Brexit Leaves EU E-Commerce Up in Air

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By Alexis Kramer and Joseph Wright

June 24 — The effects on electronic commerce from the U.K.'s vote to leave the European Union won't be immediate but could be wide-ranging, British attorneys told Bloomberg BNA.

Negotiations over the terms of the U.K.'s departure from the EU after its June 23 referendum could last up to two years. Those talks will determine whether the U.K. and the EU will pursue their own courses or remain friends with benefits.

There won't be much of an impact during the two-year period in which the terms of U.K.'s exit are negotiated, Mark Owen, a partner in the intellectual property and media group at Taylor Wessing LLP in London, told Bloomberg BNA June 24. After that, Owen said, it depends on what deal the U.K. reaches with the EU.

Alternate Arrangements

Norway, Iceland and Liechtenstein—all non-EU countries—are members of the European Economic Area (EEA) agreement, which provides for the free movement of people, goods and services within the EU. The U.K. might enter into a similar agreement as a non-EU country, given the large amount of trade it conducts with EU member states, Owen said.

“We will likely end up with something similar to what we have now, but this is all up in the air since no one has ever left the EU before,” he said.

Mark Webber, a U.K. native and an international technology and internet lawyer at Fieldfisher LLP in East Palo Alto, Calif., agreed with Owen that nothing would change in the short term.

“Today it's very clear what the laws are on e-commerce because the U.K. is still a part of the EU,” Webber said.

The majority of the EU's laws relating to e-commerce are in the forms of Directives, under which member-states—including the U.K.—were required to change their own laws to comply with harmonized principles.

The real uncertainty lies after the exit negotiations are concluded, Webber said.

The U.K. may be required to mirror some of the EU's laws if it were to join in on a trade agreement such as the EEA, but more likely it will be forced to go a different way, he said.

“In the longer term, I would anticipate the intrinsic demand and pressure of trade will cause the U.K. laws to align closely with EU digital and internet rules,” Webber said. However, he added that the U.K.—where the Brexit vote was driven in part by immigration concerns—may not be keen on entering an agreement such as the EEA, under which participating countries permit the free flow of people as well as goods and services.

James Leaton Gray, a consultant with London-based Kemp Little Consulting who focuses on digital media and technology law, said the EEA model doesn't appear to be an option. “At the moment, as immigration was one of the key drivers of the leave vote, I can't see how the negotiators could accept a model agreement that encourages the free flow of labor,” he said.

Gray said there will be a strong incentive for the EU to keep the U.K. involved in growing the digital economy, but at the same time it will be more difficult to ensure integration and that universal standards are adopted.

Voice in Digital Market Plan Uncertain

The U.K. has led the push for a digital single market across the EU, the Ecommerce Foundation said in its 2016 European B2C E-Commerce Report. It's unclear how that effort will continue to develop.

According to the report, e-commerce makes up 6.12 percent of the U.K.'s gross domestic product. The report said that the U.K. has the highest gross domestic product for e-commerce in Europe.

The U.K. has played a big role in lobbying and negotiating the Digital Single Market strategy, a regulatory framework designed to remove barriers between member states and establish uniform rules to facilitate growth and innovation in the digital economy, Owen said. (20 ECLR 700, 5/13/15).

The U.K. can still be involved while it is negotiating its departure from the EU. But the other 27 member states may not give the U.K.'s voice as much weight as they would otherwise, Owen said.

Paula Barrett, a partner and global head of privacy and information law at Eversheds International in London, echoed Owen's comment. She said that the U.K. will still be able to participate until its official exit from the EU. But whether its voice will carry the same weight remains to be seen, she said.

After its exit, she said that the U.K. won't have a a voice in relation to the Digital Single Market strategy per se, but will continue to be an important partner in the EU digital economy.

Webber said that because the U.K. is such an important market in the EU, the goal of the Digital Single Market to remove fragmentation can only be fulfilled across a smaller online market.

“What may be lost is the further harmonization plans like those in the DSM,” he said. “With the UK’s substantial online market outside of these plans, they can't deliver all they hoped for and promised.”

To contact the reporters on this story: Alexis Kramer in Washington at and Joseph Wright in Washington at

To contact the editor responsible for this story: Keith Perine at

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