Data Flow v. Data Protection: Achieving Cross-Broder Harmonisation via EU Horizontal Clauses?

Digitalisation has triggered a profound transformation in the global economy, spanning investment and trade, intellectual property (‘IP’) rights and taxation. Whilst, on the one hand, it facilitates the automatic functioning of the business chain, on the other, digitalisation triggers concerns about privacy and security. This chapter explores the challenges raised by the digitalisation of international economic transactions and how to harmonise regulation. Considering data protection a human right within the European Union (‘EU’) under the EU Charter of Fundamental Rights has led to the adoption of a heightened regulatory framework that is more protective than that of third countries. Arguably, this translates across into international economic agreements, with the EU prompting the adoption of extensive trade-restrictive data protection exceptions via horizontal clauses in bilateral and multilateral international economic agreements. Such a regime has the potential to create a disparity between domestic and cross-border data flows and between data flows among different countries, potentially in conflict with the most-favoured nation (‘MFN’) and national treatment (‘NT’) principles under the General Agreement on Trade in Services (‘GATS’). The clash can result in either improving cross-border data protection worldwide or lowering data protection in cross-border transactions involving data transfer from and to the EU.