Digital trade, data protection and the EU adequacy club

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

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Between 2000 and 2020, the EU granted 14 so‐called adequacy decisions, permitting EU citizens' personal data to flow freely between the EU and the respective trading partners, including among the countries accorded adequacy. Most adequacy decisions are unilateral, complementing the more commonly observed and analysed mutual recognition arrangements for technical regulations. Using structural gravity to assess the relationship between EU adequacy decisions and digital trade, and applying different approaches to define digital trade, we find that adequacy increases bilateral digital trade between the EU and the adequate countries by 7–9% compared to non‐digital trade. We also provide evidence of a ‘club effect,’ with digital trade increasing between countries that have been granted adequacy, but only to the extent that the USA is part of the club. Using synthetic control methods, we show that the magnitude of the club effect varies across countries.

Keywords: trade costs; recognition; data protection; clubs; digital trade (search for similar items in EconPapers)
JEL-codes: D18 F13 F14 L88 O38 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2026-01-31
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Published in Economica, 31, January, 2026, 93(369), pp. 230 - 259. ISSN: 0013-0427

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