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19th Report Contents

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Scrutiny of international agreements: Digital Economy Agreement with Singapore, and Sixth Protocol to the Convention on a Very High Neutron Flux Reactor

Agreements reported for information

Digital Economy Agreement between the United Kingdom of Great Britain and Northern Ireland and the Republic of Singapore (CP 602, 2022)1

1.The Digital Economy Agreement between the United Kingdom of Great Britain and Northern Ireland and the Republic of Singapore (the DEA) was laid on 11 March, and the scrutiny period is due to end on 9 May 2022. It was considered by the Committee on 7 April 2022.

2.The DEA focuses on facilitating trade in digital goods and services with the aim of “making it easier for UK business to target new opportunities in both Singapore and the wider region”.2 It includes articles on cooperation, digital markets, data flows, safeguards and electronic payments. The Agreement is an amending treaty, amending and inserting new provisions into the existing UK Singapore Free Trade Agreement (the UKSFTA).3

3.The Explanatory Memorandum (EM) published alongside the Agreement explains that “in 2019, the digital sector alone contributed approximately £151 billion to the British economy, employing almost 5% of the national workforce”.4 On signature of the Agreement, the Government described the Digital Economy Agreement with Singapore as “deeper and wider than previous trade agreements covering the modern digital economy”.5

4.Witnesses who submitted written evidence to the Committee broadly agreed with this description. The Professional and Business Services Council said that “the DEA contains a number of provisions which may be regarded as ‘best in class’”.6 The CityUK noted that the Agreement “provides an important mechanism to reduce digital trade barriers”, which has been welcomed by industry.7 TechUK equally welcomed the Agreement, stating that it “contains some of the most advanced provisions on digital trade, innovation and regulatory cooperation of all of UK’s agreements to date”.8 The Federation of Small Businesses welcomed the Agreement “as a model that should set precedents for digital trade chapters in the UK’s future Free Trade Agreements”.9

5.Witnesses have, however, also raised some concerns relating to data protection, and identified some missed opportunities for stronger commitments on network neutrality, safety and security, and cooperation. These are set out below.

Digital trade and data flows

6.The Agreement enables cross-border data flows, does not require the localisation of data, and contains practical provisions for paperless trading, electronic transactions, electronic contracts, e-authentication and e-invoicing. These have generally been welcomed by witnesses. The City of London Corporation, for example, highlighted that “the DEA achieves a key ask of the FPS sector in enabling the free flow of data, including financial services data. This will provide greater certainty for firms when engaging in cross border trade, thereby securing existing levels of openness”.10

7.The Federation of Small Businesses also welcomed the facilitations included in the DEA, which they considered would benefit SMEs.11

Data protection

8.While some witnesses stated that the right balance had been struck between the free flow of data and data protection,12 others were more cautious or nuanced.

9.Consumer organisation Which? explained that although Article 8.61-E states that each Party must maintain a legal framework on the protection of personal information, its sole requirement is “to take into account the principles and guidelines of relevant international bodies”.13 This leaves open the possibility of Singapore adopting guidelines, for example those of the Organisation for Economic Cooperation and Development (OECD), that have a lower level of protection than those offered by the UK’s General Data Protection Regulation (GDPR) regime.

10.Dr Emily Jones et al highlighted a drafting change in the DEA—compared to wording used in previous UK trade agreements—that offers stronger protections. The DEA omits references to the enforcement of voluntary undertakings, which are “widely viewed as providing lower levels of protection”.14 Dr Jones explained that, in this regard, the DEA limits “the risks of downward pressure on UK’s data protection standards”.15

11.Nevertheless, Dr Jones also noted that Singapore has not received an adequacy decision from the EU or the UK, and that Singapore’s domestic data protection laws are considered less stringent than the UK’s. Should the UK grant Singapore an adequacy decision, it will be important that this does not undermine the UK’s data adequacy with the EU through inadvertent onward transfers of EU data.16

12.We call on the Government to provide its assessment of how personal data transferred from the UK to Singapore under the DEA will be protected, and how the protection of personal data will be monitored after the Agreement has entered into force. We also call on the Government to set out its assessment of whether the DEA could have an impact on the EU’s decision on UK data adequacy.

Consumer protections and priorities

13.The Agreement contains a dedicated online consumer protection Article (Article 8.61-M), under which “each Party shall adopt or maintain measures that protect consumers engaged in digital trade, including laws and regulations that proscribe misleading, deceptive, fraudulent, and unfair commercial practices that cause harm or potential harm to consumers”.

14.Which? welcomed the emphasis in the DEA’s Objectives and Scope on “the importance of adopting frameworks that promote consumer confidence in digital trade”.17 TechUK considered the DEA to be “in line with best practice in international trade agreements, providing strong commitments for the protection of consumers online”.18

15.Dr Emily Jones et al noted, however, that the absence of strong commitments from Singapore on network neutrality was a missed opportunity, as such commitments had been called for by UK consumer organisations and “are central to protect an open and innovative internet, prevent network managers from censoring, filtering or charging more for specific contents”.19

16.Which? referred to several specific measures which could benefit consumers “including a commitment to no customs duties on electronic transmissions, facilitating electronic transactions and contracts, and measures to prevent unsolicited commercial electronic messages or spam”.20

Security and safety online

17.The DEA contains a dedicated provision on maintaining safety and security online (Article 8.61-O)—the first of its kind that the UK has agreed to in a trade agreement.21

18.The City of London Corporation and the Professional and Business Services Council explicitly welcomed the commitments on collaboration on cyber security included in Article 8.61-L,22 but the Council also acknowledged that the DEA does not actually include firm commitments for action.23

Looking ahead

19.Under Article 8.61-V the Parties will seek to convene a Digital Economy Dialogue to “promote relevant collaboration efforts and initiatives between the Parties”. The Dialogue may also include participation from other interested stakeholders, with the DEA citing “researchers, academics, and industry” as examples. The EM accompanying the Agreement does not set out what plans the UK Government has to convene such Dialogue.

20.We call on the Government to set out what plans it has to convene a Digital Economy Dialogue, and whether it intends to invite other stakeholders, including consumer groups and digital rights groups, to contribute to the Dialogue.

Entry into force and implementation

21.Unless otherwise agreed, the Agreement will come into force on the first day of the second month after both Parties have confirmed in writing that they have completed their respective legal procedures.24

Territorial scope and consultation

22.The DEA applies to the UK and will be extended to the Crown Dependencies and Gibraltar. The EM explains that the Crown Dependencies and Gibraltar were consulted on the Agreement and that agreed text was shared with them prior to publication.25

23.Although the content of the Agreement does not relate to devolved matters, the EM states that the UK Government consulted with the Devolved Administrations on the negotiating mandate for the Agreement and provided regular updates. The EM lists some of the areas that were discussed, including “ongoing regulatory co-operation, the digitisation of trade administration documents, and cross-border data flows”.26

Governance and amendments

24.The DEA does not establish any new governance Committees. The Federation of Small Businesses told us that it would have welcomed specific provision to establish a dedicated e-commerce Committee to take into account SME interests.27

25.As the DEA forms part of the existing UKSFTA, the EM explains that it will be subject to that Agreement’s procedures for dispute resolution. We note that UKFSTA provides for arbitration in circumstances where the Parties are unable to settle a dispute through consultation. Similarly, the DEA will be subject to UKSFTA’s procedures for termination and amendments.

26.The Parliamentary Report published alongside the UKSFTA to explain the differences between the UK Free Trade Agreement and the underlying EU one, set out that the UKSFTA may be amended either by the Parties or, in certain circumstances, by the Trade Committee established under the Agreement.

27.However, it is unclear which provisions can be amended by the Trade Committee and which amendments would be subject to parliamentary scrutiny under the Constitutional Reform and Governance Act 2010. The UKSFTA simply provides that “the Parties may, in the Trade Committee or relevant committee established by the Parties under this Agreement, adopt a decision amending this Agreement, where provided for in the Incorporated Agreement”.28 The EM accompanying the DEA does not provide further clarity, simply stating that “further amendments may engage the parliamentary scrutiny process where applicable under the conditions set out in the Constitutional Reform and Governance Act 2010”.29

28.We call on the Government to explain whether the Trade Committee (or any other governance committee established under the UKSFTA) may amend the provisions inserted by the DEA into the Free Trade Agreement with Singapore. We repeat our long-standing recommendation that the Government should publish clear guidelines on how it decides whether treaty amendments should be subject to ratification (and therefore laid for parliamentary scrutiny under CRAG).30

29.Dr Emily Jones et al also drew attention to the publication of three Memoranda of Understanding (MOUs) that relate to the DEA. Dr Jones explained that:

“Alongside the DEA text, the UK and Singapore have entered into three Memoranda of Understanding, focussed on digital identities cooperation, digital trade facilitation, and cybersecurity cooperation. The nature of these commitments, although non-binding, is reminiscent of the dynamic found in framework conventions—where the bulk of the substantive commitments are not agreed upon from the start. There is thus a risk that actual regulation will take place via MoUs, which are less accountable and provide less opportunities for public participation and Parliamentary oversight than formal treaties, such as free trade agreements. Due to the extensive scope of the digital provisions and the unusual structure of the agreement, it is important that the UK-Singapore DEA is properly scrutinised by Parliament.” 31

30.We note that the Government has published three MOUs relating to digital identities cooperation, digital trade facilitation, and cybersecurity cooperation.32 We call on the Government to provide assurances that future substantive commitments will be made through the UKSFTA (and not these MOUs), and that Parliament will be notified of any significant changes to the MOUs.

31.We report the Digital Economy Agreement between the UK and Singapore to the House for information. In particular, we highlight our comments at paragraphs 12, 20, 28 and 30.

Sixth Protocol to the Convention on the Construction and Operation of a Very High Neutron Flux Reactor (CP 635)33

32. The Sixth Protocol to the Convention on the Construction and Operation of a Very High Neutron Flux Reactor (hereafter the Sixth Protocol), was laid on 1 March 2022, and the scrutiny period is due to end on 26 April 2022. It was considered by the Committee on 7 April 2022.

33.The Sixth Protocol amends a Convention originally signed between the governments of France and Germany in 1967, which the UK joined in 1974. The Convention deals with funding and other arrangements for the Institut Laue-Langevin (ILL) in Grenoble, a centre for scientific research using neutrons that is jointly owned, funded and managed by France, Germany and the UK.

34.The purpose of the Sixth Protocol is to extend the Convention for up to another ten years once the Fifth Protocol elapses, i.e. from 2024 to 2033.34 It makes provision for the three governments to decide by the end of 2027 whether to shut down the reactor at the end of 2030, or to extend its operation until the end of 2033, after which it will be decommissioned.35 The facility is nearing the end of its operational life, but a new, higher-specification facility—the European Spallation Source (ESS)—is being built in Sweden.36

35.The Sixth Protocol makes some further amendments to the Convention. For example, it allows the ILL to establish its own rules on procurement.37 It also amends the wording on the movement and residence of individuals employed by or doing research for ILL to specify that the Governments will facilitate this in accordance with their “relevant laws and regulations”. The EM states that this amendment is being made further to the UK’s withdrawal from the EU and reflects wording used in other science and cooperation agreements.38

Governance and amendments

36.The Convention provides for arbitration if any dispute concerning application or interpretation cannot be resolved by negotiation between the Parties. The Sixth Protocol provides that, in the event of a dispute, if the Parties fail to appoint an arbitrator within the specified period, the Secretary-General of the Permanent Court of Arbitration will do so instead.39 This replaces the previous arrangement where the appointment would be made by the President of the Court of Justice of the European Union. The EM explains this is in response to the UK’s withdrawal from the EU.40

37.Amendments to the Convention have been made through successive Protocols. The EM explains the Sixth Protocol follows the practice of previous ILL Protocols by replacing whole articles of the Convention that are being amended.41 We note that the EM does not confirm whether Protocols are the sole mechanism for making amendments to the treaty and, consequently, it is unclear whether amendments would always be subject to ratification and laid in Parliament for scrutiny under the Constitutional Reform and Governance Act 2010 (CRAG).

Entry into force

38.The Sixth Protocol will enter into force on the first day of the second month after all three governments have confirmed they have completed their internal procedures.42 The EM states that no legislation will be necessary for the UK to implement the Sixth Protocol.43

Territorial scope and consultation

39.The Sixth Protocol applies to the UK.44 Government guidance on EMs states that EMs should include a section on consultation, summarising the nature of consultation undertaken with devolved administrations, Crown Dependencies and Overseas Territories, and other stakeholders.45 The guidance provides suggested wording to be used depending on whether a treaty covers subject matter that is:

• devolved;
• reserved but with implications for the devolved administrations; or
• fully reserved with no implications for the devolved administrations.

40.The EM for this Agreement does not mention the devolved administrations, whether they were consulted, or whether the Sixth Protocol relates to a devolved or reserved matter. In this context, we note that UK Research and Innovation (UKRI) is the shareholder in ILL on behalf of the UK and that their operations and funding are a reserved matter.

41.We call on the Government to review its quality assurance processes to ensure that all EMs include the specified wording on consultation with the devolved administrations, in line with existing Government guidance.

42.We report the Sixth Protocol to the Convention of 19 January 1967, as amended, on the Construction and Operation of a Very High Neutron Flux Reactor to the House for information. In particular, we highlight our comments at paragraph 41.

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