EU UK digital, UK trade & climate, UK trade politics, Week in London column

Week in London: UK green trade, Oz deal, data privacy

There’s not only the Northern Ireland drama playing out in UK trade.

Carbon leakage ‘requires global solution’ – Trevelyan

The UK has once more reiterated its desire to see a multilateral approach to preventing carbon ‘leakage’ in international trade, rather than replicating the unilateral carbon border adjustment mechanism approach pursued by the EU.

In a speech on ‘Green Trade’ in London on Wednesday (18 May), international trade secretary Anne-Marie Trevelyan acknowledged that carbon leakage resulting from trade in products like steel and electricity was “a global problem – and it will require a global solution”.

Trevelyan told an audience at Bloomberg that growth in global trade had taken place “against a backdrop of persistent market failures – like the under-pricing of carbon – and distortions – like harmful fossil fuels subsidies”.

The UK’s trade chief noted that G7 ministers had last year “collectively recognised the risk of carbon leakage”, whereby businesses shift production to countries with lower emissions regulations.

Avoiding a ‘patchwork’ of carbon regulations

“The UK believes we should design a framework that properly addresses the issue alongside our international partners and avoid a complex patchwork of regulations that stifle business,” said Trevelyan.

“This would prevent UK emissions from being simply offshored, which of course harms global efforts to reach net zero. And it would enhance incentives for overseas producers to ‘go green’ and break into new markets.”

Britain is currently undertaking a review of its carbon border policies, with Lucy Frazer, Financial Secretary to the Treasury, telling a parliamentary committee in February that all options were still on the table.

But the international trade secretary stressed that “multilateral co-operation” was the only way to use global trade to make substantial environmental improvements.

Trevelyan noted that the UK’s ambassador to the WTO, Simon Manley, was recently appointed chair of the WTO Committee on the Environment – which, she said, “is going to be a really key role”.

Trevelyan also said the UK was calling on WTO members to launch negotiations to liberalise green trade and push for substantive outcomes as soon as possible.

Parliamentary wrangles over UK-Australia FTA ratification continue

The mini-drama within Westminster over the impending parliamentary ratification of the UK’s first autonomous free trade agreements is continuing – despite a new ‘concordat’ on the subject reached between the government and the two houses of the UK parliament.

The government has still not fixed a date for presenting the text of the UK-Australia FTA to parliament.

Anne-Marie Trevelyan said in a letter this week to the chair of the Common’s international trade committee, Angus MacNeil, that DIT officials were working “at pace” to complete the necessary preliminary steps.

Under Section 42 of the UK Trade Act, the international trade secretary is required to present a report which certifies that the agreement is compatible with all relevant domestic legislation, notably on food standards and the environment.

Setting precedents for parliamentary review periods

Once this report has been submitted, the government will submit the FTA to parliament. MPs have 21 parliamentary sitting days to ratify the trade agreement – or temporarily block its ratification, if they are dissatisfied with the deal negotiated on their behalf.

But there are no rules in place – and as yet no precedent – for the details surrounding this process. This concerns the length of time MPs would have to review the Section 42 report before the clock starts ticking on the 21-day ratification period.

Scottish nationalist MP MacNeil voiced anger that Trevelyan had yet to appear before the international trade committee to take questions on the UK-Australia FTA, and accused the government of seeking to avoid due scrutiny on the agreed deal.

In a newly-published letter to Trevelyan, the MP said the failure thus far to agree a time and date for a hearing was evidence of a “worrying and deep disrespect and disregard for Parliament and this Committee”.

TAC to deliver advice on UK-New Zealand FTA next month

In the meantime a second FTA is coming up hard on the heels of the UK-Australia accord for parliamentary approval.

Trevelyan stated this week that the Trade and Agriculture Committee would deliver its independent report on the compatibility of the UK-New Zealand FTA on 16 June. The TAC had offered its verdict on the UK-Australia deal last month.

‘Concordat’ on parliamentary process on FTAs fails to reassure

Attempts to formalise the procedures around parliamentary scrutiny and ratification of FTAs have been spearheaded by Baroness Dianne Hayter, chair of the House of Lords’ International Agreements Committee.

Hayter this week published a 11-point ‘concordat’ setting out the commitments which the government has made on information-sharing and scrutiny before, during and after FTA negotiations.

But the concordat is rather loose in its language. It seems unlikely to put an end to the disputes between parliament and government.

The text of the agreement commits the government, for example, to ensuring that the relevant select committees have “a reasonable amount of time” to scrutinise new FTAs. It offers assurances that the government “does not envisage” a new FTA proceeding to ratification without a debate first having taken place on it.

EU ‘adequacy’ alert as UK pushes ahead with new Data Reform Bill

The UK’s digital trade agreements with the EU and third countries looks set to come under scrutiny following the announcement of a new governmental initiative to reform the UK’s data privacy laws.

The Data Reform Bill was one of 38 legislative initiatives to be put forward – albeit only in outline form – in the Queen’s Speech last Tuesday (10 May), setting out the UK government’s legislative programme for the newly-opened 2022-23 session of parliament.

The legislation itself has yet to be drafted, but, in a briefing accompanying the Queen’s Speech, the government said the bill would “take advantage of the benefits of Brexit to create a world class data rights regime that will allow us to create a new pro-growth and trusted UK data protection framework that reduces burdens on businesses, boosts the economy, helps scientists to innovate and improves the lives of people in the UK.”

In an implicit but very clear criticism of the EU’s General Data Protection Regulation the briefing spoke of the need to design “a more flexible, outcomes-focused approach to data protection that helps create a culture of data protection, rather than ‘tick box’ exercises”. The UK has largely maintained the GDPR’s principles since Brexit.

A key government objective is to find ways of allowing data to be shared more efficiently between public bodies. A more populist aim would be to remove or limit the use of pop-up ‘cookie’ banners on websites.

Draft text for the new legislation is expected to be tabled before the end of the summer.

Clarifying rights and responsibilities around inter-company data transfer

TechUK, the industry body, has welcomed the thrust of the new plans.

“The government wants to provide more clarity around rights and responsibilities than at present,” Neil Ross, techUK’s Associate Director for Policy, told Borderlex.

“In many cases, the reason why companies do not share data with each other is because of uncertainty about their rights and responsibilities in this area. So we would welcome a clearer framework, and we think these would be practical and sensible changes.”

Concerns over loss of ‘adequacy’ status

But concerns have inevitably been raised as to whether any UK reforms would jeopardise the EU’s determination of ‘adequacy’ on the UK’s data privacy regime.

In a ruling last June, the EU acknowledged the UK data privacy system to be substantively equivalent to GDPR, hence allowing digital trade to flow freely between the UK and the EU.

But this determination includes a ‘sunset clause’ which will force a review of the adequacy ruling before June 2025.

“Any material deviation the UK adopts in relation to data protection does risk its adequacy status so I hope there will be a detailed and objective analysis undertaken to assess whether the benefits from UK’s data reform outweigh the risks of not continuing to have an adequacy status,” commented Sam De Silva, chair of the Law Specialist Group at the UK’s Charted Institute for IT.

‘Plenty of room for manoeuvre’

However, law firm Addleshaw Goddard said in a briefing that deviation from the specific terms of GDPR should not automatically be seen as a cause for concern in terms of the UK’s digital trade relations.

“Although a great many of the data protection and privacy laws that have emerged since 2018 have borrowed heavily from the GDPR model, the [EU’s] adequacy decisions in favour of New Zealand, Canada and Argentina are proof that there is plenty of room for manoeuvre within the concept of ‘essentially equivalent protection’,” said the AG briefing.

For techUK, Ross said that the new legislation, as he understood it, would make no technical changes to the UK’s data privacy system as compared with the current EU-compatible framework.

“Even if the UK makes the changes that it is proposing, its regime will remain more similar to the EU’s than any other in the world”.

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