The Scotsman

No deal on data post- Brexit would be dev­as­tat­ing for the econ­omy

Michael Stur­rock warns that the UK could lose bil­lions

- Business · Brexit · European Politics · UK News · Information Privacy · Politics · British Politics · Society · European Union · Theresa May · United Kingdom · United States Virgin Islands · G20 · United States of America · Greg Clark · Tempo

In spite of the fast- ap­proach­ing dead­line to com­plete ne­go­ti­a­tions, ar­gu­ments b et ween ‘ soft’ or ‘ hard’ Brex­i­teers still per­vade Par­lia­ment. While the Govern­ment’s vic­tory in pass­ing the Euro­pean With­drawal Bill al­lows them to have con­trol of the deal reached with the EU, Theresa May is still scram­bling to as­sem­ble the pon­toon which might bridge the stances of her Cab­i­net.

One of the key points con­cerns reg­u­la­tory align­ment. While some ar­gue that con­form­ity to EU reg­u­la­tions would con­strict the UK’S abil­ity to pur­sue free- trade agree­ments post-Brexit, the data and mar­ket­ing in­dus­try broadly con­sid­ers com­pre­hen­sive reg­u­la­tor y align­ment piv­otal to the con­tin­ued suc­cess of data-driven busi­ness. This grow­ing data econ­omy in Europe is hugely valu­able to the UK. By 2020, the mar­ket is ex­pected to grow to € 739bil­lion, or 4 per cent of EU GDP. The UK has the biggest share of this mar­ket and it ac­counts for 75 per cent of the UK’S cross- bor­der data flows.

Data drives vi r t uall y al l ar­eas of mar­ket­ing and is the ba­sis for cru­cial func­tions in many other sec­tors so the value to the UK is not sur­pris­ing. In­deed, the UK’S data in­dus­try is world- lead­ing and the largest in the G20 as a per­cent­age of GDP.

This is, to a large ex­tent, thanks to our par­tic­i­pa­tion in EU dig­i­tal mar­kets and con­form­ity to EU data reg­u­la­tions. If the UK loses ac­cess to this, the con­se­quences could be dev­as­tat­ing. It wouldn’t be the case that com- pa­nies would have to cease all contact with EU cit­i­zens al­to­gether. Com­pa­nies can ac­cess EU mar­kets for the pur­pose of ful­fill­ing a con­trac­tual agree­ment with an in­di­vid­ual.

None­the­less, gen­eral data pro­cesses which deal with cit­i­zens’ data have to con­form to EU rules. For a vast range of busi­nesses, in­clud­ing ad­ver­tis­ing agen­cies, in­sur­ance com­pa­nies and banks, the loss of the abil­ity to process EU cit­i­zens’ data more gen­er­ally will mean the loss of a great deal of busi­ness.

To en­sure this does not hap­pen, the UK has to reach an‘ ad­e­quacy agree­ment’ with the EU. Coun­tries, re­gions, in­dus­tries or in­ter­na­tional or­gan­i­sa­tions can seek data shar­ing align­ment with the EU. If an agree­ment was reached as part of the Brex- it deal, con­tin­ued ac­cess would be guar­an­teed. Frus­trat­ingly, it’s not that sim­ple. In 2000, the USA reached a data-align­ment agree­ment with the EU, which al­lowed US busi­ness to process EU cit­i­zens’ data. How­ever, over the next 15 years, the USA imp le­men ted pro­gres­sively more per­va­sive counter-ter­ror­ism laws, which gave govern­ment un­bri­dled ac­cess to data con­tained in US- based servers.

Be­cause of this, in 2015, the Safe Har­bour agree­ment was over­turned by the EU Court of Hu­man Rights. So long as EU cit­i­zens’ data was held on US servers, their pri­vacy in ac­cor­dance with EU rights and reg­u­la­tions was not guar­an­teed.

The UK’S counter- ter­ror­ism strat­egy is as strin­gent – if not more so –

than US pol­icy. Op­er­a­tion Tempo - ra al­lows vir­tu­ally un­in­hib­ited govern­ment ac­cess to per­sonal data on UK servers–emails, phone records, search his­to­ries and more.

Cur­rently, Euro poland EU joint in­tel­li­gence ef­forts in­clude the UK’S op­er­a­tions and our coun­tert­er­ror­ism laws are ex­empt from con­form­ity to data pro­tec­tion.

How­ever, if a Brexit deal did not in­clude the same level of co-op­er­a­tion on se­cu­rity, the UK’S coun­tert­er­ror­ism laws would be deemed to breach EU hu­man rights laws.

An align­ment agree­ment and ac­cess to the EU data mar­ket is con­tin­gent on a se­cu­rity agree­ment that main­tained UK se­cu­rity ex­emp­tion.

For this rea­son, the data econ­omy re­quires the UK to have a deep and com­pre­hen­sive re­la­tion­ship on se­cu­rity as well as reg­u­la­tor y align­ment with the EU.

Busi­ness Sec­re­tary Greg Clarke has been lis­ten­ing to the con­cerns. None­the­less, nei­ther he or the Prime Min­is­ter alone, has final say over the Brexit deal. The EU also needs to be sat­is­fied. For the UK to ben­e­fit, they say con­tri­bu­tions from the UK through greater align­ment are nec­es­sary.

The UK has pushed for some con­tin­ued co­op­er­a­tion by main­tain­ing mem­ber­ship of the Dig­i­tal Sin­gle Mar­ket, yet this pro­posal was re­jected by the EU in light of se­cu­rity con­cerns and their de­sire for even greater align­ment.

EU ne­go­tia­tors recog­nise the dam­age non- align­ment can do. This is, af­ter all, not just a UK prob­lem. Euro- pean ex­ports to the UK reliant on data are worth € 36bn.

The UK needs to push for much greater align­ment with the EU in the final deal. DMA will con­tinue to work with the govern­ment to strive for a deal. The data and mar­ket­ing in­dus­try is one of the most suc­cess­ful driv­ers of the UK econ­omy. If its foun­da­tions are lost, the dam­age will be crit­i­cal. Michael Stur­rock, ex­ter­nal af­fairs ex­ec­u­tive, Di­rect Mar­ket­ing As­so­ci­a­tion.

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