Abstract:
The introduction of the EU's General Data Protection Regulation (GDPR) in 2018 created conditions that could raise the cost of trading services with the EU, especially where cross-border transfers of personal data are required. This paper examines whether the GDPR has truly affected trade in digital services between EU member states and third countries. Using a triple-difference strategy that compares EU trade with partners whose cross-border transfer regimes differ from the EU's conditional model to a suitable control group, this paper accounts for the fact that, over time, many partners have adopted a similar conditional model (so-called spillovers), following the phenomenon known as the "Brussels effect." Identification relies on two elements: sectoral data intensity, measured by the share of firms in each sector participating in the EU-US Data Privacy Framework (DPF), and partner regime alignment, distinguishing EU-style conditional regimes from non-aligned regimes. We estimate a structural-gravity PPML model with high-dimensional fixed effects, complemented by robustness checks using input-output-based intensity measures and a non-gravity triple difference on growth.