Unhindered data flows “crucial” post-Brexit, warns House of Lords

SUMMARY:

The UK faces a cliff-edge after Brexit if it doesn’t secure a transitional data agreement with the EU, the government has been warned.

The UK will find itself at a competitive disadvantage and face higher security risks if it doesn’t maintain unhindered data flows following its exit from the European Union, a House of Lords Select Committee has warned today.

The EU Home Affairs Sub-Committee has said that the UK faces a “cliff edge” if it doesn’t secure a transitional agreement with the European Union post-Brexit, putting businesses and government agencies at risk.

Although the government has said that it “will seek to maintain the stability of data transfers between the EU, Member States and the UK”, the Committee has said that little insight has been offered on how this outcome will be achieved.

Diginomica has been outlining the importance of unhindered data flows in recent months, given that the UK’s trade with the EU largely relies on exporting services – many of which are digital.

Chairman of the Committee, Lord Jay, commented on the report and said:

The volume of data stored electronically and moving across borders has grown hugely over the last 20 years. Between 2005 and 2012 alone, internet traffic across borders increased 18-fold. The maintenance of unhindered data flows is therefore crucial, both for business and for effective police cooperation.

The Committee was concerned by the lack of detail on how the Government plans to maintain unhindered data flows post-Brexit. It was concerned, too, by the risk that EU and UK data protection rules could diverge over time when the UK has left the EU. To avoid this, the Committee urges the Government to secure a continuing role for the Information Commissioner’s Office on the European Data Protection Board.

Securing adequacy

The Committee said that it was “struck by the lack of detail” around how the government plans to avoid this ‘cliff edge’ – particularly given that services account for 44% of the UK’s total global exports (second only to the US), and three quarters of the UK’s cross-border data flows are with EU countries.

The best option for the UK to continue trading data with the EU post-Brexit would be to secure an “adequacy decision” from the European Commission, which provides a standard of protection which is “essentially equivalent” to EU data protection standards.

Alternatives to this are less effective and would leave the UK subject to legal challenges, concludes the Committee.

However, EU adequacy decisions can only be taken in respect of third countries – i.e. countries that are not member states – meaning that the UK could struggle to get such a decision secured at the time of exit, whilst it is still part of the Union. The report notes that if there is no transitional arrangement on data protection post-Brexit, this could put at risk the government’s objective of securing uninterrupted flows of data, thereby creating a cliff-edge.

The report notes:

Without a transitional arrangement, the lack of tried and tested fall-back options for data-sharing in the area of law enforcement would raise concerns about the UK’s ability to maintain deep police and security cooperation with the EU and its Member States in the immediate aftermath of Brexit.

The Committee adds that even if the UK’s data protection rules were aligned with the EU regime to the maximum extent possible at the point of Brexit, there remains the prospect that over time, the EU would amend or update its rules. As a result, continuing to secure unhindered data flows with the EU post-Brexit could therefore require the UK to continue to align domestic data protection rules with EU rules (for which it will have no involvement in setting).

As a result, the report adds:

It is imperative that the Government consider how best to replace those structures and platforms that have allowed it to influence EU rules on data protection and retention. It should start by seeking to secure a continuing role for the Information Commissioner’s Office on the European Data Protection Board.

My take

Those promoting Brexit often cited that one of the benefits of being outside of the EU will be that the UK can create legislation and regulations, without the EU’s involvement. However, the reality is that if we want to continue the benefits we get from trading with the EU (in terms of goods, services and data), then we are going to have to play by the EU’s rules. In reality, that means having the same rules as the EU, but without having a seat at the table to influence them.

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