U.S. trade talks fuel worry in Canada over tech and AI rules

The U.S. Trade Representative’s mention of “digital trade alignment” as part of an agreement with Prime Minister Mark Carney’s government is fuelling concerns about Canada’s ability to set its own policy for technology companies.

The two countries appear to be on the cusp of a deal to reduce tariffs and address trade irritants. U.S. Trade Representative Jamieson Greer said in a social media post that it would include “comprehensive market access for all American goods, economic security commitments, digital trade alignment, and many important provisions.”

Former Prime Minister Justin Trudeau’s government introduced a number of policies aimed at regulating global tech giants operating in Canada, which led to frictions with both the Biden and Trump administrations. While Carney has diverged with his predecessor on some of those policies, his government’s artificial intelligence plan vows to build up domestic digital infrastructure to reduce reliance on foreign cloud providers.

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Investor Jim Balsillie, the former co-chief executive officer of BlackBerry Ltd. and current chair of the Council of Canadian Innovators, said trade agreements are no longer just about the free flow of goods, but rather are becoming “instruments of regulatory remote control.”

“What is the alignment that’s covered?” Balsillie said in an interview about Greer’s characterization of the deal.

“Is it liability for bad behavior? Is it copyright for how these algorithms ingest models? Is it the ability to do privacy or procurement or sovereign compute? There are many, many questions that go into governing a sovereign, prosperous country. And the devil’s going to be in the details.”

Balsillie said Canada opened the door to U.S. meddling in domestic policy in 2018 when it signed the Canada-U.S.-Mexico Agreement, which included digital trade rules that mandated cross-border data flows and restricted data localization, or requiring firms to store data locally.