In spite of the fast-approaching deadline to complete negotiations, arguments between ‘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 regulatory 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 virtually all 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 companies 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 Brexit 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 implemented 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 Tempora allows virtually uninhibited government access to personal data on UK servers – emails, phone records, search histories and more.
Currently, Europol and 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 regulatory 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. European 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.