Documents considered by the Committee on 21 February 2018 Contents

3Digital Single Market: Free flow of data

Committee’s assessment

Politically important

Committee’s decision

Not cleared from scrutiny; further information requested

Document details

Proposal for a Regulation of the European Parliament and of the Council on a framework for the free flow of non-personal data in the European Union.

Legal base

Article 114 TFEU; ordinary legislative procedure; QMV

Department

Digital, Culture, Media and Sport

Document Number

(39028), 12244/17 + ADDs 1–3, COM(17) 495

Summary and Committee’s conclusions

3.1The European Commission has proposed a draft Regulation15 which would prohibit “data localisation requirements”—rules introduced by Member States which require data processors to conduct data processing, and locate associated infrastructure, on national territory—because these requirements impede intra-EU trade and fragment the Single Market, increasing business costs and acting as a barrier to growth.

3.2In the Government’s Explanatory Memorandum16 the (then) Minister of State at the Department of Digital, Culture, Media and Sport (Matt Hancock MP) said that the Government had specifically asked the Commission to bring forward a proposal to tackle data localisation measures, and was therefore supportive of EU action in this area, but also noted that further clarification was needed regarding various aspects of the proposal. In our first report on the proposal,17 the Committee expressed regret at the lack of substantive analysis from the Government of the implications of EU exit for the proposal, and asked the Government to provide a wide range of clarifications about the implications of the text.

3.3On 13 December 2017 the Minister informed the Committee18 that the Estonian Presidency intended to seek an informal negotiating mandate from COREPER (the Committee of Permanent Representatives to the European Union) on 20 December 2017. The Minister did not provide the Committee with the clarifications that it had requested. In our subsequent report,19 the Committee indicated that we would regard the agreement of a mandate at this stage, in the absence of the requested clarifications, as a deprecation of Parliamentary scrutiny. The Committee therefore requested that the Government instruct the Permanent Representation to request in COREPER that the decision be deferred until sufficient scrutiny of the proposed mandate had taken place, and that a general approach should be agreed in Ministerial Council in due course, rather than an informal mandate.

3.4An informal mandate20 was agreed by COREPER on 20 December, meaning that the Council’s position is now established in advance of negotiations with the European Parliament. The Minister’s successor as Parliamentary Under Secretary of State (Margot James MP) informs21 the Committee the final text of the mandate was in line with the UK position, with no new exemptions from the principle of the free movement of non-personal data being added to the text. The Minister states that the Government supported the adoption of the informal mandate as it did not want to obstruct the business of the Council. The Minister also provides detailed answers to the Committee’s previous questions, including various clarifications regarding the draft Regulation.

3.5We regret the Government’s failure to communicate to the UK’s Permanent Representation our request that the agreement of an informal mandate in COREPER be deferred until we were provided with the necessary clarifications, and that a General Approach be agreed at a later date instead. In effect, the key stage of the legislative process for the purposes of parliamentary scrutiny has now concluded without Parliament being able to meaningfully exercise its scrutiny function. That a vote will eventually take place in the Ministerial Council at the end of the legislative process in no way mitigates this situation as there will be negligible scope at that late stage to influence the legal text, which will have been agreed by the Parliament and the Council in trilogue negotiations. The Department’s handling of this proposal falls short of our expectations and deprecates parliamentary scrutiny. We note that this is not the first instance of such difficulties arising.22

3.6The Committee notes the Government’s assurance that the final text agreed in COREPER broadly retained the scope and ambition of the Commission text and that no further exemptions were added, as well as the Government’s view that, post-withdrawal, the proposal will benefit many UK businesses with an EU presence, as it will remove artificial barriers to data flows and reduce the cost of providing data processing services. However, further clarification is needed regarding the new text on public sector data processing, as well as the effects of the Regulation on third country operators (see below). We note that if the Bulgarian Presidency succeeds in concluding negotiations with the European Parliament, the Regulation will apply to the UK before and during the envisaged Article 50 transition period, given that the Regulation will apply six months after its publication.

3.7We seek further clarification regarding the following aspects of the informal mandate:

3.8We retain the proposal under scrutiny. We ask the Government to respond to our queries by 28 March 2018. We also request an update in due course when the anticipated outcome of trilogue negotiations becomes clear, including an account of any changes that will negatively impact the UK when it leaves the EU, and, if appropriate, a request for a scrutiny waiver/clearance.

Full details of the documents

Proposal for a Regulation of the European Parliament and of the Council on a framework for the free flow of non-personal data in the European Union: (39028), 12244/17 + ADDs 1–3, COM(17) 495.

Background

3.9On 13 September 2017 the Commission adopted a proposal for a Regulation governing the free flow of non-personal data (hereafter ‘the Regulation’).23 The draft Regulation proposed to:

3.10The proposed Regulation would also require Member States to designate a ‘single point of contact’ to deal with issues concerning the application of the Regulation, and would establish a free flow of data comitology committee.

3.11In its Explanatory Memorandum,24 the Government indicated its support for the proposal, but said that it would seek further clarification in relation to aspects of Article 4 (Free movement of data within the Union),25 the scope of Article 5 (Data availability for competent authorities),26 and aspects of Article 6 (Data porting).27

3.12The Committee subsequently asked the Government for updates in relation to each of these points of clarification.28 We also asked the Government whether it was confident that the proposed Regulation’s provisions were sufficient to require Member States to repeal existing data localisation requirements other than where genuine public security grounds existed, or whether countries would be free to obstruct proper implementation of the Regulation once adopted on the basis of tenuous and weakly justified public security grounds.

3.13On 13 December 2017 the (then) Minister of State for Digital at the Department of Digital, Culture, Media and Sport (Matt Hancock MP) wrote to the Committee29 to indicate that the Estonian Presidency intended to seek an “informal [negotiating] mandate” from COREPER (the Committee of Permanent Representatives to the European Union) at its meeting on 20 December. The Minister did not provide the Committee with the requested clarifications, or answer the Committee’s other questions. He indicated that there had been a push among some Member States to increase exemptions from the principle of the free movement of non-personal data, raising concerns that the proposal’s liberalising effect might be diminished. He indicated that the Government would continue to support the Commission’s proposal and to resist changes that could weaken its scope and impact. Clarification was sought from officials but these did not address any of the Committee’s previous requests.

3.14In our report on 19 December 201730 we stated that we could not support the Government instructing the UK’s permanent representation to back the agreement of an informal mandate on the proposed regulation in COREPER, as none of the areas where further clarification was required had been addressed by the Government, little information had been provided to the Committee about the proposed mandate, and the Government had not made it clear on what basis it would instruct the permanent representation to vote.

3.15For these reasons, the Committee said that agreeing a mandate for the proposed regulation in COREPER “would seriously deprecate parliamentary scrutiny of the proposal” and asked the Government instruct the Permanent Representation “to request in COREPER that the decision be deferred until sufficient scrutiny of the proposed mandate has taken place, and that, instead of an informal mandate, a general approach be agreed in Ministerial Council in due course”.

Letter from the Minister on 18 January 201831

3.16On 18 January 2018 the Parliamentary Under Secretary of State at the Department of Digital, Culture, Media and Sport (Margot James MP) wrote to inform the Committee that the Estonian Presidency achieved its ambition to obtain an informal mandate for trilogue discussions at the 20 December meeting of COREPER. The Minister does not explicitly acknowledge the Committee’s request that the Government instruct the UK’s permanent representation to seek to defer a decision and to push for a general approach to be agreed in Ministerial Council. Instead, the Minister explains that:

“The decision to accelerate the adoption of an informal mandate was made by the Presidency on the basis of support expressed by the majority of ministers during a debate at a meeting of the Telecommunications Council on the 5 December. The UK has been a consistent supporter of action on the free flow of non-personal data and to tackle data localisation in the EU and consider this file to be of significant importance to driving future trade and the development of the digital economy. Whilst we recognise that it would have been preferable to have more time to work through the file, the Government supported its speedy adoption, as we did not want to obstruct the business of the Council on what is an important regulation.”

3.17The Minister stated that the UK supported the informal mandate for trilogue as the Government believed the final tabled document did not include any new text that went against the UK’s position on this file, and because the final text broadly retained the scope and ambition of the Commission text and resolved many of the points of clarification set out in the explanatory memorandum of 12 October.

3.18The Minister also enclosed a copy of the text of the mandate, and an annex which systematically answers the Committee’s previous questions. Key clarifications provided in the annex cover the following aspects of the Regulation:

Article 4 (Free movement of data within the Union)

Article 5 (Data availability for competent authorities)

Article 6 (Porting of Data)

Third country and EU exit implications

3.19On 25 January 2018, as part of a letter on the DCMS-related priorities of the Bulgarian Presidency, the Secretary of State (Matt Hancock MP) informed the Committee that the Free Flow of Non-Personal Data regulation would be a high profile file during the Bulgarian Presidency, and that the Bulgarians have stated their expectation that the file would be brought to a conclusion during their Presidency.

Previous reports

Seventh Report HC 301–vii (2017–19), chapter 6 (19 December 2017); Second Report HC 301–ii (2017–19), chapter 4 (29 November 2017).


15 Proposal for a Regulation of the European Parliament and of the Council on a framework for the free flow of non-personal data in the European Union COM(17) 495.

16 EM from the Minister, DCMS, to the Chair of the European Scrutiny Committee (12 October 2017).

17 Second Report HC 301–iii (2017–18), chapter 4 (29 November 2017).

18 Letter from the Minister, DCMS, to the Chairman of the European Scrutiny Committee (13 December 2017).

19 Seventh Report HC 301–vii (2017–19), chapter 6 (19 December 2017).

20 General Secretariat of the Council to Permanent Representatives Committee, Proposal for a Regulation of the European Parliament and of the Council (19 December 2017).

21 Letter from the Minister, DCMS, to the Chair of the European Scrutiny Committee (18 January 2018) including an annex of responses to the Committee’s questions.

22 Twenty-seventh report HC 71–xxix (2016–17), chapter 3 (18 January 2017).

23 Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Building a European Data Economy SWD (2017) 2 final.

24 Explanatory Memorandum from the Department of Digital, Culture, Media and Sport (12 October 2017).

25 Aspects of Article 4 on which clarification was sought include: the treatment of datasets that contain personal and non-personal data, and exempted and non-exempted data, including where these are difficult to separate out; the mechanism for assessing notified exemptions: the criteria, including any proportionality test, and the process in the event of a Member State challenging a negative decision; how the proposed notification system would capture localisation that occurs as a result of practices, guidance and procurement; and how the proposed transparency model will work in relation to sensitive data that is exempted.

26 Aspects of the scope of Article 5 where the Government sought further clarification included examples of the information that would apply, as well as the degree to which it would support public authorities seeking to access data held in non-public organisations.

27 Aspects of Article 6 on which further clarification was sought included the evidence in the impact assessment to support action on data porting; how the proposed code of conduct would have the desired impact on facilitating switching and increased market competition; and what appeared to be an ambitious 12-month deadline.

28 Second Report HC 301–iii (2017–18), chapter 4 (29 November 2017).

29 Letter from the Minister to the Chairman of the European Scrutiny Committee (13 December 2017).

30 Seventh Report HC 301–vii (2017–19), chapter 6 (19 December 2017).

31 Letter from the Minister, DCMS, to the Chair of the European Scrutiny Committee (18 January 2018) including an annex of responses to the Committee’s questions.




23 February 2018