What would Brexit mean for marketing regulations?

Leaving the EU could create a two-tier system between British consumer protection laws and those on the continent, posing new barriers to trade.

WPP CEO Sir Martin Sorrell was noticeably gloomy about the potential consequences of Brexit during Advertising Week Europe in April. He suggested that if the UK was no longer part of the EU single market, his advertising group would “lose influence“ in four of its top 10 markets, namely Germany, France, Italy and Spain. “I know clients will close plants and jobs will go,” he added.

Sorrell was expressing the fear of the ‘remain’ campaign that by trading outside of the EU bloc, Britain will face higher tariffs and trade costs and new barriers to doing business. This claim is fiercely contested by the Brexit camp, which argues that Britain’s economic strength will compel other nations to continue trading with it on favourable terms.

Advertising Association CEO Tim Lefroy, who is not taking a public stance on the referendum, argues that the ad industry “will be resilient whether we are in or out” because of Britain’s strength as an exporter of advertising services. The trade body’s latest Advertising Pays report calculates that Britain exports £4.1bn of advertising services every year and the country’s balance of payments surplus for advertising is the biggest in Europe (£1.6bn). It also notes that in the past decade, British companies have won more Cannes Lions awards than any other country in Europe.

Beyond the export question, there are various thorny regulatory issues for marketers to pick through. Britain has its own independent regulatory body in the Advertising Standards Authority, so Brexit would not alter the ethical standards that British marketers and brands already adhere to. However, in areas such as consumer protection, product law and copyright, Brexit could potentially create a two-tier system because Britain would no longer be bound by rules governing the rest of the EU.

These different regulatory systems could present further barriers to trade, and the British government will need to decide how closely to match existing EU laws in these areas with any new proposed legislation. Ian Twinn, public affairs director at advertising trade body ISBA, which is also not taking a stance on the referendum, says: “Are we going to turn around to consumers who have just voted to leave the EU and say ‘we don’t like these ridiculous consumer laws, we’re going to take your rights away’? I don’t think brands would want that either because it would reflect badly on them.”

The Direct Marketing Association (DMA) takes a similar position on the question of data regulation. In April, the EU Parliament and Council ratified the new General Data Protection Regulation (GDPR). Due to come into effect in 2018, this law will govern how businesses in the EU manage, protect and administer data in the future. Chief executive at the DMA Chris Combemale believes Brexit would make no difference to data protection and privacy in Britain.

“If we opted to leave, it would enter into some form of trading relationship with the EU and data protection would form part of any such trading agreement,” he says. “Therefore, Britain would need to implement data protection legislation that was broadly equivalent with the GDPR.”

How quickly it could do so and how many of the EU’s consumer protections MPs would be willing to adopt are not simple questions to answer, however, since British ministers opposed and actively lobbied against many of the restrictions the GDPR will place on businesses.

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