2025
AUGUST
NEW RENAISSANCE
INTERNATIONAL SCIENTIFIC AND PRACTICAL CONFERENCE
VOLUME 2
|
ISSUE 8
69
DIGITAL TRADE AND DATA SOVEREIGNTY: NEW FRONTIERS FOR
INTERNATIONAL ECONOMIC GOVERNANCE
Rahmonov Jaloliddin
Tashkent State University of Law,
Lecturer of the Department of International Law and Human Rights.
E-mail:
jaloliddin.rakhmanov@gmail.com
https://doi.org/10.5281/zenodo.16903881
Abstract.
This article explores the intersection of digital trade and data sovereignty,
examining the evolving challenges of balancing open data flows with national control over
information. Digital trade, driven by cross-border data flows, has become a key component of the
global economy. However, the increasing trend toward data sovereignty, as countries assert
control over data within their jurisdictions, raises complex questions in international economic
governance. This paper delves into the theoretical and legal debates surrounding data sovereignty,
highlighting the tensions between economic liberalization and regulatory autonomy. By examining
recent developments in trade agreements and international forums, the article aims to provide
insights into the future of digital trade governance.
Keywords:
Digital trade, Data sovereignty, Cross-border data flows, International
economic governance, Privacy protection, Regulatory autonomy.
Introduction
Digital trade
–
the exchange of goods and services delivered digitally
–
has become a
cornerstone of the global economy. Cross-border data flows are now the backbone of modern
trade, facilitating everything from supply chains to cloud computing and e-commerce. The rise of
digital trade promises efficiency and growth, but it also raises governance challenges. As data
moves across borders, countries are asserting control over information, a trend known as “data
sovereignty.” This push for sovereign control over data has sparked debates in international
economic law. How can the free flow of data, essential to digital trade, be reconciled with nations’
desire to protect privacy, security, and economic autonomy? This article explores these debates
and the emerging governance responses in trade agreements and international forums.
Digital trade encompasses online retail transactions, streaming services, and cloud
computing. It enables global communication, powers supply chains, facilitates financial services,
and connects buyers and sellers worldwide. The COVID-19 pandemic accelerated the reliance on
digital trade, making cross-border data transfers critical. Studies indicate that the economic value
of data flows may exceed that of physical goods. Digital trade enhances efficiency and innovation
but also exposes regulatory gaps, as most trade rules were designed for a pre-digital era. Data,
unlike goods or services, is intangible, can be replicated endlessly, and moves at the speed of light,
complicating governance.
Governments are increasingly asserting data sovereignty, the principle that data is subject
to the laws of the nation where it is collected. This is manifesting in regulations that localize data
storage and restrict data from leaving national borders. By early 2023, nearly 100 data localization
measures were in place across 40 countries. Countries pursue data sovereignty for privacy
protection, national security, and economic development.
2025
AUGUST
NEW RENAISSANCE
INTERNATIONAL SCIENTIFIC AND PRACTICAL CONFERENCE
VOLUME 2
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ISSUE 8
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For example, some argue data sovereignty can protect citizens’ privacy, while others fear
that unrestricted data flow could lead to economic imbalances or “digital colonialism.” However,
the concept remains contested, with critics arguing it leads to protectionism and undermines the
open Internet.
The clash between digital trade and data sovereignty is a critical tension in international
economic law. Advocates for free data flow argue it drives innovation and efficiency, while
proponents of data sovereignty stress that some restraints are necessary to protect privacy, security,
and national interests. The debate centers on balancing regulatory autonomy with trade
liberalization principles. Excessive data localization may hinder innovation, but unrestricted data
flows could undermine privacy and security. In the WTO, discussions about rules on cross-border
data flows have intensified, with the U.S. signaling a shift in position to prioritize domestic
regulation over global data openness.
With multilateral consensus elusive, many countries are turning to regional and bilateral
agreements to establish digital trade norms. Agreements like the CPTPP, USMCA, and RCEP
contain provisions on data flows, often with exceptions for privacy and security concerns. New
initiatives like the Digital Economy Partnership Agreement (DEPA) and OECD frameworks are
emerging but remain fragmented. These developments reflect the ongoing tension between global
trade rules and national sovereignty. As regional governance becomes more prevalent, global
consensus remains a challenge.
Legal scholars are debating whether existing trade laws can address digital trade and data
sovereignty or if new rules are needed. Some suggest that the General Agreement on Trade in
Services (GATS) can apply to digital services, while others argue for new agreements tailored to
data flows. A key debate is whether free data flow should be the default or if sovereignty should
take precedence. Additionally, questions of fairness and power arise, with developing countries
expressing concerns about being left behind in the digital economy. The goal is to find a balanced
framework that respects both economic imperatives and sovereign interests.
Conclusion
Digital trade and data sovereignty present a major challenge for international economic
governance. The debate between free flows and local control, global rules and national policies, is
intensifying. Achieving a balance that fosters digital trade while protecting privacy and national
interests will require innovative solutions, combining trade agreements, privacy protections, and
international cooperation. As the international community grapples with these issues, there is hope
that through dialogue and adaptive governance, digital trade and data sovereignty can coexist in a
secure and inclusive digital future.
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