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UK urged to take centre stage in global digital trade

Trade association TechUK sets out vision to liberalise digital trade policy, under principles such as the opposition to data localisation in exchange for market access to fend off the trend towards digital protectionism

The UK government needs to “set a new course” in its trade policy and redesign its approach with a liberal mindset to respond to a movement towards “balkanisation” in digital global markets, according to a report published by trade association TechUK.

The report, A vision for UK digital trade policy, sets out 12 principles to make that shift, across the areas of data, tariffs, intellectual property, regulatory cooperation and trade facilitation (see Digital trade principles box).

It stressed that, as one of the world’s most significant tech sectors, with £6.3bn of venture capital investment in 2018, and ranking fourth in the world for scale-up investment after the US, China and India, the UK needs to have a new digital trade plan.

According to the association’s vision, the size of the global digital trade opportunity is estimated to be over $25tn. However, a major threat mentioned in the report is a trend towards “digital protectionism”, with nations taking actions such as restriction of data flows, conditions for market access and forced transfer of intellectual property. The report urged the UK to revamp its trade policy and become “digital by default” to respond to that global movement.

“Our open and business-friendly policies provide the UK with a unique opportunity to play a leading role in developing the international trading rules that will govern the exchange of goods and services which drive the fourth industrial revolution,” said TechUK chief executive Julian David.

One of the key areas of the TechUK report is a set of recommendations where the UK would “take a tough line” to oppose data localisation and the forced transfer of source codes in exchange for market access. These provisions should be “enshrined” in free trade agreements, it noted, and the government should also lead an agenda of liberalisation of digital trade.

Read more about digital policy

Free cross-border flow of data and regulated access to datasets is, according to TechUK, “an essential bedrock of digital trade”, and should be a key feature of future trade agreements. This new approach, the association argues, needs to see the government “throwing UK diplomatic clout” to achieve a positive outcome on e-commerce in the Joint Strategic Initiative (JSI) negotiations at the World Trade Organisation.

“A lack of shared definitions and norms for digital trade have helped create the conditions where protectionism can spread,” said David. “However, as the UK takes up its own seat at the WTO and begins negotiating new free trade agreements, we can become an important counterweight to the trend of protectionism.”

The UK should also pursue a proactive engagement with various international organisations and bodies that deal with digital issues, such as the G20 and the Organisation for Economic Co-operation and Development, as the country enters a world “buffeted by protectionist currents and adverse trade winds” post-Brexit, the report noted.

When it comes to the UK-EU relationship, the report stressed that some of its features are crucial for the UK tech sector to continue to thrive. That includes free movement of people, access to EU investment funds, EU support of UK scientific research and collaboration, which are not usually considered as part of the scope of free trade agreements.

Beyond Brexit-related matters, the TechUK report also noted that the government should look into a number of domestic issues and policy to enable the national tech sector to remain competitive when it comes to digital trade. These include building fast and comprehensive digital connectivity, helping equip people with digital skills, and helping companies that are unable to trade internationally to bridge their knowledge gaps.

Minister of state Nigel Adams described the TechUK report as “insightful” as the government looks into how to shape its global trade policy. “We are determined to keep up this momentum and ensure we have the right conditions for [the tech sector] to continue to grow and succeed on a global stage.”

Digital trade principles

The 12 key digital trade principles set out by TechUK are divided across the areas of data, tariffs, intellectual property, regulatory cooperation and trade facilitation, and relate to what the UK should do to ensure digital trade competitiveness:

  1. Enable the cross-border flow of data without compromising data protection standards.
  2. Prevent the forced localisation of data.
  3. Facilitate regulatory access to data.
  4. Prevent separate treatment for cross-border flows of financial data.
  5. Expand the Information Technology Agreement in both geographic and product coverage.
  6. Make the moratorium on customs duties on electronic transmissions permanent.
  7. Prevent the mandatory transfer of source codes, algorithms, or encryption keys as a condition of market access.
  8. Support the development of artificial intelligence (AI) through enabling open government data and text and data mining.
  9. Establish cooperation on the regulation of AI, fintech and other emerging technologies.
  10. Establish cooperation on cyber security issues with an emphasis on a risk-based approach.
  11. Standardise minimum di minimis thresholds to facilitate e-commerce.
  12. Secure the recognition of e-signatures and expansion of paperless trading.

 

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