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As prime minister unveils Brexit plans, TechUK calls for deal on services

The UK tech industry wants a Brexit deal open to services, mirroring the EU trade agreement with Canada

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Prime minister Theresa May has unveiled her Brexit plans, which include a UK/EU free trade area to get around regulatory checks at the border, which will involve a common rulebook.

But in her statement, May specifically excluded services from the UK exports that would be bound by the common rulebook.

The prime minister said the UK would make an upfront sovereign choice to remain harmonised with regards to European Union rules on goods. “This will not cover services, because this is not necessary to ensure free flow at the border,” she said.

May said there would be a Parliamentary lock on all new rules and regulations. “When we leave the EU,” she said, “we will end the direct effect of EU law on the UK. All laws in the UK will be passed in Westminster, Edinburgh, Cardiff and Belfast. Our Parliament would have the sovereign ability to reject any proposals if it so chose, recognising there will be consequences, including our market access, if we chose a different approach to the EU.”

But the trade body for UK IT, TechUK, is calling on the government to remain aligned with European law. It wants services to be part of any trade agreement with the EU and it wants the UK government to look at replicating the deal between the EU and Canada.

TechUK’s CEO, Julian David, said: “It is right that the prime minister has sought to take the tough decisions needed to move the conversation about the UK’s plan for our post-Brexit relationship with Europe forward. The UK tech sector does not see clear benefits of divergence with the EU. Indeed, there has been a strong consensus to maintain alignment on crucial issues such as data protection.

A goods only approach would risk UK-based tech firms selling into Europe having to comply with two competing regulatory regimes and being unable to guarantee that services can be provided on the same terms to customers in different locations.

“Such a deal also ignores the increasing number of goods that rely on a services contract to operate, where divergence would make it harder for UK digital services businesses to be part of European supply chains,” he said.

Read more about Brexit and the IT industry

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  • The EU deal with Canada, as well as forthcoming trade agreements with Japan, Singapore and Vietnam, could boost the UK tech sector – if adopted after Brexit.

TechUK’s Dealing with the deals: Existing EU international agreements and the tech sector paper, published today (9 July 2018), recommends the UK secure the rollover of the EU’s March 2018 comprehensive economic trade agreement (Ceta) with Canada after exiting Europe.

In a TechUK roundtable, hosted at the House of Commons earlier in the day, Thomas Goldsmith, TechUK policy manager for trade and Brexit, and author of the report, said: “The technology supply chain stretches across borders and is underpinned by multilateral agreements, which are essential for a thriving UK technology sector. Avoiding a no-deal Brexit is crucial to UK business.”

Ceta is the first time EU has adopted a negative list, he said. According to Goldsmith, this is essential in the fast-moving tech sector, where new services are constantly being invented.

However, Vicky Ford, Conservative MP and member of the Science and Technology Committee, said: “Don’t assume the Ceta deal for services is that great. One of the stumbling blocks in the current EU/UK discussions is that an offer from the European Commission of a free trade agreement is not a Canada-style one. They are not offering a free trade agreement that covers the whole of the UK.”

“The technology supply chain stretches across borders and is underpinned by multilateral agreements, which are essential for a thriving UK technology sector. Avoiding a no-deal Brexit is crucial to UK business”
Thomas Goldsmith, TechUK

She said the commission would offer one, but only for Great Britain, and not for Northern Ireland. “Fundamental to the prime minister's approach to this is wanting to keep the UK united, and also not wanting to breach the Good Friday Agreement. We need to find a bespoke deal, which is what the Chequers offer is,” said Ford.

“I think we need to have deeper trade agreements. A modern, intensive piece of kit has intelligence built-in, and it is not just goods. We have been working on trade and services deals for many years. You have to work on the details with our closest trading partners,” she said.

Looking specifically at digital services, Ford said it was in everyone’s interest to find a common position, such as the General Data Protection Regulation (GDPR). 

“But some of the discussions that have been taking place in Brussels on the Privacy Directive are possibly taking a different approach than one would want to take here. And these are often very challenging discussions. Looking at the discussions between China and the EU, my understanding is they will get a data-sharing agreement without having to cut and paste every detail of GDPR. It is about keeping the principles without having to be a rule-taker,” she said.

Data protection

The roundtable discussion explored data protection further. Stephen Timms, Labour MP and member of the Committee on Exiting the European Union, said: “TechUK has done a lot of work on this. What we need from the European Commission is an adequacy agreement, a determination that data protection in the UK is adequate. If we get that, we can carry on doing everything we do at the moment with personal data.”

For Timms, the issue is how to keep in step with data rules going forward, since the commission can revoke a data adequacy agreement if the UK’s data rules are no longer deemed adequate. 

“The prime minister said some time ago she wanted two things to enable us to keep in step. Firstly, the information commissioner in the UK should sit on the EU committee for data and privacy. And secondly, we should be part of one-stop-shop arrangements the commission is putting in place.

“If we could secure those, we would be very hopeful that we would be on the inside of decision-making, and we could ensure our arrangements stayed in step with those of the EU. So when the European Court of Justice made a decision on a matter, we would be bound by its decision in the future as we are now.

“If we stay on the inside, I am very hopeful we can keep our arrangement adequate, in EU terms, by carrying on doing what we do at the moment, and we shouldn’t suffer undue difficulties. If, however, we were to fail on some of these aspirations that the prime minister has set out, then we could find ourselves in serious difficulties, as arrangements with the US have shown.”

Tim Durrant, senior researcher at the Institute for Government, and a TechUK member business, added: “If we don’t get a data adequacy judgement, it questions not only the trade side, but it also questions security cooperation.”

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