The Power of EU Collective Action: The Impact of EU Data Privacy Regulation on US Business Practice

Abstract

Contemporary critiques of globalisation processes often focus on the potential levelling of regulatory standards and the export by the United States of neoliberal norms of deregulation and market facilitation. This paper, in contrast, examines the extra‐jurisdictional impact of EU regulatory policy on the behaviour of foreign private parties, even in powerful states such as the United States. Shaffer finds that the threat of curtailing access to the EU’s large market provides the EU with leverage. By acting collectively, EU Member States can magnify the impact of European policy on US business practice and enhance EU Member State clout in the negotiation of de jure and de facto foreign standards. The site of analysis is the current dispute between the United States and the European Union over the provision of ‘adequate’ data privacy protection in accordance with the EU Directive on data privacy. The paper explores the many ways in which the Directive affects US practice through changing the stakes of US players – including regulators, businesses, privacy advocates, lawyers and privacy service providers – and thereby shifting the playing field in the United States on which competing interest groups clash. In examining the interaction of EU law, US practice and international trade rules, the author finds that WTO law, rather than constraining the Directive’s extra‐jurisdictional impact, provides the EU with a shield against US retaliatory threats, thereby facilitating a trading up of data privacy standards. The paper concludes by examining the conditions under which cross‐border exchange can lead to a leveraging up of social protections: the desire for firms to expand their markets, Member States’ collective bargaining power buttressed by market clout, the nature of luxury goods, the externalities of foreign under‐regulation legitimising EU intervention, and the constraints of supranational trade rules.