Globalization and Social Protection: The Impact of EU and International Rules in the Ratcheting Up of U.S. Privacy Standards

Abstract

Contemporary critiques of globalization processes often focus on the potential leveling of regulatory standards and the export by the United States of neoliberal norms of deregulation and market facilitation. This Article, in contrast, examines the extrajurisdictional impact of EU data protection policy on the behavior of private parties in the United States, leading to a ratcheting up of U.S. privacy standards. The Article takes a socio-legal approach, exploring the many ways in which the EU Directive on the Processing of Personal Data affects U.S. practice through changing the stakes of US. players-including regulators, businesses, privacy advocates, lawyers, and privacy service providers-and thereby changing 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 Article finds that WTO law, rather than constraining the Directive's extra-jurisdictional impacts, provides the EU with a shield against U.S. retaliatory threats, thereby further facilitating a trading up of data privacy standards. The Article concludes by examining the conditions under which cross-border exchange can lead to a leveraging up of social protections such as data privacy standards. These include: the desire for firms to expand their markets, subjecting themselves to foreign regulatory policy; European states' ability to enhance their bargaining power by acting collectively, using the large EU market as leverage to change foreign standards; the nature of data privacy protection as a luxury good demanded by residents of relatively wealthy, more powerful jurisdictions; the externalities of U.S. under-regulation of privacy protection, legitimizing EU intervention; and the constraints of WVTO supranational trade rules on U.S. unilateral retaliatory threats. While the Article focuses on the issue of data privacy, its analysis applies to broad areas of law affected by economic globalization.