UK will leave EU Digital Single Market

The UK’s Prime Minister, Theresa May, has confirmed in a much anticipated speech today that the UK will be leaving the EU’s Digital Single Market – but has called for a free trade agreement that covers most sectors of the British economy and for a strong data relationship with the trading bloc.

Negotiations between the EU and the UK are ongoing, as Britain prepares to leave the trading bloc in March 2019. Companies around the world will be watching closely as the Prime Minister lays out her vision for how businesses will be able to trade with the UK and the EU in the future, post Brexit.

Two key areas of concern are the Digital Single Market, which calls for close alignment and free trade of digital services across all countries in the EU, and how data sharing will be impacted after the UK exits the EU.

Theresa May has stated that she wants “more than just an adequacy agreement” when it comes to data sharing with the EU, as Brexit negotiations continue. The Prime Minister delivered her much anticipated speech on the future trading relationship with the EU at London’s Mansion House this afternoon.

May laid out the “hard facts” on Brexit and outlines her hopes for the UK’s future relationship with the European Union, as it prepares to leave the trading bloc in March of next year.

She said that the UK will be “leaving the single market” and that “life is going to be different”, whilst acknowledging that everyone would “not get everything they want”.

The mainstream press are likely to focus on the fact that Theresa May is calling for a free trade agreement for most sectors of the British economy that goes further than the one the EU has with Canada, but not quite as extensive as the relationship Norway has with the trading block, which is part of the European Economic Area.

However, there were also some clear commitments from the Prime Minister regarding a future data sharing deal with the EU, which has been a top priority for businesses on both sides of the channel. If one isn’t agreed before March 2019, the UK could potentially face a cliff edge on data sharing with the EU.

Previously it has been said that the UK is hoping for data adequacy status upon leaving the European Union, which should mitigate the risks. Data adequacy is granted when the European Commission feels that a territory that is not part of the EU has data protection laws and practices that are aligned to the EU’s high standards.

Currently ten countries have been granted the status, including Israel and New Zealand. The USA and Canada have only been deemed to be partially adequate, and the data sharing with the USA is governed by the 2016 Privacy Shield agreement.

However, today Theresa May said she would be pushing for an agreement that goes beyond data adequacy and implied there would be a future role for the Information Commissioner’s Office at the table of the EU’s data decisions. She said:

We will need an arrangement for data protection.

“I made this point in Munich in relation to our security relationship. But the free flow of data is also critical for both sides in any modern trading relationship too. The UK has exceptionally high standards of data protection. And we want to secure an agreement with the EU that provides the stability and confidence for EU and UK business and individuals to achieve our aims in maintaining and developing the UK’s strong trading and economic links with the EU.

That is why we will be seeking more than just an adequacy arrangement and want to see an appropriate ongoing role for the UK’s Information Commissioner’s Office. This will ensure UK businesses are effectively represented under the EU’s new ‘one stop shop’ mechanism for resolving data protection disputes.”

She also acknowledged the “hard fact” that even after the UK leaves the jurisdiction of the European Court of Justice, EU law and the decisions of the ECJ will continue to have an impact. In this case, the Prime Minister cited how the ECJ determines whether agreements the EU has struck are legal under the EU’s own law – as the US found when the ECJ declared the Safe Harbor Framework for data sharing invalid.

However, the Prime Minister did confirm the UK will not be part of the EU Digital Single Market post-Brexit. She said:

“On digital, the UK will not be part of the EU’s Digital Single Market, which will continue to develop after our withdrawal from the EU. This is a fast evolving, innovative sector, in which the UK is a world leader. So it will be particularly important to have domestic flexibility, to ensure the regulatory environment can always respond nimbly and ambitiously to new developments.”