UK government announces digital trade strategy

The UK government has announced a five-point digital strategy aimed at improving international digital trade for businesses and consumers and future-proofing the sector.

New secretary of state for international trade, Anne-Marie Trevelyan, announced the strategy during a speech at London Tech Week’s Global Leaders Innovation Summit today (20 September).

During the speech, Trevelyan emphasised the relevance of international digital trade for the UK. The digital sector contributed £150.6bn to the national economy in 2019 and the government is working with an estimate that digital transformation investments may bring $6.8tn to the economy between 2020 and 2023, she said.

“As we recover from Covid, free trade and enterprise are going to be vital,” said Trevelyan. “The UK has so much to offer the global marketplace. We are the second-largest services exporter in the world. We are one of the most innovative economies, exporting most of our services digitally.

“This five-point plan is rightly ambitious, but one we are fast delivering through our independent trade policy.”

The digital trade plan aims to capitalise on that promise by helping businesses to reach a wider consumer base by selling online and boosting efficiency by trading remotely, thus making the supply of services more resilient to disruption, said Trevelyan. The government noted that the ability to connect remotely has mitigated the impact of the Covid-19 pandemic on the cost of supplying services.

But the strategy described the existing and emerging threats to the strategy as “considerable”, given that some countries are more open to digital trade, while others have taken a more protectionist stance. Issues include ensuring data flows and safeguards and establishing digital trading systems to help businesses cut through red tape. Addressing these hurdles should support the UK’s wider international trade programme, growth plans and trade and investment campaigns.

On open digital markets, the idea stated in the strategy is to secure access for British businesses to overseas digital markets and allow UK consumers to access a wider variety of products and services from overseas. This will be done through actions ranging from promoting investment in digitally delivered services and working to remove barriers that result in “discriminatory conditions” for e-commerce activities, and remove measures that inhibit the use of electronic authentication.

The strategy on data flows includes actions such as the UK championing data flows internationally, and seeking to minimise data localisation, which is seen as harmful to competition. The country will support businesses that trade goods which depend on embedded data and services, and require its trade partners to create or maintain data protection frameworks while ensuring UK legislation on that front is observed.

According to the strategy, the UK sees consumer confidence that their data will be protected as crucial to its trade approach and to boost online shopping and digital services consumption.

The Department for International Trade will also seek to champion consumer benefits and business safeguards in digital trade. This will happen through an advancement of digital consumer rights, including the reduction of spam. Net neutrality commitments will also be sought and trade partners will be asked to avoid “unreasonable or unjustified” data requests, such as requiring the disclosure of source code as a condition of operating in certain markets.

On digital trading systems, the plan is to help businesses become “digital by default” and promote simplified customs and border processes, while also introducing paperless trading, electronic contracts, electronic authentication, and electronic trust services to make international trade more effective. Work relating to that will also include a facilitation of data flows that are necessary to support digitisation of customs and border processes.

There is a recognition in the strategy that trading systems across the world remain insufficiently digitally enabled, increasing the time and cost of doing business across borders. The strategy includes work with countries to ensure compatibility of systems and overcome challenges such as the limited availability of digital customs and logistics systems. Work in that area is part of broader efforts to encourage the interoperability of digital standards and frameworks globally to maximise the opportunities and benefits of digital trade.

Trevelyan said free trade agreements (FTAs) also have a key role to play in the strategy and the UK is making progress in that regard. FTAs covering 68 countries plus the European Union, worth £744bn, have been struck since the deal with Japan, which she described as an agreement that sets “a new standard for digital trade” by generating “opportunities for both countries across all sectors of the economy”.

Looking forward, Trevelyan anticipated that the UK will be the first European country to pursue a digital economy agreement with Singapore. “That is the type of modern deal we can and should be striking,” she said.

Other digital economy agreements include the upcoming Trans-Pacific Partnership, which is expected to build the UK’s digital trade connections with 11 Indo-Pacific markets. Negotiations with India are under way and trade deals signed with Norway, Iceland and Liechtenstein include provisions for “the most advanced deals for digital trade to date” between the countries, she said.

“By embracing new opportunities on the global marketplace, we will level up the country through trade and investment,” said Trevelyan. “That means more high-quality jobs in the industries of the future across every region and nation of the UK.”

The UK also plans to be “a strong advocate” for the World Trade Organization’s moratorium on customs duties on electronic transmissions, opposing such customs duties permanently, she said. It also plans to work with WTO partners to “advance new rulemaking on digital trade” and establish FTAs that include cooperation in areas such as innovation and emerging technologies, fintech and cyber security.

Trade association TechUK set out its vision to liberalise digital trade policy in January 2020. It urged the government to “set a new course” in its trade policy and redesign its approach with a liberal mindset to respond to a movement towards “balkanisation” in digital global markets. At the time, the association estimated the size of the global digital trade opportunity to be over $25tn.