Analysis: The GDPR and international trade – evidence and implications for EU policy

Data regulations like the General Data Protection Regulation (GDPR) can strengthen global data privacy standards and increase trust, thereby benefiting trade. However, the GDPR has also created regulatory uncertainty, increased compliance costs, and hampered cross-border data flows, which have negatively affected EU trade and productivity.

To balance strong data protection with greater competitiveness, this analysis suggests revising the GDPR by streamlining enforcement, improving data transfer mechanisms, and enhancing compatibility with international cooperation on data privacy standards.

Hannes Berggren, what are the main positive and negative effects of the GDPR on international trade?

Data protection regulations, such as the GDPR, can improve trust in the digital economy, benefiting international trade. Moreover, the regulation has, to a certain extent, set the global tone for data privacy regulation in a way that reflects EU priorities. The GDPR is thus an example of the Brussels effect, which describes the EU's ability to set global rules through its market power and regulatory capacity.

At the same time, the GDPR has had certain negative effects on the EU's international trade and productivity. For example, it has made cross-border data flows more difficult, created regulatory uncertainty, and increased compliance costs for businesses. In other words, while the GDPR has strengthened EU influence over data protection, it has also come at the expense of trade growth, productivity and, thereby, competitiveness.

How has the GDPR affected the EU’s economic competitiveness?

The GDPR is often cited among the most burdensome EU regulations, not least for its impact on rapidly evolving digital and high-tech sectors. Our analysis, which is based on empirical studies and industry reports, indicates that the GDPR has hindered EU companies’ productivity and thereby their competitiveness in international markets.

This is partly because the GDPR has created regulatory uncertainty and increased compliance costs. But it is also because the GDPR has reduced EU companies’ data storage and processing capabilities, which is concerning, given that access to data and computing power are key factors in developing a trade policy fit for the age of AI.

Why is revising the GDPR important for the EU’s competitiveness?

The rapidly changing global landscape is putting significant pressure on the EU’s economic growth. However, beyond external challenges, the EU’s economic progress is also hindered by internal inefficiencies, such as insufficient integration in the single market and a regulatory framework that sometimes stifles trade and innovation. This issue was recently highlighted in the Draghi report on EU competitiveness.

Addressing weaknesses in the EU’s regulatory framework can help boost the EU’s trade and competitiveness, and the GDPR is one piece of this puzzle. The hope is that this analysis will help balance Europe’s demand for strong data protection with the need for better conditions in EU digital trade, ensuring that the GDPR remains fit for purpose in an evolving digital economy.

What is the National Board of Trade Sweden?

The National Board of Trade is the Swedish government agency for international trade, the EU internal market and trade policy. Our mission is to facilitate free and open trade with transparent rules as well as free movement in the EU internal market. We provide the Swedish Government with independent analyses, reports and policy recommendations and take into account the views of businesses of all sizes in international trade policy-related matters.