Enhancing the European Union’s Trade Position Through Digital Standards Externalization

Abstract

Following the accelerated growth of global digital trade post-COVID-19, the European Union (EU) has actively projected its domestic digital regulations globally. Moving beyond traditional interpretations that view EU digital policies as purely normative or defensive, this paper demonstrates that digital standards externalization serves as a strategic tool of economic statecraft to bolster European trade influence. Utilizing state-level regulatory power through trade agreements and firm-level conditional market access, the EU leverages its market size to compel foreign governments and tech giants to adopt its frameworks. Case evidence reveals that this strategy levels the playing field for European businesses, reduces technological service dependencies on the United States, and strengthens the EU's leverage in international trade negotiations with global powers like China.