Canada's trade negotiator, Janice Charette, recently told a business audience that the Canada-U.S.-Mexico Agreement (CUSMA) is "the envy of the world." However, a growing minority view warns that the agreement poses a serious threat to Canada's digital sovereignty and economic prosperity.
Jim Balsillie: Canada was 'hijacked'
Jim Balsillie, co-founder of BlackBerry and chair of the Canadian Council of Innovators, argues that Canada was "hijacked" during the original CUSMA negotiations and is likely to be further disadvantaged in the pending renegotiation. "It was very clearly designed to shackle us — and it worked," he said. Balsillie's concerns center on Chapter 19 of the agreement, which he claims gives the United States excessive control over Canada's digital economy. He warns that Canada is on a path to becoming "Puerto Rico without a passport."
Chapter 19 and digital restrictions
Chapter 19 of CUSMA prohibits countries from imposing duties on digital products or treating them in a discriminatory manner. Critics argue that this provision reduces the capacity of the state to regulate data properly. Despite concerns, the chapter was accepted during the general euphoria of striking a deal in 2018. Evan Solomon, Canada's artificial intelligence minister, has described digital sovereignty as "the most pressing policy and democratic issue of our time."
Canada's concessions
Canada has already scrapped its planned digital services tax, which would have levied a three percent tax on digital giants like Amazon and Apple, in response to U.S. objections. Finance Minister Francois-Philippe Champagne claimed that repealing the tax would "significantly advance negotiations on a new economic and security partnership with the U.S." However, critics argue that this concession only whetted the American appetite for more. The U.S. also views other Canadian legislation, such as the Online Streaming Act (the "Netflix tax") and the Online News Act (under which Google agreed to pay $100 million to Canadian publishers), as discriminatory and contrary to the 2018 agreement.
Advisory council criticized
Balsillie is particularly incensed that Prime Minister Mark Carney's new advisory council on trade negotiations does not include representatives from digital and innovation companies, which make up 92 percent of the S&P 500's value. The council of 23 individuals is largely composed of members from trade associations, industries impacted by tariffs, and former politicians, including former federal Conservative leader Erin O'Toole. "I'm disappointed but not surprised," Balsillie said, blaming an "outdated policy class" that has failed to understand "21st century prosperity drivers."
As the renegotiation approaches, the debate over Canada's digital future intensifies. While Ottawa hopes to preserve much of the current deal, Balsillie and other critics warn that failing to secure digital sovereignty could have long-term consequences for Canada's economy and independence.
