The Centre for Canadian Innovation and Competitiveness appreciates the opportunity to contribute to Global Affairs Canada’s consultation on a potential Canada-European Union Digital Trade Agreement (DTA). Canada should approach exploratory talks regarding a Canada–EU Digital Trade Agreement (DTA) with caution, as greater alignment with the EU may appear to provide a hedge against U.S. influence but risks importing a framework that impedes the potential for Canada’s digital economy and industries while raising compliance costs without increasing competitiveness. A DTA must not become a vehicle for embedding the EU’s digital sovereignty agenda or precaution-first templates, which have already constrained Europe’s own digital economy. Canada should reflect upon the reality that if it wishes to import Europe’s digital economy rules it will also import the moribund condition of the European digital economy that those very rules have engendered. Moreover, Canada already possesses a stronger foundation in the Comprehensive and Progressive Agreement on the Trans-Pacific Partnership (CPTPP) and potential accession to Digital Economy Partnership Agreement (DEPA). These frameworks prohibit data localization, enable cross-border data flows, and provide modular approaches that adapt to new technologies, while adopting certain EU policies would directly contravene these existing trade obligations. As the global trade system shifts, CPTPP and DEPA are emerging as preferable models for open, innovation-friendly digital commerce, an approach the EU is now exploring itself through discussions of possible CPTPP accession. Canada should be exporting these principles to Europe, not importing the Brussels Effect. In particular, the EU’s General Data Protection Regulation (GDPR) restricts cross-border data transfers in ways that fragment digital services, while the Digital Markets Act (DMA) hard-codes design mandates that reduce consumer choice and delay new product releases. Canada should not fall into the trap of substituting EU dominance for U.S. influence but instead safeguard its own ability to regulate technologies in a way that supports competitiveness, innovation, and growth. As a foundation for exploratory discussions, Canada should be guided by the following principles when evaluating any Canada-EU Digital Trade Agreement:
- Prioritize innovation and interoperability by favouring international, industry-led standards and outcome-based approaches.
- Reject adopting EU policies by not allowing rules that would lock in one regulatory model and limit future options for governing AI, data, or digital platforms.
- Align with CPTPP and DEPA norms by embracing cross-border e-commerce and data flows without the EU’s precautionary-first governance approach.
- Reject low-benefit, high-cost provisions by saying no to rules that burden Canadian innovators without offering clear commercial upside.
- Design for modularity and adaptability by structuring the agreement to evolve with technology, not freeze it in time (à la DEPA).
The following recommendations address specific issue areas:
- Keep PIPEDA’s Framework for Cross-Border Movement of Data: Canada should not trade its data protection principles for the EU’s approach. PIPEDA takes an organization-to-organization accountability model, contrasting with the EU’s country-to-country approach. Locking GDPR concepts such as adequacy determinations or consent-based transfer rules into a Canada–EU DTA would raise compliance costs and discourage efficient cross-border data use.
- Protect Intellectual Property by Avoiding Backdoors in Source Code Disclosure: Canada should avoid expanding carve-outs for forced source code disclosure, as other IP rights disputes rarely require access to source code.
- Maintain a Flexible Approach for Developing and Using Artificial Intelligence: The EU AI Act’s design choices would freeze Canada’s policy space. The agreement should limit itself to cooperative principles: risk-based oversight, post-deployment monitoring, and incident reporting, referencing international standards and including a standing regulatory cooperation forum.
- Ensure an Outcome-Focused Antitrust Enforcement: The DMA imposes prescriptive design rules on large platforms, constraining Canada’s case-by-case antitrust enforcement. Canada should limit competition policy cooperation to information exchange and emulating the CPTPP’s consumer protection laws.
- Promote Industry-Led Approaches to Interoperability: The EU’s rigid technical mandates should be avoided. Any standards referenced in the agreement should be international, open, and developed through transparent, industry-led processes.
- Protect Consumers Without Overregulating: Online consumer protection should focus on protecting consumers from fraudulent and deceptive commercial activities, not on soft-law precursors to binding obligations.
- Promote Open Government Data Without Stringent Licensing Barriers: Standard datasets should be published consistently across jurisdictions in open, interoperable, and machine-readable formats with clear licensing terms. A joint Canada-EU technical working group could publish common API patterns and reliability benchmarks.
- Minimize Counterfeits Through Collaboration and Smarter Enforcement: Fighting counterfeits in cross-border e-commerce depends on fast enforcement and effective traceability systems, not heavy-handed platform liability rules. Practical areas for joint action include customs cooperation, shared risk profiling, and pilot projects on interoperable authenticity markers.
- Promote Risk-Based Cybersecurity Cooperation: Operational rather than compliance-driven cooperation is most productive. High-value priorities include secure threat intelligence channels, joint botnet disruption campaigns, and co-funded R&D on secure-by-design tools.
Trade provisions should reinforce strong encryption and targeted lawful access through established legal processes, without creating obligations that imply backdoors.
