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With U.S. Retreat from Online Privacy, Canada Needs to Safeguard the Internet in NAFTA Talks

The North America Free Trade Agreement renegotiation is likely to start within the next few months as the U.S. triggers provisions that will re-open Canada’s most important trade deal.  With U.S. Secretary of Commerce Wilbur Ross emphasizing the need to address digital economy issues, I wrote about a digital economy-era NAFTA in last week’s Globe and Mail, noting that there were some issues (including online contract enforcement and consumer protection) that should relatively uncontroversial.

In light of yesterday’s U.S. Congressional decision to overturn online privacy rules, it is worth revisiting the NAFTA renegotiation issue and consider whether Canada will need to safeguard its Internet policy. I noted last week that the U.S. was already likely to target two Internet-related privacy measures: data localization and data transfers. Data localization, which could mandate retention of personal information on computer servers located in Canada. has become an increasingly popular policy measure worldwide as countries respond to concerns about U.S.-based surveillance and the subordination of privacy protections for non-U.S. citizens and residents. The Trans Pacific Partnership included restrictions on data localization requirements at the insistence of U.S. negotiators and those provisions are likely to resurface during the NAFTA talks.  Similarly, limitations on data transfer restrictions could surface, restricting the ability to establish privacy safeguards and placing Canada in a difficult position with the EU requiring restrictions and NAFTA prohibiting them.

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March 29, 2017 1 comment News
Privacy Is Not A Crime by Kent Lins (CC BY-NC 2.0) https://flic.kr/p/SdZhmU

Fixing PIPEDA: My Appearance Before the Access to Information, Privacy & Ethics Committee

Last week I appeared before the House of Commons Standing Committee on Access to Information, Privacy and Ethics as part of its review of PIPEDA, Canada’s private sector privacy law. The ETHI study is expected to last several months and may provide the foundation for potential reforms. My opening remarks are posted below:

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March 28, 2017 2 comments News
Man on Sidewalk in Nikes (Buenos Aires, Argentina 2002) by Woody Wood (CC BY-NC 2.0) https://flic.kr/p/s1xotg

What Would a Digital Economy-Era NAFTA Mean for Canada?

U.S. Commerce Secretary Wilbur Ross is expected to file a notice of renegotiation of the North American free trade agreement within weeks, paving the way for talks that could reshape the Canadian economy. It became clear last week that the renegotiation will involve much more than just a few “tweaks”, as a U.S. congressional hearing saw officials trot out the usual laundry list of demands including changes to agricultural supply management, softwood lumber exports, and anti-counterfeiting measures.

Those issues will undoubtedly prove contentious, yet my Globe and Mail article notes that more interesting were comments from Mr. Ross about the need for new NAFTA chapters to reflect the digital economy. The emphasis on digital policies foreshadows a new battleground that will have enormous implications for Canadian privacy laws and digital policies.

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March 24, 2017 3 comments Columns
Mentre tassisti (e teppisti) devastano Roma, Uber è sempre più utilizzato by Automobile Italia (CC BY 2.0) https://flic.kr/p/SoruaR

C’mon Uber: Sales Taxes on Uber Rides Are Not a “Tax on Innovation”

Yesterday’s federal budget included plans to amend the law to ensure that GST/HST is applicable to ride sharing services such as Uber. The budget states that the government will:

Amend the definition of a taxi business under the Excise Tax Act to level the playing field and ensure that ride-sharing businesses are subject to the same GST/HST rules as taxis.

This change should not be particularly controversial. No one likes paying taxes, but equal application of sales taxes ensures appropriate revenue collection and a level-playing field for all businesses in the sector. As I noted in an earlier post, I expect that this is a first step toward extending requirements to collect and remit sales taxes on foreign digital services such as Netflix and Spotify.  Applying sales taxes to all foreign digital services is complicated – there needs to be thresholds implemented to ensure that administrative costs do not outweigh revenues collected – but Uber is well established in Canada with many local jurisdictions establishing a regulatory framework for the service.

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March 23, 2017 7 comments News
AM16 Seminar: Fiscal Policy in the New Normal by International Monetary Fund (CC BY-NC-ND 2.0) https://flic.kr/p/MuzgZS

Budget 2017: Why Canada’s Digital Policy Future Is Up For Grabs

Canadian Finance Minister Bill Morneau released his government’s 2017 budget today and while the spending promises may be underwhelming for some, the documents sets out an ambitious agenda for digital policy review. In fact, with changes to copyright, patent, broadcast, telecom, net neutrality, digital taxes, fintech, Canadian media, and Cancon all under consideration, the coming year will have enormous implications for the future of Canada’s digital policies.

The budget does include several spending promises, including $13.2 million over five years to support an affordable Internet access program, $50 million for kids coding programs, $29.5 million over five years for digital literacy, and $14.9 million for digitization of Indigenous language and materials. There is also new money for the growth of artificial intelligence sector and the much-anticipated revamping of innovation funding programs.

Yet the biggest digital implications may ultimately come from the policy reforms. First up may be new digital sales taxes. The budget includes a commitment to extend sales taxes to ride sharing companies such as Uber, a move that seems likely to ultimately lead to a broader extension of sales taxes to digital services such as Netflix.

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March 22, 2017 4 comments News