New privacy rules make production in the EU relatively more expensive
Posted: Mon Jan 06, 2025 8:49 am
Europe: Made possible by the US
The study commissioned by the American Chamber of Commerce sees the new European privacy rules as a trade barrier between Europe and the US. The reasoning:
The European-American marketplace is responsible for $2.4 trillion in cross-border investments;
The US is the EU's largest importer;
Europe has the largest share of world trade in services (logistics, distribution, facility management), with 23%;
Half of these services are made possible by ICT and cross-border data flows;
and through the European recognition of model contracts and safe harbour (a scheme that allows US companies to exchange data with Europe), privacy rules now do not pose a trade barrier in the EU-US import-export.
This will change when European privacy rules also apply to American companies, as the new rules propose, because:
Because the rules have an extraterritorial effect, US companies importing to Europe will also have to incur costs to comply with the rules;
and import costs are rising across the board: the willingness to use European (data) service providers is decreasing.
graph services export-import
Economic impact
Subsequently, a number of calculations were made in the study to calculate the impact on the economy.
US companies importing to the south africa phone data Netherlands will have to incur costs to implement the new legislation. Based on the calculation of the English government, exports between the US and the EU will decrease by 0.2 to 0.5% ( high and low cost estimate ). Compliance costs also affect exports from the EU to the US. These will decrease by -0.6 to -1%, because Europe's competitive position deteriorates.
The second scenario not only looks at trade relations between the EU and the US, but also between the EU and the rest of the world. Furthermore, the scenario assumes that safe harbour and model contracts are no longer recognised. This means that all non-EU companies must comply with the new rules if they want to trade with one of the member states. Imports by the EU will drop sharply, depending on the continent by -16 to -80%. But EU exports will also drop because the supply chain is disrupted, by -8 to -10%. This leads to a decrease in European GDP of 0.8 - 1.3%. For comparison, this is three times as much as the economic downturn during the current crisis.
Note: privacy rules are not conducive to competitive position
The calculations do not take into account the cost savings that harmonisation of rules can bring to companies (3.2 billion according to the European Commission) and focus.
The study commissioned by the American Chamber of Commerce sees the new European privacy rules as a trade barrier between Europe and the US. The reasoning:
The European-American marketplace is responsible for $2.4 trillion in cross-border investments;
The US is the EU's largest importer;
Europe has the largest share of world trade in services (logistics, distribution, facility management), with 23%;
Half of these services are made possible by ICT and cross-border data flows;
and through the European recognition of model contracts and safe harbour (a scheme that allows US companies to exchange data with Europe), privacy rules now do not pose a trade barrier in the EU-US import-export.
This will change when European privacy rules also apply to American companies, as the new rules propose, because:
Because the rules have an extraterritorial effect, US companies importing to Europe will also have to incur costs to comply with the rules;
and import costs are rising across the board: the willingness to use European (data) service providers is decreasing.
graph services export-import
Economic impact
Subsequently, a number of calculations were made in the study to calculate the impact on the economy.
US companies importing to the south africa phone data Netherlands will have to incur costs to implement the new legislation. Based on the calculation of the English government, exports between the US and the EU will decrease by 0.2 to 0.5% ( high and low cost estimate ). Compliance costs also affect exports from the EU to the US. These will decrease by -0.6 to -1%, because Europe's competitive position deteriorates.
The second scenario not only looks at trade relations between the EU and the US, but also between the EU and the rest of the world. Furthermore, the scenario assumes that safe harbour and model contracts are no longer recognised. This means that all non-EU companies must comply with the new rules if they want to trade with one of the member states. Imports by the EU will drop sharply, depending on the continent by -16 to -80%. But EU exports will also drop because the supply chain is disrupted, by -8 to -10%. This leads to a decrease in European GDP of 0.8 - 1.3%. For comparison, this is three times as much as the economic downturn during the current crisis.
Note: privacy rules are not conducive to competitive position
The calculations do not take into account the cost savings that harmonisation of rules can bring to companies (3.2 billion according to the European Commission) and focus.