Written evidence submission from The Institute of Export and International Trade (DTD0017)

House of Commons Select Committee on International Trade

Inquiry into Digital Trade and Data

 

Submission by the Institute of Export & International Trade

February 2021

 

  1. The Institute of Export & International Trade is the professional membership body representing and supporting the interests of everyone involved in importing, exporting and international trade.

 

  1. Offering a unique range of individual and business membership benefits and a world-renowned suite of qualifications and training, the Institute is the leading authority in best practice and competence for businesses trading globally.

 

  1. The Institute’s mission is to enhance the export performance of the United Kingdom by setting and maintaining professional standards in international trade management and export practice. This is principally achieved by the provision of education, training and practical business support services. The Institute is a registered charity.

 

  1. The digital marketplace is an essential part of today’s international trade landscape. The rise of e-commerce platforms, the growing servitization of goods trade, and advances in technology have affected the way businesses engage in overseas markets. The Government estimates that the UK had a surplus of £114 billion in “potentially ICT-enabled” services trade in 2018.

 

  1. We welcome the fact that the Government is prioritising digital trade in negotiations. We have provided services, on behalf of Scottish Enterprise, to businesses aiming to navigate the post-Brexit trade in services environment. The recent bilateral agreement with Japan includes advanced digital provisions covering areas such as net neutrality and anti-data localisation. The CPTPP – which the UK hopes to join next year – also includes innovative digital trade provisions. We also welcome the setting up of so-called tech bridges, such as those between the UK and Australia and the UK and Singapore. However, an EU decision on data adequacy equivalence is yet to be made, and even if (as we would hope and expect) the UK is granted this, business and consumers can expect a degree of ongoing uncertainty over data flows.

 

 

What are the main barriers faced by UK businesses engaging in digital trade?

 

  1. Potentially the biggest barrier that will face UK businesses when trading digitally is the restriction of data flows, often reflected in demands for data localisation. These protectionist policies are a constraint on local and global growth and potentially threaten the global interoperability of information technology systems that underlies so much of the economy that has emerged over the last three decades. Rights to privacy, and the rights of countries to guarantee them to their citizens, must be respected – indeed proportionate legislation promotes trust in business - but it should be possible to do this in ways that do not impinge on the ability of businesses to transfer vital data across borders.

 

  1. These barriers are likely to have a disproportionately large dissuasive effect on SMEs who are unlikely to have access to the sources of advice to enable them to negotiate complex rules and so are therefore more likely to take a decision not engage in markets where data does not flow freely or predictably. The multiplicity of different regimes, in and of itself, adds a layer of complexity. We believe that there is a need for a single point of information (with useful advice and insight) for SMEs and would be keen to work with Government to meet it.

 

 

What opportunities does digital trade present for UK businesses?

 

  1. As a training provider, much of what we offer is already offered digitally, a trend that has been speeded up by Covid 19 but also an increase in the number of students studying IOE&IT courses around the world: the IOE&IT is an exporter of education services to Africa, the Americas and Central Asia.

 

  1. Digitalisation of customs and trade procedures enables the simplification of those procedures and reduces the time and costs involved. But digitalisation also offers the prospect of using the data created by trade, including customs data, to create new opportunities with business advantages. There are opportunities to use the data and documentation requirements for process optimisation and the better allocation of resources to improve efficiency; both within companies and between them in complex supply chains. There will also be opportunities to use data to transform activities in fields such as risk management. Indeed, there is an opportunity to create new businesses and new business models using such data.

 

  1. There are also opportunities for Government in using data to better understand trade in both goods and services and prioritise support. Data deployment is increasingly crucial in sectors where the UK has a competitive advantage, such as Healthcare and Fintech, and this must present a trading opportunity for the UK.

 

 

What approach(es) should the UK take to negotiating digital and data provisions – including those concerning the free flow of data, protection for personal data, net neutrality, data localisation, and intellectual property– in its future trade agreements?

 

  1. The UK should look in future trade agreements to
  1. Seek to maximise the ability of the UK’s world leading education and training services sector to offer training and internationally recognised certification in a range of regulatory and compliance fields.
  2. Make provisions to facilitate the free flow of data, consistent with maintaining a reasonable standard of privacy and protecting national security. 
  3. Minimise, or ideally eliminate, requirements for data localisation.
  4. Promote regulatory cooperation – including the making of mutual adequacy/equivalence decisions in a timely and transparent manner.
  5. Provide strong protection for intellectual property rights.

 

 

What does the UK-Japan Agreement indicate about the UK’s approach to digital trade and data provisions in future trade negotiations?

 

  1. We welcome the inclusion of digital services in the UK-Japan agreement and believe that the UK should seek to replicate such chapters in future agreements, and updates of agreements. There is a need to ensure that digital trade and trade in services forms an integral part of the SME chapters of trade agreements going forward.

 

 

What approach should the UK take towards renewing the WTO’s moratorium on customs duties on electronic transmissions?

 

  1. The UK should support the renewal of the moratorium on customs duties on electronic transmissions, which has been an enabler of the growth of the world digital economy.

 

 

What objectives should the UK have when negotiating digital and data provisions during its accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)?

 

  1. We welcome the Government’s intention to join the CPTPP which represents an ambitious step towards increasing the UK’s access to some of the world’s fastest growing markets. However, care should be taken in negotiation not to call into question the issue of the adequacy of the UK’s data regime vis a vis the EU. This need not be a binary decision, given the precedents of Canada and Japan, but data adequacy with the EU is a key part of enabling UK companies to do business digitally in the bloc.

 

 

 

 

February 2021