International agreements on cross-border data flows and international trade

This report uses a state-of-the-art gravity model to analyse the effects of selected international data agreements on bilateral trade flows in goods and services for the years 1995-2012. International data agreements can foster cross-border transactions by enhancing consumer trust and the interoperability of national regulatory frameworks, providing legal clarity for firms operating in distinct jurisdictions. Yet they can also involve compliance costs and restrictions on the free flow of data, potentially creating trade barriers. The report sheds light on these issues by examining how entering an international data agreement (e.g. the EU Data Protection Directive, the EU-US and Switzerland-US Safe Harbor agreements or the Council of Europe Convention 108) affects trade among participating countries relative to trade with or among non-participating countries. The results suggest that entering such agreements has a statistically significant and robust effect on trade, though this effect can vary according to the nature of the agreement.