Written evidence submission from CBI (DTD0022)



February 2021




  1. The CBI welcomes the opportunity to respond to the Select Committee’s inquiry into digital trade and data. The CBI is the UK’s leading business organisation, speaking for some 190,000 businesses of all sizes, sectors, and regions, that together employ around a third of the UK private sector workforce. The inquiry is timely given the significant opportunities in digital and at a time when the UK is relaunching itself on the world stage.

Digital trade can be a driver of post-Covid recovery

  1. The UK’s digital economy is worth £150.6bn[1] and is often cited as a key priority in any trade negotiation by the Department for International Trade (DIT). Digital trade will underpin growth in both the UK’s goods and services sectors. From SMEs growing sales through e-commerce, to UK firms being globally competitive in Fintech, the digital agenda is becoming increasingly fundamental to the UK economy. The significance of the cross-border free flow of data for innovation and collaborative research has been shown as the UK combats the Covid-19 pandemic. Looking ahead, with companies needing to find new sources of revenue and growth to fuel the economic recovery, embracing digital trade is a clear opportunity.
  2. The government has a broad programme now that the UK has an independent trade policy. With post-Brexit continuity agreements secured with over 60 countries, attention turns to the renegotiation of some of these trade deals, such as with Canada and Mexico. New FTAs are being pursued with the US, Australia, and New Zealand, while accession to CPTPP is seen as a top priority. In the modern day, digital trade and the free flow of data feature as key objectives in Free Trade Agreements (FTAs) and the CBI expects the UK government to put ambitious digital trade provisions at the heart of its objectives.
  3. The CBI and its members are supportive of this ambition and at the same time emphasise the continuing importance of the UK’s relationship with the EU, our largest trading partner, as we look to build back from the pandemic. The UK is an international leader for data flows, with the second largest data economy in Europe, worth £79bn to the economy.[2] Securing and retaining a data adequacy decision from the EU will help to maintain a stable regulatory environment, attract FDI into the UK, and enable a close trading relationship between the two partners.
  4. Equally, the UK’s Presidency of the G7 in 2021 presents a clear opportunity to drive forward the digital trade agenda on the global stage. With technical leadership, soft power, and high standards of data protection, the UK has an opportunity to foster a more collaborative, coordinated approach at an international level. Against a backdrop of increasing protectionism and fragmentation, the G7 is a chance for the UK to show leadership and broker a way forward on digital trade and data which supports recovery from the pandemic and reflects democratic values.  
  5. The CBI welcomes the strong focus on digital in the government’s approach to post-Brexit trade, the progress made in the UK-Japan FTA and the emphasis placed on digital in the UK-EU Trade and Cooperation Agreement (TCA). To continue capitalising on the opportunities in digital trade the UK needs to:

a.      See digital as a key enabler across the UK and global economy for trade in goods and services, and critical for wider UK objectives such as world-leading UK R&D, cooperation in health, delivering net zero and inclusive growth.

b.      Champion the free flow of data across borders supported by robust mechanisms, including maintaining data flows with the EU via an adequacy agreement.

c.      Make digital a priority in both trade deals and market access work through regulatory diplomacy.

d.      Ensure that the UK is a global leader and standards setter in digital trade through FTAs with New Zealand, Australia, the US and CPTPP, in a way which is consonant with UK democratic values and commercial standards e.g. IP.

e.      Sets its digital ambitions high for the 2021 G7, including to secure business resilience through trade facilitation.

f.        Make progress on e-commerce and telecoms central to efforts to relaunch the WTO under a new DG and make the case that digital is critical for inclusive growth and wider objectives like climate.

g.      At the same time be prepared to work in a vanguard of smaller groups to shape the future such as the Digital Economy Partnership Agreement (DEPA) between New Zealand, Chile and Singapore.

h.      Underpin the efforts above by:

i.            A successful domestic strategy (skills, infrastructure, regulation) which creates the competitive advantage the UK can exploit through trade.

ii.            Targeted trade promotion so that companies are aware of the opportunities in digital trade.

iii.            Resourcing the digital trade effort so that DIT has the skills it needs for trade policy and promotion and can build up its global network as it is doing in ASEAN.

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

  1. Cross-border data flows are the lifeblood of the modern economy, underpinning trade of both goods and services. The government is therefore right to prioritise data flows at it seeks comprehensive and ambitious Free Trade Agreements (FTAs). The legal and political landscape is moving fast, and the current system of international data transfers and privacy laws is a complex mesh, with a range of mechanisms under fire, harming businesses and consumers alike as global trade, investment, and cross-border collaboration on innovation are all stifled. The main barriers faced by firms, outlined in greater detail below, include:
  1. A potential failure to receive and maintain a data adequacy decision from the EU.
  2. A global increase in protectionism.
  3. An increasing cumulative regulatory burden.
  4. Market access barriers to telecommunications services.

EU adequacy remains the top priority for businesses

  1. Firms were pleased to see the UK-EU Trade and Cooperation Agreement’s provision for a bridging period to allow time to ratify an adequacy decision. Securing and retaining adequacy will enable a close future trading relationship between the UK and EU, playing an important role in everyday trade of goods and services as well as the development of innovative technologies such as AI. Failure to receive an adequacy decision from the EU will endanger sectors across the rest of the economy, forcing businesses to undertake expensive legal processes and make decisions about infrastructure and the provision of their services that lead to significant costs, and operational and technical burdens.

A global rise in protectionism risks stifling trade

  1. Businesses are concerned by the rise of data protectionism around the world. Positively, research from the European Centre for International Policy Economy (ECIPE) predicts that if countries lifted restrictions on the cross-border flow of data, there would be an average productivity gain of 4.5% across countries.[3] However, countries are increasingly introducing data policies restricting the flow of data across borders, which ECIPE’s Digital Trade Restrictiveness Index (DTRI) considers a key barrier to digital trade.[4] A third of measures are in the most restrictive category, requiring a company to use a local server for the processing of data or banning data transfers entirely.[5]



  1. While some restrictions on data flows may be appropriate to uphold consumer privacy and national security, businesses suffer burdensome red tape and costs where markets are protectionist, particularly around forced data localisation. Recent research by the International Regulatory Strategy Group (IRSG), made up of some of the UK’s leading financial and professional services firms, shows that data localisation measures are often bad for business and for customers.[6] Such requirements mean that data is hosted in less resourced and sophisticated local environments rather than more secure, centralised data centres. In addition to harming international players who trade across borders, a high cost of compliance due to localisation requirements may lead to a lack of investment in local economies, as well as harming smaller firms who can no longer make use of cloud data storage in other jurisdictions.

Greater regulatory cooperation and harmonisation can reduce firms’ compliance burden

  1. Regulatory cooperation is an integral part of facilitating cross border trade and will be a key instrument for the UK’s post-Brexit foreign engagement. The divergence in standards that results from lack of effective regulatory cooperation is one of the most significant barriers constraining services trade and market access.
  2. The opportunity for international regulatory cooperation to reinforce the UK’s wider trade policy is enormous, and international trade policy is often the vehicle to deliver international cooperation, whether through FTAs or other bi- and multilateral engagement. Tangible outcomes such as Mutual Recognition Agreements (MRAs) are vital government tools that can open doors for businesses. In the UK and internationally, the digital regulation and competition regime are undergoing seismic change to adapt to the rapid pace of digitisation and innovation. In particular, countries – rightfully – want to ensure citizens’ personal data rights and protections and are taking a range of approaches to secure these. Greater regulatory collaboration between UK regulators and their international counterparts in relevant jurisdictions (including the EU) can reduce market barriers, supporting trust between countries and a more consistent approach around applying rules and sanctions.
  3. Following the Schrems II judgement, the onus of assessing other jurisdictions’ adequacy has shifted onto businesses. This places a disproportionate burden on data importers and exporters to evaluate whether a third country’s legal regime is necessary and proportionate, impacting SMEs in particular. Firms would be greatly assisted by government and regulators – in this case, the ICO – providing greater certainty and stability by taking the lead in adequacy assessments, in addition to ICO guidance around the use of other transfer tools.

Market access barriers to telecommunications services exist in a number of ways

  1. As the GATS annex states, telecoms are the ‘underlying transport means for other economic activities’ such as e-commerce and digital trade. In places like the UK, liberalisation has gone hand-in-hand with competition and regulatory best practice, spurring the broader availability and affordability of communications services, as well as investment and innovation.
  2. Following the huge increase in internet traffic over the last 20 years, the UK and EU have put forward a proposal to review the 1990s WTO telecoms rules. Businesses support this initiative at the level of the WTO. Equally, the CBI supports ambitious and comprehensive telecommunications chapters in the UK’s bilateral trade agreements, which should set a benchmark that reflects the market openness and competitiveness of the UK’s telecommunications market. Regulators should act independently, transparently, and in a non-discriminatory way.

What opportunities does digital trade present for UK businesses?

  1. The government’s trade agenda has significant opportunities, both in the bilateral and multilateral space. With numerous bilateral negotiations already initiated and the UK’s formal accession to CPTPP underway, UK businesses see potential to gain market access around the world. The digital agenda can underpin expansion of UK firms overseas, from Fintech bridges to the digitisation of trade facilitation.
  2. From a strategic point of view, the CPTPP includes countries at the forefront of the digital agenda. The agreement should therefore be seen as joining a club of like-minded and ambitious nations in the digital space, with potential to go further, rather than an end in itself. The Digital Economy Partnership Agreement (DEPA) between New Zealand, Chile, and Singapore should be considered by the UK government in addition to CPTPP. Meanwhile, the Pacific Alliance is an excellent example of what can be achieved in creating a digital single market.
  3. At the WTO the e-commerce talks must make progress, and the rules-based system around services is severely out of date. Updating the GATS to include digital provisions and reforming the WTO telecoms rules is an important next step. A new US administration and a new WTO Director-General opens a narrow window of opportunity to unblock progress in Geneva ahead of this year’s WTO Ministerial. Business would welcome UK leadership in this area through the G7 and the CBI stands ready to support through its work leading the B7 group of international business associations as part of G7.  

Future-proofing international trade success by liberalising cross-border data flows

  1. Securing the free flow of data and prohibiting forced data localisation can stimulate digital trade, reducing costs and red tape for UK companies. While it is difficult to measure the value of data and data flows, research from the McKinsey Global Institute has estimated that data flows exert a larger impact on growth than goods trade, mainly through productivity increases.[7] The size of the prize when it comes to facilitating cross-border data flows will be significant for both individual firms and the wider economy unlocking productivity benefits, helping SMEs to enter new markets, and supporting the UK’s leading position as a hub for data flows (with McKinsey ranking the UK as the third most connected country globally for cross-border data flows).[8]

B2B and B2C e-commerce is a clear opportunity for business

  1. According to UNCTAD, global e-commerce hit $25.6 trillion in 2018, up 8% on 2017[9]. E-commerce sales, including B2B and B2C, made up 30% of global GDP that year. This trend will only accelerate in the short-term response to the pandemic. The government is therefore right to include world-leading chapters on e-commerce in bilateral trade agreements, and the UK-US FTA is a clear opportunity given the size of the consumer market. The USMCA agreement has a progressive chapter on e-commerce which will likely form the basis of negotiations for the US administration in the UK FTA. Many of the provisions included should form the basis of the UK’s approach to bilateral FTAs more widely, such as commitments to information and tech sharing, e-signatures, open government data, and consumer protection. The UK-Japan deal was positive in many of these areas.
  2. According to the United Nations Conference on Trade and Development (UNCTAD), the value of global B2B e-commerce in 2018 was $21 trillion, representing 83% of all e-commerce. Global supply and value chains depend on well-functioning transport, logistics, finance, communication, and other professional services that move goods and coordinate production along the value chain. In the digital economy almost all trade today is digitally enabled and therefore dependent on the exchange of data at a global scale. Consequently, the inefficient provision of B2B services, such as for telecommunications, cloud, cyber security, and other ICT inputs harm the cross-border trade of components, equipment, final goods and services.
  3. The e-commerce talks at the WTO are an opportunity to make significant progress at multilateral level, which would see significant benefits worldwide. The UK should support the discussions proactively and use its Presidency of the G7 in 2021 as a call to arms in creating a more functional WTO. There is a risk that discussions will become too laboured, and agreement is needed as soon as possible to support economic growth and recovery. A specific area of opportunity is to make progress on prohibiting the mandatory transfer of source codes, algorithms, or encryption keys as a condition for market access.[10]

Paperless trading can facilitate trade and support economic recovery

  1. In the context of Covid recovery, simplifying trade to maximise the ability of UK companies to reach new markets and find alternative revenue streams is vital. Paperless trading has the potential to significantly ease burden on business and be a driver of international trade.
  2. The UN ESCAP Framework Agreement on Facilitation of Cross-border Paperless Trade is potentially a very useful mechanism for this.[11] The UK government should also remove any remaining obstacles to the digitisation of trade transactions and align UK law with international best practice under the UNCITRAL Model Law on Transferrable Records (MLETR)[12]. The agreement is designed to facilitate e-commerce by improving the speed and security of contracts being transferred through “smart contracts”.

Protecting IP will mean capitalising on UK innovation

  1. The UK’s innovation status also requires effective protection of IP. With the world on the cusp of a 4th Industrial Revolution promising emerging technologies such as Internet of Things, autonomous vehicles, quantum computing, AI and genomics rely on IP protection to succeed internationally.
  2. The UK should be confident in its highly respected domestic IP system and connected regimes, such as enforcement mechanisms. Trade agreements should require trading partners to introduce and maintain as a minimum, equivalent forms and levels of protection. A priority is to build on the UK’s current IP ecosystem and see UK commitments to existing treaties including the European Patent Convention maintained. Some issues, such as substantive patent law, require harmonisation at a multilateral level where CBI members want to see the UK take a lead.
  3. Copyright and its enforceability play key roles in the digital and creative economies. The UK’s world-leading creative industries in publishing, film, television and music have been built on these solid foundations and these should be upheld.

FinTech presents opportunities for international growth

  1. The CBI has been closely involved with HM Treasury’s FinTech Review. The UK can enhance its place on the world stage by providing international leadership on the future of technology regulation, offering solutions that many countries are looking for. From internet regulation to modernising taxation, the UK can lead supranational collaborations that consider how to regulate on an international level. The CBI would welcome more work building up on the success of HMT’s fintech bridges, creating a cross-sector hub connected to international initiatives would be a valuable conduit for spreading new technologies and best working practices.

Trade promotion will be key to capitalise on digital trade opportunities

  1. Integrating trade policy with trade promotion will be crucial to UK success. It is no different for digital trade. The government, working alongside business organisations like the CBI, must ensure gaining greater market access for digital trade is matched by businesses being aware of, and seizing, the opportunities. A strong government digital platform for trade promotion should underpin promotion of digital trade.
  2. The government has shown a commitment to this through the future trade strategy for the UK tech industry launched in 2020.[13] This included the creation of a Digital Trade Network in the Asia Pacific to enable more firms to find business in this fast-growing sector and region, getting the advice they need from tech experts in UK diplomatic missions and targeting opportunities in trade policy. This is an excellent initiative, and its success should be monitored with a view to expanding around the globe. The CBI also welcomed the appointment of a Technology Envoy to the US.[14] The UK and US, particularly through a future FTA, have an enormous opportunity to increase digital trade, encourage collaboration in R&D, and set the standards of future industries.
  3. The government must continue to put emphasis on upskilling its offer to business globally so that the UK can maximise exports and attract greater inward investment. The CBI and its members stand ready to help with this effort both by lending expertise and helping to promote the opportunities created by trade deals.

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?

Data flows

  1. The UK is an international leader in data flows with a data centre economy worth £79bn to the economy.[15] But the legal and political landscape is complex and fast-moving, with developments that could leave the UK’s role as a global hub for data flows at risk: most pressingly, the risk of failing to achieve and maintain EU data adequacy, international fragmentation on standards, and a global turn towards protectionism. With a range of data transfer mechanisms under fire, the regulatory burden on firms is increasing at a time when many have reduced bandwidths: for example, the European Data Protection Board’s (EDPB) guidance following the Schrems II ruling has transferred the burden of assessing countries’ data regimes onto businesses. This should not be a role for businesses, but for governments and regulators.
  2. Against this backdrop, firms welcomed government’s ambition in the National Data Strategy to secure adequacy from the EU while removing unnecessary barriers to data flows globally. With its soft power and technical leadership, strong links to the European data regime and opportunity to set independent policy, the UK is in a unique position to encourage transparent and values-based international norms and reduce fragmentation.
  3. Businesses also welcomed the language in the EU-UK TCA banning data localisation and promoting the free flow of personal data on the basis of the availability of transfer tools. This approach could inspire WTO talks on e-commerce.
  4. Future trade agreements will be a central part of the UK’s toolkit on data and digital and should work in lockstep with other mechanisms, in particular an independent UK adequacy regime, while recognising that people’s information and privacy rights cannot be traded away. The UK should follow the encouraging example set by the UK-Japan trade deal and continue to take an ambitious approach to digital and data provisions in future trade agreements, with business priorities outlined below:
  1. Free flow of data: With data underpinning both goods and services trade, future UK trade agreements should commit to the free flow of data. The Department for International Trade (DIT) and the Department for Culture, Media and Sport (DCMS) should work closely to develop an independent UK data adequacy regime that aligns with its trade ambitious. Importantly, the UK’s strategy and trade commitments should not jeopardise an adequacy decision from the EU.

    Given the importance of services trade exports to the UK economy and its competitive edge in this space, businesses have highlighted the US, India, Singapore, and Hong Kong as additional jurisdictions where they would value data flowing unencumbered.


Protection for personal data: The cross-border flow of data should not compromise data protection standards, and the UK’s approaches to trade and adequacy must equally acknowledge that UK citizens’ information and privacy rights cannot be traded away. To maintain public trust in a robust decision-making process, government must be transparent about why jurisdictions have been found adequate and subject decisions to regular review, for example producing an annual report.

The UK could also examine multilateral approaches to data privacy, for example the Asia-Pacific Economic Cooperation (APEC) Cross-Border Privacy Rules (CBPR) System, where participating jurisdictions are obliged to demonstrate that requirements are legally enforceable against certified companies – essentially ensuring that protection travels with data.

  1. Data localisation: In the face of increasing global protectionism, future UK trade agreements should contain reciprocal, forward-looking provisions that remove unjustified data localisation requirements. The UK-Japan agreement set a positive precedent.
  2. Regulatory cooperation: Trade agreements should be accompanied by a commitment for regulatory collaboration, for example through memorandums of understanding. Given that equivalent data protection standards between jurisdictions might not be identical, regular engagement between expert UK regulators – such as the Information Commissioner’s Office (ICO) and their counterparts on data is likely to reduce the burden on firms by leading to a more consistent approach around applying rules and greater compatibility between different regimes.

    CBI members also support techUK’s recommendation for trade agreements to ensure that parties publish clear and accessible guidance available online on how businesses can comply with legal frameworks and how individuals can pursue remedies.[16] Frequent dialogue between regulators is likely to lead to more accessible guidance on this front.

Intellectual property (IP)

  1. The UK is home to some of the world’s most innovative companies, clearly demonstrated over the last few months in areas from vaccine development to the Ventilator Challenge. The UK’s innovation status requires the effective protection of IP, with the emerging technologies of the Fourth Industrial Revolution such as AI, quantum computing, and genomics, relying on IP to succeed internationally.

    R&D is supported by a robust and forward-looking UK IP regime, which we should look to promote as global best practice by embedding forward-looking provisions into future trade agreements, building on the UK-Japan deal. Trade agreements should require partners to introduce and maintain equivalent forms and levels of protection, at a minimum.
  2. The UK should not weaken its domestic IP regime, however an ambitious trade agenda around IP must equally be matched by UK laws that continue to be competitive as technologies emerge and develop. Some CBI members are concerned that the UK will become less competitive if it does not keep pace with international partners on targeted changes that make data available for data-driven innovation and technologies like AI. For example, updates to the EU’s Copyright Directive in 2021 introduce a new optional exception that Member States can implement for text and data mining (TDM) to publicly accessible data used to train commercial AI models, while still allowing rightsholders the ability to reserve their rights. This is broader than the UK’s TDM exception and is an example of an area that the UK government could continue to monitor to ensure our regime maintains its competitiveness.
  3. Business priorities relating to IP provisions in trade agreements include:
  1. Public sector data: Firms welcomed UK-Japan trade deal provisions around the release of open government datasets. Future trade agreements should also commit parties to making government data available in machine-readable formats subject to clear rules and safeguards, benefitting innovative businesses and consumers in both jurisdictions.
  2. Preventing mandatory access to proprietary information: UK trade agreements should prevent the forced transfer of algorithms, software, or encryption keys as a condition of market access. 
  3. Multilateral dialogues: Although bilateral trade agreements may be one forum for influencing the development of IP laws and standards in other jurisdictions, businesses stress the importance of the UK influencing multilateral harmonisation dialogues such as in the World Intellectual Property Organisation (WIPO) on issues such as substantive patent law, to avoid fragmentation that is particularly harmful for SMEs and start-ups.

    Businesses urge government to recognise the continued importance of international arrangements like the European Patent Convention during negotiations and ensure that trade commitments don’t harm UK participation.

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

  1. The UK-Japan Comprehensive Economic Partnership Agreement (CEPA) is not a simple roll over of the EU-Japan economic partnership agreement (EPA) when it comes to digital trade and data provisions. The EPA does not have a full chapter on e-commerce in comparison to the CEPA, which demonstrates the latter is a relatively modern and forward leaning agreement and will likely set the precedent for future UK trade deals. CBI members support this ambition.
  2. The e-commerce chapter of the UK-Japan agreement goes further than the EPA in areas like consumer protection, data protection, open government data, free flow of data, location of computing facilities and protection of new technologies. These new provisions will have implications for the future digital economy of the UK. The deal also symbolises a strategic departure from the EU approach on digital, and the UK’s intention to shape future global standards. The CBI does not believe that ambitious CEPA provisions should harm an EU adequacy decision, noting that Japan has been granted adequacy by the Commission, alongside fellow CPTPP members New Zealand and Canada.
  3. The CEPA commits to the cross-border flow of data, going further than the EPA, with new provisions prohibiting unjustified data localisation and unjustified restrictions on the free flow of data. It nevertheless safeguards privacy, with provisions on personal data protection reflecting the approaches taken in the CPTPP and the US in trade deals. In addition to recognising the importance of personal data protection, the CEPA includes a carve-out for legitimate policy objectives – as long as measures are not arbitrary or discriminatory, don’t disguise trade barriers, and aren’t disproportionate to achieving the public policy objective.
  4. Other welcome provisions in CEPA include preventing mandated access to, or transfer of, source code as a condition for trading software and the agreement to encourage the release of anonymised government datasets where appropriate.
  5. A key area where the UK could go further in future agreements is regulatory cooperation, following the example of the USMCA which contains a commitment to consider establishing a forum to address issues. The rapidly changing nature of digital trade requires firmer commitments to regulatory dialogue as issues arise.
  6. Overall, businesses welcomed the digital provisions in CEPA as setting a high standard for UK digital trade going forward – more akin to the CPTPP and USMCA than the EU-Japan EPA. To cement its place as a leading digital nation, the UK should ensure this high standard is replicated in trade agreements going forward.

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

  1. The WTO moratorium on customs duties on electronic transmissions is beneficial for all countries, whether developed or developing. As highlighted throughout this submission, digital trade is a vehicle for economic growth and any potential revenue gains from charging duties on electronic transfers would be small in comparison to the damage to economic growth and innovation. Modelling has been done by ECIPE on a mix of countries, comparing potential revenue growth from tariffs against the estimated loss in GDP due to higher prices and reduced consumption.[17] India, for example, would lose 49 times more in GDP than it would in new duty revenues. Added to that the logistical challenge of charging for every cross-border electronic transfer, with a duty charged for every email sent, for example, industry is very clear that no country should pursue the implementation of duties.
  2. With the rise of digital protectionism, this issue is of increasing concern. The biennial review of the moratorium at the WTO is being challenged frequently. There is an opportunity for the UK to make a forceful case for maintaining a liberal approach in this area through its newly independent seat at the WTO. The case must set out the benefits to developed and developing countries alike in maintaining the moratorium. UK business would like WTO members to go further and secure a permanent status to the moratorium. While understanding the challenge behind securing a consensus, momentum should be built with like-minded partners. The UK’s position as President of the G7 in 2021 is a prime opportunity to lay down a marker on this policy.

What objectives should the UK have when negotiating digital and data provisions during its accession to the CPTPP?

  1. Firms welcomed the UK’s recent commencement of the formal accession process to the CPTPP, which could open up new opportunities for British businesses in some of the world’s rapidly growing markets and further entrench the UK’s position as a global hub for data flows (noting that Japan and Canada have been granted adequacy by the European Commission and are CPTPP members).
  2. The CPTPP sets a high bar on digital and data trade across issues such as data localisation, elimination of customs duties on electronic content, and prohibiting access to source code as a condition of market access. Although its digital provisions are no longer as ground-breaking as they once were, the bloc’s members are widely seen as at the forefront of the digital agenda as outlined above. UK government objectives should therefore be to build a coalition of like-minded partners in liberalising digital trade and championing its benefits in multilateral fora.
  3. Promisingly, the UK has already gone beyond the CPTPP in some regards in its agreement with Japan, such as the provisions relating to open government data and protections for software, algorithms, and encryption technology. However, CBI members have raised concerns about the IP provisions within CPTPP as potentially diluting the UK’s excellent IP regime. The government must ensure the international agenda does not weaken domestic policy on IP, and a coordinated approach is taken between DIT and BEIS.
  4. Other trade deals containing comprehensive data provisions include DEPA (mentioned above), Australia-Singapore Digital Economy Agreement (DEA), and the joint statement between the Monetary Authority of Singapore and US Treasury, supporting data transfers in the financial services sector. With regards to telecommunications services, the CPTPP chapters are not ambitious enough to reflect the regulatory best practice and market openness of the UK. The UK should therefore aim to go further when negotiating bilateral FTAs with individual CPTPP countries such as Australia and New Zealand in this respect.
  5. Membership of the CPTPP should therefore be seen as a basis for going further, signalling the UK’s ambition to be a frontrunner on digital and data trade in a year where it is the host of the G7 and chair of the Digital Nations group.

Will the global increase in digital trade affect the environment in a positive or negative way? What steps can be taken to mitigate any negative environmental impacts of increased digital trade?

  1. Trade agreements should promote environmental standards and go further than existing FTAs, with meaningful commitments that put countries on the path to the Paris Agreement goal of limiting global warming to 1.5°C. Digital technologies in areas such as smart energy use are crucial enablers towards this objective, with increased adoption of digital technologies is likely to support the increased decoupling of GDP growth and emissions as they disrupt sectors across the economy, with the potential to directly enable a third of the emissions reductions needed by 2030.[18]
  2. It is important to note that digital technologies and data aren’t cost-free. However, double the number of internet users since 2010 and a 12-fold increase in internet traffic have not led to a corresponding increase in data centre energy usage.[19] In fact, research from the International Energy Agency suggests that if current trends of infrastructure and hardware efficiency continue, global data centre energy usage could remain nearly flat over 2021-22, despite a 60% increase in service demand.[20] Data centre operators must continue to set targets and monitor progress, including key actions outlined by techUK such as committing to renewable power, measuring and reporting energy use and making better use of waste heat.[21]
  3. As outlined above, cross-border data sharing facilitated by more robust mechanisms and setting ambitious provisions in trade agreements around open government data could also support emissions reduction through more data-driven innovation. Research by Linklaters shows that 9 in 10 companies think collaboration is central to progress on environmental, social, and governance (ESG) issues.[22] International collaboration must combine with national action to tackle climate change.


February 2021

[1] DCMS, DCMS Economic Estimates 2019

[2] European Commission, The European Data Market Monitoring Tool (2020). The Commission estimates the UK’s digital economy was worth €88.8bn in 2020.

[3] ECIPE, The cost of data protectionism (2018).

[4] ECIPE, Digital trade restrictiveness index (2018).

[5] Ibid.

[6] IRSG, How the trend towards data localisation is impacting the financial services sector (2020).

[7] McKinsey Global Institute, Digital globalisation: The new era of global flows (2016).

[8] McKinsey, ibid.

[9] UNCTAD Estimates of global e-commerce 2018, https://unctad.org/system/files/official-document/tn_unctad_ict4d15_en.pdf

[10] TechUK, A vision for UK digital trade policy (2020).

[11] https://www.unescap.org/resources/framework-agreement-facilitation-cross-border-paperless-trade-asia-and-pacific

[12] https://uncitral.un.org/en/texts/ecommerce/modellaw/electronic_transferable_records

[13] https://www.gov.uk/government/news/liz-truss-launches-future-trade-strategy-for-uk-tech-industry

[14] https://www.gov.uk/government/news/joe-white-appointed-hm-consul-general-san-francisco-and-technology-envoy-to-the-usa

[15] The European Data Market Monitoring Tool.

[16] A Vision for UK Digital Trade Policy.

[17] ECIPE, The economic losses of ending the WTO moratorium on electronic transmissions

[18] Exponential Roadmap: Scaling 36 solutions to halve emissions by 2030 (2020).

[19] International Energy Agency, ‘Data centres and data transmission networks’ (2020).

[20] Ibid.

[21] techUK, UK data centre sector: Energy routemap (2019).

[22] Linklaters, Competition law needs to cooperate (2020).