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John Ivison: Washington’s set to eat Canada’s digital sovereignty for lunch in the CUSMA talks

Jim Balsillie said Canada was ‘hijacked’ last time around and is likely to be further disadvantaged in the pending negotiations

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Canada’s trade negotiator, Janice Charette, told a business audience this week that our trade agreement with the U.S. is “the envy of the world.”

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The consensus in Ottawa seems to be that if Canada can emerge from the renegotiation process with much of the current trade deal intact, it will be a win.

John Ivison: Washington’s set to eat Canada’s digital sovereignty for lunch in the CUSMA talks Back to video

But there is a minority view that looks at the Canada-U.S.-Mexico agreement through the lens of digital sovereignty and prosperity. From that perspective, Canada is not the most privileged of America’s trading partners: rather, it is the most captive.

Jim Balsillie, the co-founder of Blackberry and chair of the Canadian Council of Innovators, said Canada was “hijacked” last time around and is likely to be further disadvantaged in the pending negotiations.

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“It was very clearly designed to shackle us — and it worked,” he said.

Balsillie’s specific concerns are over provisions in Chapter 19 of the agreement that allow the U.S. an inordinate degree of control over Canada’s digital economy. It left the country on a path to becoming “Puerto Rico without a passport,” he said.

Chapter 19 forbade countries from imposing duties on digital products or treating them in a “discriminatory” fashion.

Concerns at the time that the chapter would reduce the capacity of the state to engage in proper data regulation were ignored in the general euphoria at striking a deal.

Evan Solomon, the artificial intelligence minister, has said digital sovereignty is “the most pressing policy and democratic issue of our time.” Yet, Canada has already scrapped its planned digital services tax, which would have levied a three per cent tax on digital giants such as Amazon and Apple, in the face of U.S. objections. At the time, Finance Minister Francois-Philippe Champagne said that the repeal of the tax would “significantly advance negotiations on a new economic and security partnership with the U.S.”

In fact, it only whet the appetite for more concessions.

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The Americans consider other legislation — including the Online Streaming Act, the “Netflix tax,” and the Online News Act, under which Google has agreed to pay $100 million to Canadian publishers — as discriminatory and against the terms of the agreement signed in 2018.

Balsillie said there is a reason why the U.S. administration plays hardball on the digital front. “That is where the tens of trillions are,” he said.

He is particularly incensed that Prime Minister Mark Carney’s new advisory council on trade negotiations does not include anyone from the sectors that make up 92 per cent of the S&P 500’s value — the digital and innovation companies.

The new council of 23 individuals is largely composed of people 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, pointing the finger at an “outdated policy class” that has failed to understand and appreciate “21st century prosperity drivers.”

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He said the U.S. has 26 trade advisory councils that incorporate 700 experts. “We have to build that kind of capacity. We can’t bring together an ad hoc group without deep subject matter expertise.”

“Carney’s approach has really been to manage erosion and focus on commodities,” he said. “Severe damage was caused by the Trudeau/Freeland clown show and the opposition alternatives are very weak.”

Balsillie said the CUSMA deal that came into force in 2020 has proven to be bad for Canada in terms of sovereignty and prosperity.

“We paraded like we’d won, but in the last five years Canada has had the poorest economic performance of the 50 developed countries in the world.” (Canada’s GDP per capita has shrunk 0.4 per cent per year since 2020.)

“We have to quit acting like (CUSMA) was a triumph,” he said.

Balsillie said he supports the concept of digital sovereignty but said the government is currently going backwards on achieving its goal.

He pointed to the $240 million committed to Canada’s AI champion, Cohere, to build a data centre. The money was then passed to CoreWeave, a U.S. company to build and operate the infrastructure because the government did not require Cohere to choose a Canadian supplier.

The Toronto-based company is reportedly in talks with Germany’s Aleph Alpha about a merger. Joelle Pineau, Cohere’s chief AI officer, told MPs recently that she is confident that Canada “will continue to be home for a lot of the work (the company) is doing.”

However, as the market awaits the government’s AI strategy, the prospects for digital sovereignty in Canada remain opaque.

Solomon is on record as saying the goal is “not to be the farm team for someone else’s economy.”

But that is precisely what the American side wants when it comes to the innovation sector.

There were 35,374 patents filed in Canada with the Intellectual Property Office in 2024. Only 4,304 were filed on behalf of Canadian residents, with U.S. residents making up 50 per cent of the rest.

Even when Canada produces the knowledge, the U.S. is capturing the value.

“I definitely think we need to get our commodities to market but we shouldn’t be blind about where the big money is,” said Balsillie.

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