Following Brexit, the UK and the US will have an opportunity to boost the transatlantic digital services market by expanding UK-US data exchange arrangements. The move, which could be in-part achieved outside and ahead of a broader free trade agreement, would promote innovation, consumer choice and regulatory oversight in both countries, according to a new report from TheCityUK and EY.
Personal data exchange between the UK and the US is currently covered by the EU-US Privacy Shield, but Brexit will require the UK and US to revisit their current arrangement. This could present an opportunity for the UK and the US to expand the coverage of any revised agreement, allowing industries that are not included in the EU mechanism, such as financial and professional services, to be covered for the first time.
As well as expansion, providing continuity for the existing data exchange arrangements is also important in the short-term to give US firms certainty that they can continue to transfer UK data within their organisation, and give UK firms confidence that data transfers to the US would be compliant with UK data protection principles.
Miles Celic, Chief Executive Officer, TheCityUK, said, “The UK and US host the world’s leading financial centres, but as the industry continues to digitise, success will increasingly rely on the ability of businesses to freely access, process and exchange data. The UK already has a very similar outlook to the US on many of these issues, such as data localisation, and it should aim to be ambitious on what it wants to do following Brexit. This will be as much about improving security and regulatory access to data, as it is about lowering customer costs, improving competition and expanding consumer choice.”
Steve Holt, Partner, EY, said, “The global economy is being reshaped by digital technology, and innovations in data use. In financial services, personal data is used to detect fraud, manage risk, monitor financial market activity, and develop personalised products. However, even as data driven innovations are expanding the horizons of global trade and investment, some countries are creating new barriers, like data localisation, which risk stifling innovation. The UK should avoid such barriers and seek to forge ambitious data exchange relationships with partners around the world.”
While the UK is likely to continue to adhere to European consumer data protection standards (GDPR) post-Brexit, these standards should not limit its ambition for creating a transatlantic digital market in services with a scope far beyond what exists today.
According to the report, the UK and US should look to capitalise on their shared approach to issues like forced data localisation and cyber security, broadening what is already one of the busiest routes for cross-border data exchange in the world.
The report also makes clear that as the industry becomes increasingly digitalised, its ability to innovate and provide new products will become increasingly reliant on the terms by which firms can trade and exchange data internationally.