Brexit and India, Retained EU Law and the Digital Services Act

Brexit and India

On 18th October 2022, City AM published an article entitled “No Brexit karma in Delhi: Whisky and visas increasingly complicate £27bn trade deal between UK and India”.

The article explains that the deadline of 24th October 2022 originally set by former UK Prime Minister, Boris Johnson MP, for finalising the UK-India trade deal will be missed “after both parties have hit a roadblock in discussions”.

The article continues that “although a detailed reason hasn’t been given by both sides, sticking points include a steep import duty on British whisky for sale in India, and demands for more visas for Indian students and businesses”.

We shall have to see what happens, bearing in mind the comment in the City AM article that a free trade agreement between the UK and India “could cause the total value of bilateral trade to double by 2030, which would have profoundly positive effects on the UK economy”.

This latest development in the twists and turns of the UK-India trade and investment relationship should be viewed in the context of the generally positive developments in that relationship in recent times as evidenced by the UK Department for International Trade (DIT) factsheet published on 19th October 2022. This factsheet showed that total trade in goods and services (exports plus imports) between the UK and India was £25.7 billion in the four quarters to the end of Quarter 1 (Q1) 2022, an increase of 35.2% or £6.7 billion from the four quarters to the end of Q1 2021. Of this £25.7 billion:

  • Total UK exports to India amounted to £8.8 billion in the four quarters to the end of Q1 2022 (an increase of 21.3% or £1.5 billion compared to the four quarters to the end of Q1 2021); and
  • Total UK imports from India amounted to £16.9 billion in the four quarters to the end of Q1 2022 (an increase of 43.9% or £5.2 billion compared to the four quarters to the end of Q1 2021).

According to the DIT factsheet, India was the UK’s 12th largest trading partner in the four quarters to the end of Q1 2022, accounting for 1.9% of total UK trade.

The factsheet also showed that, in 2020, the outward stock of foreign direct investment (FDI) from the UK in India was £14.9 billion, accounting for 0.9 % of the total UK outward FDI stock, and that, in the same year, the inward stock of FDI in the UK from India was £10.6 billion, accounting for 0.6% of the total UK inward FDI stock.

One has the feeling that there is plenty of scope for future development in the trade and investment relationship between the two countries!

Brexit and Retained EU Law (REUL)

On 24th October 2022, the UK’s House of Commons European Scrutiny Committee (“the Committee”) published the UK Government’s response to the Committee’s report entitled “Retained EU Law: where next?”

The UK Government’s response to the Committee’s report includes the following points relating to the revocation and reform of REUL:

  • There will be a comprehensive programme of REUL reform ahead of the 31 December 2023 sunset date. To achieve this comprehensive reform, the Retained EU Law (Revocation and Reform) Bill 2022-23 (the Bill) creates powers to enable ministers to make changes to REUL where appropriate;
  • As regards which REUL will be prioritised for reform, this will remain a matter for government departments. The UK Government expects that Cabinet ministers will outline their priorities for reform in due course; and
  • The Department for Business, Energy and Industrial Strategy (BEIS) will be leading and coordinating a cross – Whitehall REUL reform programme. The Brexit opportunities unit will coordinate the programme of secondary legislation to follow the Bill.

Reportedly, the UK Government has also said that its Dashboard details relevant government departments’ best understanding of their catalogue of REUL at the time of publication and that the Dashboard will be further iterated and improved, as well as updated on a quarterly basis, although no mention was made of consolidated texts.

The whole issue of REUL is likely to be an important area of public focus in the coming months. Indeed, by way of example, it has been reported that, during the debate on the second reading of the Bill, the UK Government made a commitment to take the necessary action to safeguard the substance of any REUL and legal effects required to operate international obligations within domestic law. In this context, the UK Government apparently accepted that some retained EU law within the scope of the Bill’s sunset (or revocation) provisions is required to continue to operate the UK’s international obligations, including those under the UK-EU trade and co-operation agreement, the UK-EU withdrawal agreement and the Northern Ireland protocol.

As a further twist, there is speculation that the new UK Prime Minister, Rishi Sunak MP, may seek to delay the full implementation of the Bill, when enacted, because of the enormous amount of civil service time that might otherwise have to be devoted in implementing it – time that the UK Government can ill afford given the pressures of the current economic crisis.

Clearly, a developing situation!

Brexit and the Digital Services Act

On 4th October 2022, the council of the EU announced that it had formally adopted the Digital Services Act (DSA), which (according to its press release) “defines clear responsibilities and accountability for providers of intermediary services, such as social media, online marketplaces, very large online platforms (VLOPs) and very large online search engines (VLOSEs)”.

The DSA includes provisions on:-

  • Combatting the online sale of illegal products and services;
  • Countering illegal content online in a timely fashion;
  • Better protecting the interests of minors by banning various types of targeted advertising;
  • Restricting targeted advertising, based on gender, race and religion; and
  • Banning misleading interfaces known as “dark patterns” and practices aimed at misleading.

VLOPs and VLOSEs are subject to additional obligations and, in the context of Russia’s invasion of Ukraine, the DSA also introduces a crisis response mechanism to deal with the online manipulation of information.

The DSA is expected to come largely into force after fifteen months in 2024 and represents a significant step by the EU in dealing with what are perceived to be unacceptable aspects of the digital dissemination of information. It will have an impact on non-EU online platforms which target consumers and/or business users established or resident in the EU.

The UK’s approach to the issues covered by the DSA is still evolving.