The UK this week launched negotiations on a new ambitious digital trade agreement with Singapore that it says could remove obstacles to digital trade and enable UK exporters to expand into high-tech markets.

However, a report released by the International Trade Committee, while supportive of the UK government’s focus on digital trade and data, notes that there is no overarching strategy informing the UK’s approach, and warns of potential risks as a result.

Digital trade – the digitally enabled trade of goods and services – contributed £150.6bn to the UK economy in 2019, employing 4.6% of the national workforce, according to government figures cited in the report, with the Department for International Trade (DIT) saying that, in 2019, the UK’s “remotely delivered trade with the world was worth £326bn, equating to one quarter of total trade”.

However, digital trade requires the movement of data across borders, which raises a series of issues that the government must focus upon, the report says.

“The benefits of digital trade are significant, particularly when goods and services are available in an instant and from the comfort of our homes,” says Angus Brendan MacNeil, chair of the International Trade Committee, a cross-party parliamentary body that examines the spending, administration and policy of the DIT. “However, there can be costs to this convenience. We know there are concerns about the protection of personal data, as well as about unnecessary burden and bureaucracy placed on businesses by data protection rules.”

“With the UK forging independent trade agreements, this is a pivotal moment for the government to produce a coherent digital trade strategy, laying out the rules of engagement and how we can protect our data online,” he adds. “Transparency is key, and the government should explain the impact of any new trade agreement on the UK’s ability to regulate digital trade and data.”

The comments come as the UK and Singapore open talks around securing new digital markets for exporters, ensuring free and trusted cross-border data flows, and cutting red tape for UK businesses by promoting digital trading systems such as digital customs and border procedures that will save time and money when exporting.

In one of several recommendations, the committee highlights the fact that data protection rules in free trade agreements (FTAs) are complex and open to diverging legal interpretations.

“Digital trade regulations are affected by a mix of domestic law and international commitments and new trade partners may allow the free flow of data to third countries,” the report says.

The committee recommends that the government publishes an assessment on the risk of UK citizens’ data being passed onto third countries without sufficient safeguards when new trade agreements are signed, as well as outline ways to prevent this from occurring.

Another concern is around data adequacy with the EU. This came after a move this week by the 27-member bloc to formally recognise the UK’s data protection standards as offering an equivalent level of protection to the EU GDPR after more than a year of talks, which was welcomed by businesses.

“Data and its freedom to cross borders between the EU and the UK has remained a critical issue post-Brexit, so the European Commission granting the UK data adequacy will come as a welcome relief to the thousands of companies, particularly those in the financial and healthcare sectors, who would otherwise have had to implement onerous additional transfer safeguards,” says Rob Masson, CEO of The DPO Centre, a specialist organisation that provides data protection compliance and representation services to UK firms.

However, the committee warns that any new trade agreements – such as the planned entry of the UK into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) – may undermine this arrangement.

In consultations held by the committee, the Motion Picture Association, which represents the film and television industry, expressed reservations about accession to CPTPP on the basis that accession “may result in the embrace of IP standards significantly lower than those present in UK law”, citing the current suspension of measures in the CPTPP which require signatories to have in place digital security technology to protect IP.

While the committee says it recognises the opportunities accession to CPTPP could bring, it says that acceding may require the UK to change the way it handles data, particularly EU citizens’ personal data, and therefore is calling on the government to outline what changes it anticipates as a result of accession to CPTPP, including those related to the management of EU citizens’ personal data and the subsequent impact on UK stakeholders.

Although far from a damning indictment of the UK’s ability to manage and facilitate digital trade, the report underscores that, if the country is to achieve its stated aim of becoming a global leader in digital trade, it urgently needs to develop a consistent “macro-strategy” in consultation with stakeholders – or risk inadvertently creating new barriers to exports.