Data localisation and international economic law: reconciling digital sovereignty with trade and investment disciplines

Abstract

This article examines whether state measures requiring data localisation, restricted transfer and increased regulatory control of platform generated data can be reconciled with international economic law (IEL). The central question is whether data localisation measures, justified on cybersecurity and sovereignty grounds, can satisfy the disciplines of market access, national treatment, and General Agreement on Trade in Services (GATS) Article XIV necessity test, and investment protection standards. While data localisation and cybersecurity policies reflect states’ pursuit of digital sovereignty, they may simultaneously restrict cross border digital services, increase compliance costs for foreign platforms and affect digital investors. Using a doctrinal and comparative approach, the article analyses GATS Articles XVI, XVII and XIV, selected digital trade provisions in the United States Mexico-Canada Agreement (USMCA) and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and investment law principles relating to fair and equitable treatment, indirect expropriation and police powers. China’s Cybersecurity Law is used as the main example. The article argues that IEL permits legitimate regulation of platform data, but only where such regulation is transparent, non-discriminatory, proportionate and not a disguised restriction on trade or investment.