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International Trade Committee reports on digital trade and data

28 June 2021

The International Trade Committee has today published its report on Digital Trade and Data.

Digital trade refers to the digitally enabled trade of goods and services and requires the movement of data across borders. The Government has repeatedly emphasised the importance of digital trade and data in its free trade agreement (FTA) negotiations.

The report examines the impact of new trade agreements on the protection of UK citizens’ data, the importance of a digital trade strategy and potential changes to the UK’s data protection laws.

Chair's comments

Commenting on the report, Angus Brendan MacNeil MP, Chair of the International Trade Committee, said:

“At a time when many of us are working, socialising and shopping online, digital trade and the protection of our personal data are becoming increasingly important.

“The benefits of digital trade are significant, particularly when goods and services are available in an instant and from the comfort of our homes. However, there can be costs to this convenience. We know there are concerns about the protection of personal data, as well as about unnecessary burden and bureaucracy placed on businesses by data protection rules.

“With the UK forging independent trade agreements, this is a pivotal moment for the Government to produce a coherent digital trade strategy, laying out the rules of engagement and how we can protect our data online. Transparency is key, and the Government should explain the impact of any new trade agreement on the UK’s ability to regulate digital trade and data.

“Naturally, as we come to scrutinise individual free trade agreements, digital trade and data will be a topic my Committee watches closely."

A digital trade strategy

While the Committee supports the Government’s focus on digital trade and data, it notes that there is no overarching strategy informing the UK’s approach. With the Government striking new trade agreements, the Committee believes this is a pivotal moment to craft a clear strategy on digital trade and data which will guide the development of the UK’s independent trade policy.

The Committee recommends that the Government produces and publishes a digital trade and data strategy which clarifies the UK's approach across all trade negotiations and how this approach interacts with domestic law.

Data protection in the UK

Data protection rules in FTAs are complex and open to diverging legal interpretations. The Committee recommends that, when FTAs are agreed, the Government publishes an assessment of the agreement's impact on the protection of citizens' data and ability of the UK to maintain its data protection regime.

Digital trade regulations are affected by a mix of domestic law and international commitments and new trade partners may allow the free flow of data to third countries. The Committee recommends that the Government publishes an assessment on the risk of UK citizens' data being passed onto third countries without sufficient safeguards when new trade agreements are signed, as well as outlining ways to prevent this from occurring.

Data adequacy with the EU

A data adequacy decision with the European Commission is a status granted which allows EU citizens’ data to flow into the recipient country without further safeguards.

While the Committee recognises the importance of maintaining a data adequacy decision with the European Commission – and welcomes the Government's progress in achieving a draft adequacy decision – there are concerns new trade agreements may undermine this arrangement.

The Committee recommends that the Government publishes an assessment of the potential impact of new trade agreements on maintaining data adequacy with the European Union.

Joining CPTPP

The Government is committed to joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). While the Committee recognises the opportunities accession to CPTPP could bring, acceding may require the UK to change the way it handles data, particularly EU citizens' personal data.

The Committee recommends that the Government states what changes it anticipates as a result of accession to CPTPP, including those related to the management of EU citizens' personal data and the subsequent impact on UK stakeholders.

Data privacy

Amending the UK’s GDPR law has the potential to create a simpler, more effective regulatory regime. The Committee welcomes the Government’s intention to build on GDPR, but recommends it sets out how the UK will depart from the EU’s GDPR while maintaining data adequacy and minimising regulatory burdens for businesses.

Digital Trade Q&A

What is digital trade?

Digital trade refers to digitally enabled, or digitally delivered, trade in goods and services. Such trade involves the movement of data.

What is the UK’s current data protection regime?

Data protection in the UK is governed by the UK GDPR. This is an almost direct verbatim copy of the EU GDPR, with minor adjustments made to make it UK-specific. For example, the UK Information Commissioner’s Office takes the role of the European Commission in handling enforcement.

The UK GDPR applies to personal data; data which could be used to identify a person directly or indirectly. Typical examples involve names and location data.

Under the GDPR, organisations which control, store, and organise personal data have a range of obligations related to when they can process data, and a number of rights they must give to the people whose data they are using.

How does a data adequacy decision with the European Commission work?

On 19 February 2021 the European Commission published a draft adequacy decision related to the UK. Representatives of the EU’s member states agreed to grant the UK an adequacy decision on 17 June 2021, allowing the European Commission to formally adopt the decision by the end of June.

The ‘bridging mechanism’ which temporarily allows data flows between the EU and the UK following Brexit expires at the end of June 2021.

What is CPTPP?

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a trade agreement signed in 2018 by eleven countries in the Asia-Pacific region. The eleven signatories have combined economies representing 13.4 percent of GDP. Only four members of CPTPP have not already signed or rolled over an FTA with the UK: Australia, Brunei, Malaysia, and New Zealand.

The digital and data provisions in CPTPP exemplify the Asia-Pacific approach to digital trade and have been replicated in the UK’s FTA with Japan. Some commentators classify the digital trade provisions in CPTPP as cutting-edge. Of the eleven members of CPTPP, three are considered data adequate by the European Commission.

What are the advantages to changing the UK’s GDPR laws?

The Government and some commentators have suggested that the UK might be able to change UK GDPR for the better while retaining adequacy with the EU. For example, there are suggestions that UK GDPR might be modified to make it simpler to follow for small businesses. The Committee also heard that the UK GDPR’s system of granting adequacy regulations – the UK’s version of the EU’s adequacy decisions – to third countries can be made more efficient.

Further information

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