EU UK digital, Freeports, UK WTO & 3rd countries, Week in London column

Week in London: Data bridge to Asia, India, Serbia, freeports

This week’s British trade policy highlights below.

UK ‘will build bridge’ between European and Asian data privacy frameworks

The UK has an ambition to build a ‘bridge’ in the area of digital trade and data protection between the more cautious EU approach to data privacy and the more open approach favoured by many Asia-Pacific countries.

This was the view expressed by John Whittingdale, minister of state for media and data, at a hearing this week of the House of Commons International Trade Committee.

The UK agreed comparatively liberal rules on data exchange as part of its ‘enhanced rollover’ trade agreement with Japan last year – and similar provisions form part of the Comprehensive and Progressive Agreement on Trans-Pacific Partnership, to which the UK aspires to accede.

But Whittingdale said there was no intention on the UK’s part to weaken its current data privacy laws, and no need to do so either.

“We see an opportunity to demonstrate, now that we are out of the EU, that it is possible to have high standards of data protection and to facilitate data exchange,” Whittingdale told the committee.

“Now that we can set our own laws, we are in a strong position to promote digital technology and data transfer, and we can do that through our influence in the WTO and our presidency this year of the G7. I don’t think it’s a question of choosing between the two.”

UK is ‘well along the road’ to EU data adequacy ruling

The minister also expressed optimism that the UK would soon achieve its objective of a full data adequacy ruling from the EU.

At present, a six-month ‘bridge’ is in place which effectively keeps in place the pre-Brexit status quo on data transfers between the UK and the EU, pending an EU decision on the adequacy of UK data privacy laws.

But these bridging provisions are set to expire at the end of June.

“We’re already well along the road to establishing a data adequacy decision,” Whittingdale assured MPs.

“We already had a Commission assessment of UK data protection laws which established that they were adequate. Now we have received the report of the European Data Protection Board, which has concurred with the Commission’s assessment.”

It only remained now for the EU Council of ministers to sign off on the agreement to allow the UK’s adequacy status to be confirmed, the minister said.

UK to pursue deeper trade relations with India despite cancellation of PM visit

The UK suffered a minor setback in its UK’s much-vaunted strategic ‘pivot’ towards the Asia-Pacific region this week with news that prime minister Boris Johnson had cancelled his planned visit to India next week.

This is the second time a planned visit by the prime minister to India has had to be cancelled because of the worsening coronavirus situation in that country – and it deprives the UK of an opportunity to pump-prime what the UK believes could be a highly profitable intensification of trade relations with the Commonwealth country.

A spokesman for Johnson stressed that despite the cancellation, “prime ministers [Narendra] Modi and Johnson will speak later this month to agree and launch their ambitious plans for the future partnership between the UK and India. They will remain in regular contact beyond this, and look forward to meeting in person later this year.”

India has been identified as a key target for the UK in its post-Brexit trade strategy of opening up emerging markets in Asia and elsewhere.

A full FTA with India is viewed by even the most ardent enthusiasts as a somewhat distant prospect,  given India’s notoriously cautious approach to trade liberalisation.

However, the UK sees huge potential benefits in even limited steps to open up India’s financial and legal services markets, or reductions in India’s sky-high tariffs on products like cars and Scotch whisky.

But near the top of India’s list of demands would be improved access to UK visas for Indian students and business people, which could be a political challenge for Britain.

‘Powerful commercial and geopolitical reasons’ for deal

The influential Institute of Economic Affairs this week published a paper supporting a UK-India trade agreement.

“There are important commercial reasons for this agreement, but perhaps more importantly, there are powerful geopolitical reasons. India could be brought into an alignment of nations including the CPTPP members as a bulwark against the negative impact of China’s market distortions and security policies,” the paper suggested.

UK secures belated ‘rollover’ trade deal with Serbia

The UK has concluded a rollover agreement with Serbia, allowing terms of trade between the two countries to revert to the preferential basis which was enjoyed prior to 1 January this year.

The Partnership, Trade and Cooperation Agreement, which was signed on Friday (19 April), will allow trade to resume on a largely tariff-free basis, after the UK left the EU customs union at the end of last year with no deal in place.

“This Agreement replicates the effects of the existing EU-Serbia Stabilisation and Association Agreement as far as possible,” the Department for International Trade said.

For the past four months, trade between the UK and Serbia – worth about £680 million a year – has been conducted on a non-preferential basis. The UK has applied WTO terms on its imports, while Serbia – which is not a WTO member – has applied its equivalent domestic tariffs.

Serbia now becomes the 67th country with which the UK has secured a rollover of the terms previously available under EU FTAs.

This leaving only three countries with which the UK has still to regain its former preferential market access, namely Algeria, Bosnia-Hercegovina and Montenegro.

Trade MPs give cautious welcome to freeports

The UK government’s programme to create a network of freeports across the UK has been given a cautious welcome by the House of Commons’ International Trade Committee.

In a report  published at the conclusion of an enquiry into the freeport programme, the committee said it “welcomed the Government’s clarity on its objectives” for freeports – but expressed concern over apparent confusion within the government as to which minister would have oversight of the programme.

The committee also expressed the view that it “remains to be seen” how successful freeports will be in achieving their primary aim of increasing trade and investment.

In March, the government announced the locations of the first eight UK freeports – zones into which intermediate goods may be imported free of tariffs, and in which a range of tax breaks to promote employment and investment in infrastructure are available.

But as freeports touch on issues of tax, planning and regional development as well as simply trade, the question of which department would have lead responsibility for the programme was viewed as a concern.

”We are concerned that, in light of the disagreement between the Treasury and the Department for International Trade about which department was best-placed to give evidence to our inquiry, the necessary cross-departmental collaboration and clear accountability required to implement the policy is absent,” the report noted.

Risk of economic displacement

A more substantive concern for the committee was the risk of economic displacement from other regions which are not freeports.

Warning that it was not possible to fully eradicate this risk, the committee said the government should “devise a framework for assessing economic activity occurring at freeports, distinguishing between that which is new and that which is relocated”.

The report also recommended that a full, independent evaluation of the implementation of the freeports policy should be commissioned within five years of the establishment of the first freeports.

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