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As the UK negotiates its way out of the EU, TechUK, the membership organisation for UK IT, has urged the government to focus on services, which will be needed for the UK technology sector to flourish after Brexit.
Following Cabinet ministers’ weekend discussions at Chequers on the UK’s future relationship with Europe, TechUK CEO Julian David said services was an area not covered by their proposal.
“The UK tech sector does not see clear benefits of divergence with the EU. TechUK agrees that we need a frictionless border for goods, but a Brexit based on goods alone is not one that plays to the strengths of the UK’s digital economy. It would create a lop-sided Brexit that causes complexity for businesses and confusion for consumers.”
A recent study from TechUK reported that 81% of digital sector exports are in services, representing 46% of total UK services trade. This accounted for £112bn of the UK’s total services exports of £245bn in 2016, with digital service exports to countries covered by EU free trade agreements (FTAs) amounting to over £18bn, according to TechUK.
In its Dealing with the deals: Existing EU international agreements and the tech sector paper, TechUK recommended the UK secure the rollover of the EU’s March 2018 comprehensive economic trade agreement (Ceta) with Canada after exiting Europe.
The TechUK paper highlights that Ceta includes a chapter covering e-commerce. According to TechUK, this is the first time e-commerce has formed a separate part of an EU trade agreement.
“The chapter removes all customs duties, fees or charges on deliveries transmitted by electronic means, and sets the basis for an ongoing dialogue on issues raised by e-commerce, including questions of trust, electronic signatures and spam emails, among others,” the TechUK paper stated.
TechUK called for the UK government to push for EU ratification of trade deals with Japan, Singapore and Vietnam, and carry these forward after Brexit. TechUK said the deal with Japan makes specific reference to digital services.
Julian David, TechUK
“The EU-Japan FTA, like Ceta, uses a negative list for services, securing liberalisation by default for cutting-edge digital services,” TechUK stated.
Its own research estimates that 45% of net employment in the digital sector between 2009 and 2015 was accounted for by foreign workers. TechUK said the EU deal with Japan provisions for “mode 4” movement of people for business purposes, which goes further than any previous EU agreement.
This effectively covers workers from one World Trade Organisation (WTO) member state, contracted to provide a service in another member state. As well as traditional categories, such as intra-corporate transferees, contractual service providers and independent professionals, it includes new groups such as short-term business visitors and investors.
Additionally, spouses and children can accompany those who are either service suppliers or work for a service supplier.
TechUK said the UK exported £541m in electronic equipment to Singapore.
“The agreement includes agreeing to base standards, technical regulations and conformity assessment procedures for electronics on the relevant international standards. The agreement also reduces the duplication of conformity testing procedures,” it stated.
As for Vietnam, TechUK said the EU-Vietnam agreement would include a number of positive rules on e-commerce and new commitments by Vietnam on foreign equity caps, joint ventures and the protection of intellectual property rights (IPR).
TechUK said that If these EU trade deals are not ratified before December 2020, when the implementation period for Brexit ends, the government should seek means to negotiate substantially similar deals as soon as possible.
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