The Brexit Trade Deal, what does it mean for the tech sector?
The UK-EU Trade and Cooperation Agreement sets the new terms of trade for business from 1 January 2021
The UK and EU have agreed a new Trade and Cooperation Agreement (TCA). The UK-EU TCA and the Northern Ireland Protocol replace the existing rules for activities carried out between the UK and the EU. This includes rules for buying and selling goods, providing services and for how long and for what reasons you can travel to the UK or the EU.
The new relationship will enter into force from 1 January 2021. A limited number of the new rules will be phased in over time, however for the majority of business activities the UK-EU TCA will apply immediately.
The new agreement will mean additional steps will be needed to do business between the UK and EU. Members will likely find that activities which did not require checks or paperwork before will do so under the new terms.
During the negotiations techUK worked with the UK Government, European Commission and our partners at DIGITAL EUROPE to achieve the best possible outcome for the tech sector in the negotiations. While any relationship outside of the EU Single Market and Customs Union cannot be frictionless, the deal contains a number of positive aspects for the tech sector which go above and beyond comparable EU free trade agreements.
Please see below a summary of key aspects of the UK-EU TCA for the tech sector.
You can also find here a list of documents including the full agreement and a summary document provided by the UK Government.
For detailed guidance on how to prepare for the end of the transition period vist our EU Exit hub.
If your business faces any disruption due to the implementation of the new agreement, please get in touch via firstname.lastname@example.org
Key elements for UK tech companies:
- Tariff and quota free trade and importing and exporting goods
- Data adequacy, the rules for transferring personal data between the UK and EU
- The digital trade chapter, the rules for doing business via digital channels
- Telecoms, mobile roaming and net neutrality
- Cyber security
- Providing services, professional services and the movement of workers to deliver services
- Financial Services
- European programmes
- Moving goods to, from and through Northern Ireland
Tariff and quota free trade and importing and exporting goods.
The UK-EU TCA eliminates tariffs and quotas from being applied to goods traded between the UK and the EU. This means goods exported or imported between the UK and EU will not face charges as they cross the border and there is no limit on the quantity of goods that can be traded.
The UK Government has provided guidance for importing goods from the EU and exporting goods to the EU after the transition period (additional guidance is needed for goods imported, exported or moved through Northern Ireland, further details on Northern Ireland can be found below).
Please note, while the deal removes tariffs and quotas it does not remove non-tariff barriers, i.e. the checks, paperwork and extra regulatory processes that need to be undertaken to legally place a product on the market.
For example no agreement was reached on mutual recognition agreements for certified products. This means manufacturers will need to get regulatory approval in both the UK and EU to place some products on the market.
Data adequacy, the rules for transferring personal data between the UK and EU
The transfer of personal data between the UK and EU is no longer allowed by default due to the UK’s departure from the EU. techUK has raised the importance of finding a solution to ensure the continued flow of personal data between the UK and EU since the outcome of the 2016 referendum.
During the transition period the UK was being assessed to determine if UK data protection laws offer an equivalent level of protection to the EU’s own. If deemed adequate, then personal data can continue to be transferred without taking extra steps beyond complying with the data protection laws of the jurisdiction the company is based in (i.e. the UK GDPR or the EU GDPR).
Alongside the UK-EU TCA the UK and EU published a statement allowing a further, up to six-month, bridge period to allow for the completion of a UK adequacy decision. During this period data can flow as it did when the UK was an EU member.
Further details on data, adequacy and the future relationship, as well as information on what to do if adequacy is not granted can be found here.
The digital tradev chapter, the rules for doing business via digital channels
A digital trade chapter agreed between the UK and the EU sets the terms under which businesses can provide products and services to each other via digital channels, such as over the internet. The EU does not normally agree full digital trade chapters and the inclusion of this advanced digital trade chapter is an important step forward and victory for the UK and EU tech sectors who argued that advanced provisions on digital trade should be included in the agreement.
Data flows; the UK-EU TCA creates a positive obligation in favour cross-border data flows to facilitate trade in the digital economy, a significant evolution in EU trade agreements which tend to be more restrictive on data flows.
This includes a ban on data localisation meaning UK/EU based companies and public bodies cannot, (unless in very specific circumstances) require data used when providing a product or service to be stored in a specific jurisdiction. The UK-EU TCA also prevents one party, as a prerequisite to doing business, requesting to see the source code of applications used to provide a good or service.
Electronic contracts, signatures and providing services digitally; for the vast majority of services the UK-EU TCA gives equal treatment to electronic signatures and electronic documents versus paper-based documents. The UK-EU TCA also contains clauses that mean services can be provided digitally by default without requiring prior authorisation.
Please note there are some specific exceptions, for example certain kinds of legal services, gambling services and broadcasting services. A full list of exemptions can be found in the digital trade chapter.
Consumer protection, data protection and online harms; the digital trade chapter places obligations on companies to ensure the protection of consumers engaging in e-commerce as well as ensuring consumer protection bodies can cooperate and enforce breaches of UK and EU consumer rights. There are also additional clauses to protect individuals against unsolicited direct marketing communications.
The digital trade chapter contains a commitment for both sides to ensure high standards of personal data protection and does not limit the ability of the UK or EU from taking policy action to protection privacy or to regulate online harms.
Emerging technology and cooperation; the digital trade chapter contains a positive obligation for the UK and EU to cooperate on the development of emerging technologies such as (but not limited to) AI and quantum computing. This will support dialogue between regulators and other public and private bodies as new technologies are developed. A common understanding and cooperation in these areas should support research and product development as well as compatible market rules allowing for technologies developed in the UK or EU to more easily be sold in each other’s markets. This is an important addition and one that techUK strongly supported in the negotiations.
The digital trade chapter also contains a number of other obligations for cooperation as well as review clauses so that the chapter as a whole (or parts of it) can be updated in future, for example to adjust to new technological developments or evolutions in the way UK and EU companies engage in digital trade.
Please see here guidance and information on providing digital, technology and computer services between the UK and EU after the transition period.
Telecoms, mobile roaming and net neutrality
The EU-UK TCA supports an open approach to the telecoms market, for example both UK and EU providers will have access to and use of each other’s telecom’s networks, including not having to wait for prior authorisation before they begin to deliver services. This is a high level of access which goes beyond what is traditionally included in free trade agreements.
Roam like at home will end on 1 January 2021. This means that individual mobile providers will need to determine whether roaming fees are charged to customers. The agreement contains a number of commitments to support consumers such as creating obligations for the transparent publishing of any roaming chargers as well as encouraging cooperation between providers.
The UK-EU TCA creates obligations on net neutrality this underpins commitments to an open internet, however it does not prevent either the UK or EU from taking action to protect the safety of internet users.
The UK-EU TCA creates a framework for UK-EU cooperation in the field of cyber security as well as the UK’s participation in the activities of expert bodies such as the European Union Agency for Cybersecurity (ENISA) and the Network and Information Systems (NIS) Cooperation Group as well as voluntary cooperation with the EU’s Computer Emergency Response Team (CERT-EU).
Providing services, professional services and the movement of workers to deliver services
The UK-EU TCA provides coverage for services roughly equivalent to other EU free trade agreements such as the EU-Canada and EU Japan agreements.
For example, service suppliers and investors will mostly not require a visa for short term trips or face limitations such as economic needs tests. EU Member States and the UK will not be able to discriminate against service suppliers and will have to treat them as if they were from their home jurisdiction. A local presence is not required to provide most services and there is ratchet clause in the agreement meaning that if either the UK or EU provides more favourable rules on services to other trading partners then the UK-EU TCA can be updated to match any new or more favourable terms.
However please note the services chapter has a large number of exemptions and local EU Member State rules will apply in certain circumstances.
This is because the EU Single Market for services is not complete and therefore individual Member States have their own rules. Some of these rules applied when the UK was an EU Member State, however there are now additional barriers. techUK members are strongly encouraged to refer to UK Government guidance on services trade, specific guidance from EU Member State Governments and to seek legal support where needed.
Professional services; the UK and EU did not reach agreement on the mutual recognition of professional qualifications. This means accountants, lawyers and others with recognised professional qualifications may need to seek recognition with the appropriate UK, EU or Member state level body.
Professional services also have a number of Member State level exemptions, UK and EU based lawyers, auditors and other professional service providers are strongly encouraged to seek guidance from their qualification provider or association.
Movement of workers to provide services; the end of freedom of movement also means additional rules and potential checks for travelling to the UK or the EU to provide a service.
The UK-EU TCA allows visa free travel, including for work, for up to 90 days in any 180-day period. However not all activities can be carried out visa free. The agreement contains a list of permitted activities which can be undertaken without requiring a visa or economic needs test.
For the vast majority of in person activities techUK members engage in there will be no requirement for a visa or an economic needs test. The list of permitted activities covers meetings, sales, consultancy work and post-lease/sales services such as repair, maintenance and the work of specialised staff related to the lease/sale.
There is no general visa free exemption for artists, musicans or for journalists, members who support workers in this category should look for UK and Member State specific exemptions.
Members should also bear in mind that individual Member States have listed reservations against the overall agreement meaning that in some EU Member States there will be more limited coverage on supplying services in person. techUK members are therefore encouraged to refer to the annexes of the UK-EU TCA (Annex servin-3: business visitors for establishment purposes, intra-corporate transferees and short-term business visitors pg 749 - 754) for specific details, please also see here UK Government guidance, including country-by-country guides on the trade in services.
The UK-EU TCA contains only limited agreements on financial services. The majority of financial services trade will be governed by uniliteral assessments undertaken by the EU and UK under the Financial Equivalence framework. Please see here guidance from the UK Government on preparing for the end of the transition period for financial services.
The UK-EU TCA will support enhanced cooperation between regulators as well as information sharing and bilateral dialogue in order to establish a durable and stable relationship. The TCA contains commitment to codify this framework for regulatory cooperation in a Memorandum of Understanding between the UK and EU. This will have limited immediate impact on market access for financial services but should help improve regulatory coordination in future.
The UK will associate to a number of EU programmes, these include Horizon Europe, Euratom Research and Training, and Copernicus.
Please note there may be changes in the rules of access due to the UK now being a third country rather than an EU Member State. techUK members are encouraged to review additional guidance from the programmes themselves as well as from the UK Government to determine what impact any changes might have.
The UK will not take part in Erasmus +, but has launched a new Turing Scheme which will support student exchanges. This will be a global scheme, not just focused on the EU.
Moving goods to, from and through Northern Ireland
Due to the unique position of Northern Ireland as a result of its history and special circumstances relating to the border with the Republic of Ireland, Northern Ireland has been granted a significant carve out from the UK-EU TCA.
This is carve out, as well as additional obligations are managed through the UK-EU Joint Committee and the Northern Ireland protocol. An agreement on the Northern Ireland protocol was reached in December 2020, members can find the UK’s command paper detailing the agreement here.
Guidance for businesses moving goods into, out of, or through Northern Ireland from 1 January 2021 can be found here. This includes information on customs, VAT and excise duties.
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