Digital Trade, Data Protection and the EU Adequacy Club

Martina F. Ferracane, Bernard Hoekman, Erik van der Marel and Filippo Santi

No 19882, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Between 2000 and 2020, the EU granted so-called adequacy status to 13 states or territories, permitting EU citizens’ personal data to flow freely between the EU and the respective trading partners, including between countries accorded adequacy, creating a de facto (discriminatory) club. Adequacy decisions are unilateral, complementing more commonly observed and analyzed mutual recognition arrangements for technical regulations. We use structural gravity and synthetic control methods to assess the relationship between EU adequacy decisions and digital trade, using different approaches to define digital trade. We find that adequacy increases bilateral digital trade, driven to an important extent by EU-US agreements. We also show that digital trade between adequacy-receiving countries increases, providing evidence of a ‘club effect’ associated with EU adequacy decisions.

JEL-codes: F13 F15 (search for similar items in EconPapers)
Date: 2025-01
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