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International Data Flows and Privacy: The Conflict and Its Resolution

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  • Aaditya Mattoo
  • Joshua P Meltzer

Abstract

The European Union’s General Data Protection Regulation (GDPR) widens the scope and strengthens the enforcement of privacy standards. To protect privacy abroad, personal data is allowed out of the EU under strict conditions: if a non-EU country enacts privacy legislation equivalent to the GDPR, or if firms accept Binding Corporate Rules (BCR) or use Standard Contractual Clauses (SCC) for specific business deals. These conditions pose a challenge, particularly for developing countries. A GDPR-based national privacy law would impose the same high standard on all firms, even when they sell at home, leading to higher economy-wide costs of doing business. BCRs and SCCs have proved to be costly and time-consuming. While the GDPR may raise WTO issues, litigation cannot address the central challenge: preserving opportunities for digital trade while respecting countries’ chosen levels of privacy protection. An alternative approach would involve negotiating agreements under which data destination countries protect the privacy of foreign citizens in return for source countries committing not to restrict data flows, as in the EU–US Privacy Shield and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). In parallel, and as a step toward multilateralizing these agreements, countries would develop common privacy principles, building upon the work in the OECD and APEC.

Suggested Citation

  • Aaditya Mattoo & Joshua P Meltzer, 2018. "International Data Flows and Privacy: The Conflict and Its Resolution," Journal of International Economic Law, Oxford University Press, vol. 21(4), pages 769-789.
  • Handle: RePEc:oup:jieclw:v:21:y:2018:i:4:p:769-789.
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    File URL: http://hdl.handle.net/10.1093/jiel/jgy044
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    Cited by:

    1. Bernard Hoekman & Martina Ferracane & Erik van der Marel van der Marel, 2023. "Digital Trade, Data Protection and EU Adequacy Decisions," RSCAS Working Papers 2023/37, European University Institute.
    2. Kyvik Nordås, Hildegunn, 2023. "Services in the India-EU Free Trade Agreement," Working Papers 2023:5, Örebro University, School of Business.
    3. Yoshinori Abe, 2020. "Data Localization Measures and International Economic Law:How Do WTO and TPP/CPTPP Disciplines Apply to These Measures?," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 16(5), pages 1-29, August.
    4. Richard Pomfret, 2020. "Global Production Networks, New Trade Technologies and the Challenge for International Institutions," Foreign Trade Review, , vol. 55(1), pages 21-41, February.
    5. Nordås, Hildegunn Kyvik, 2023. "Services in the India-EU free trade agreement," International Economics, Elsevier, vol. 176(C).
    6. Ferracane,Martina Francesca & Van Der Marel,Erik Leendert, 2021. "Regulating Personal Data : Data Models and Digital Services Trade," Policy Research Working Paper Series 9596, The World Bank.
    7. Erik Marel & Martina Francesca Ferracane, 2021. "Do data policy restrictions inhibit trade in services?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 157(4), pages 727-776, November.

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