Digital trade, data protection and the EU adequacy club

Ferracane, Martina F., Hoekman, Bernard, van der Marel, Erik and Santi, Filippo (2025) Digital trade, data protection and the EU adequacy club. Economica. ISSN 0013-0427

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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.

Item Type:	Article
Additional Information:	© 2025 The Author(s)
Divisions:	LSE
Subjects:	H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HF Commerce
JEL classification:	D - Microeconomics > D1 - Household Behavior and Family Economics > D18 - Consumer Protection F - International Economics > F1 - Trade > F13 - Commercial Policy; Protection; Promotion; Trade Negotiations; International Trade Organizations F - International Economics > F1 - Trade > F14 - Country and Industry Studies of Trade L - Industrial Organization > L8 - Industry Studies: Services > L88 - Government Policy O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development > O38 - Government Policy
Date Deposited:	11 Nov 2025 11:42
Last Modified:	11 Nov 2025 11:42
URI:	http://eprints.lse.ac.uk/id/eprint/130102

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