly equivalent” to those in the much-vaunted UK-Japan deal agreed last year, and said that the only difference between the TCA provisions and those in the Comprehensive and Progressive Agreement on Trans-Pacific Partnership – to which the UK is aiming to accede – is that CPTPP allows for free flow of personal data.
“But this deal doesn’t get in the way of us joining CPTPP,” Ross stressed. “It simply means that the UK would have to ensure that data does not get passed on to any ‘non-adequate’ CPTPP member.”
‘We can be confident about the future’
The tech sector is facing a number of challenges at present – but the techUK official was adamant that the EU-UK trade relationship was not one of them.
“The biggest issues for tech at present are to do with technology adoption, a shortage of digital skills, and wider trade and business issues. These are not TCA-related,” Ross commented.
His conclusion was a positive one.
“There is no reason why, if we tackle the big issues well, we can’t be as effective as when we were in the EU. We can be confident about the future.”