UK will ‘prioritise digital’ in trade talks with US

Profile picture for user ddpreez By Derek du Preez March 2, 2020
Summary:
The UK has published its negotiating objectives for a free trade agreement with the US. But reaching a trade agreement will be a balancing act.

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The British government has this week set out it’s negotiating objectives as it attempts to secure a comprehensive free trade agreement with the USA, placing digital trade as a top priority. 

However, the post-Brexit trade agreement is likely to be a fine balancing act given that the UK is also under pressure to secure a post-Brexit trade agreement with the EU before the end of the transition period. The EU-UK Brexit negotiations also kick off today. 

The UK may find itself stuck between a rock and a hard place as it contends with differing priorities between the two trading giants, one of which favours strict personal data regulations (the EU), the other likely wanting more flexibility.

Throw into the mix that US technology giants will likely be placing pressure on the UK to reduce the rhetoric around a digital services tax - things could well get very complicated, very quickly. 

Whilst there are inevitably huge opportunities on securing a free trade agreement with both the US and the EU, the realities of being a smaller independent trading nation are likely to become apparent, with the UK possibly having to decide which will benefit it more greatly over the coming decades. 

The one saving grace is that the UK-US trade talks aren’t time pressured (unlike the EU negotiations, which have to reach a conclusion one way or another by the end of the year), and a lot could change over their lifetime - including potentially a new incoming President! 

The government has said that the free trade agreement with the US will deliver for the whole of the UK, with Scotland, the North East and the Midlands forecast to benefit most from removing barriers to trade with the US. 

Government published analysis states that the UK economy will benefit from a £3.4 billion boost, as the trade deal aims to increase transatlantic trade flows by £15.3 billion. 

International Trade Secretary, Liz Truss said:

Striking ambitious free trade agreements with our partners around the world is one of the key opportunities of Britain becoming an independent trading nation once again.

This deal with our biggest single trading partner will cut red tape for our small businesses, cut tariffs for our great products from dairy to cars and increase growth in all four nations.

Detail on digital

As noted above, the government has said it will be giving priority to arriving at “cutting edge digital trade provisions, that could maximise opportunities across the UK economy”. The objective, the government’s document states, is to reduce the costs of international trade, facilitate the coordination of global value chains and help connect businesses and consumers, including mechanisms to support digital business models and contracts. 

The document adds that the government has listened to responses from stakeholders on the desire for robust online protections for consumers and the need for provisions to “support innovation and cyber cooperation”. 

On some of the challenges noted above - particularly a digital services tax and data regulations - it reads:

We also note comments regarding digital taxation and will consider this as part of our policy development. We have listened to the responses from stakeholders on the desire for robust protections for consumers online and agree that protecting an open internet is an important principle.

The Government notes stakeholders’ responses regarding data protection and privacy standards in the UK and will ensure that robust protections for personal data are maintained. 

The UK will allow for the continued free flow of data to the EU on a transitional basis, subject to our own independent UK ‘adequacy’ arrangements being established, which will govern the transfer of personal data from the UK.

It was recently reported by diginomica/government that the government has said that it will be seeking an adequacy decision from the EU to allow personal data to continue to flow freely between the EU and the UK. However, it has also said that it will have an independent data protection policy in the future - leaving it open to divergence from the EU’s GDPR. 

The government estimates that more than 72% of UK services exports to the US (approximately £46 billion) were delivered remotely in 2018, the majority of which were due to cross-border data flows.