Evidence Submitted by TheCityUK to the House of Commons International Trade Committee inquiry into Digital Trade and Data.
This Evidence is offered in response to the House of Commons International Trade Committee inquiry into Digital Trade and Data. TheCityUK represents the UK-based financial and related professional services (FRPS) industry – an industry that contributes nearly 10% of the UK’s total economic output and employs over 2.3 million people, with two-thirds of these jobs and half the exports coming from outside London. It is the UK’s largest taxpayer and biggest exporting industry and generates a trade surplus greater than all other UK net exporting industries combined.
TheCityUK’s Liberalisation of Trade in Services (LOTIS) Committee exists to consider trade and investment liberalisation questions affecting UK financial and related professional services. The Committee brings together individual businesses and representative bodies in the field of financial and related professional services, together with other relevant stakeholders such as the City of London Corporation. The LOTIS Committee has followed international developments in digital trade and data, bearing in mind the transformative impact that these developments have had, and will continue to have, on our sector.
Our Evidence does not aim to offer fresh answers to each question in the Committee’s Call for Evidence. We have contributed to the evidence submitted by the City of London Corporation and by the Professional and Business Services Council (PBSC) and endorse the points that they have made.
In offering this short note of additional evidence, we would focus on only two points. The first is the need for any future global rules on digital trade to be as universal as possible in their coverage of all sectors, without exceptions. Financial services comprise a highly regulated sector, and there have in the past been suggestions that financial services should not be included in provisions against data localisation, on the grounds that regulators need data on regulated transactions to be available locally. We fully agree that all relevant data concerning financial services transactions should be available to local regulators. However, provided that such data is available on demand, we do not see that there needs to be an additional requirement for the data to be localised (i.e. processed and stored within a specified jurisdiction). Indeed, such a requirement can lead to fragmentation in data storage spread over many sites, with potential threats to data security and, in certain circumstances, to financial stability.
Secondly, TheCityUK is a strong believer in the importance of international alliances, at both the government and the business level, to bring about a satisfactory framework within which there can be openness in digital trade and data movement. At the government level, we hope that the UK’s G7 Presidency this year will provide an opportunity for the UK to exert a positive influence and harness others to do so; and we endorse the role that the UK is taking in the WTO Joint Statement Initiative (JSI) on E-Commerce. At the business level, TheCityUK has joined in subscribing to a recent Global Services Coalition letter on the priorities to be taken forward in the WTO JSI and to a multi-industry statement on cross-border data transfers and data localisation disciplines. The views put forward in these statements are in line with a recent report by TheCityUK and EY “The future UK-US trading relationship: Creating a transatlantic digital market in services”
We hope the views of TheCityUK will help the Committee in its inquiry, and would be pleased to provide further insight.