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differences, in turn, affect how national information intensive sectors like financial services
and telecommunications develop. Moreover, the regulation of personal information transfers
between Europe and third countries like the United States have touched off a series of high-
level trade disputes between the two economic areas (Farrell 2003). European multinational
corporations that have affiliates in multiple European Union member states and firms that
share information with countries lacking adequate data protection regulation often have to
take conflicting or complicated action to permit the processing and transfer of personal
information. Another consequence of the directive was the creation of a new political
institution, the Article 29 group. Intended to advise the European Commission on data
protection issues and composed of national data protection officials, it has surprisingly
become an integral source of soft law, institutionalizing a European privacy debate mediated
by national independent regulators.
This chapter explores the political development of the directive and attempts to make
sense of these outcomes. Specifically, the chapter will address two fundamental questions.
First, why did the EU take on the issue of data protection? Second, why did it regulate in
such a way that raised protection levels while allowing for continued national enforcement
variation? Far from a cultural residue or technological inevitability, I will argue that the
answer to these questions lies fundamentally in the historical sequencing of national data
protection regulation and the role that the resulting independent regulatory authorities played
in international politics. Had the internal market project pre-dated the institutionalization of
national data protection commissioners, it is unlikely that the directive would have emerged,
contained such strong protection of individual rights, or permitted national enforcement
variation. As internal market integration spilled over into data protection issues – firms and
identification number or to one or more factors specific to his physical, physiological, mental, economic,
cultural or social identity
Convention