Canadian Foreign Minister Chrystia Freeland outlined Canada’s NAFTA negotiating objectives in talk earlier this week, identifying the need to modernize NAFTA so that “all sectors of our economy can reap the full benefits of the digital revolution.” I posted yesterday on how the IP chapter could be used to level the playing field for innovation. This post discusses how the new e-commerce chapter, which will be the most obvious manifestation of a modernized NAFTA, offers the opportunity to address an increasingly important aspect of modern cross-border commercial activity.
Post Tagged with: "data localization"
Last week I posted on the leak of the draft notice from the Trump Administration on the NAFTA renegotiation, which identifies at least 40 issues, will serve as the starting point for discussions once talks begin. The post unpacked some of the general language to decipher what the U.S. has in mind on intellectual property issues. This second post examines some of the digital issues that U.S. officials have indicated will form a key part of the updated trade agreement.
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.
If all TPP countries implemented similarly strong privacy protections, there would be little need to consider alternative mechanisms to enhance public confidence in their privacy through additional legal safeguards. However, the Trouble with the TPP is that it actually weakens privacy protections by treating voluntary undertakings as equivalent to comprehensive privacy laws (prior posts include Day 1: US Blocks Balancing Provisions, Day 2: Locking in Digital Locks, Day 3: Copyright Term Extension, Day 4: Copyright Notice and Takedown Rules, Day 5: Rights Holders “Shall” vs. Users “May”, Day 6: Price of Entry, Day 7: Patent Term Extensions, Day 8: Locking in Biologics Protection, Day 9: Limits on Medical Devices and Pharma Data Collection, Day 10: Criminalization of Trade Secret Law, Day 11: Weak Privacy Standards). The TPP goes further in harming privacy, however, by restricting the use of data localization requirements that might otherwise be used to provide privacy protection.
Data localization has emerged as an increasingly popular legal method for providing some additional assurances about the privacy protection for personal information. Although heavily criticized by those who fear that it harms the free flow of information, requirements that personal information be stored within the local jurisdiction is an unsurprising reaction to concerns about the lost privacy protections if the data is stored elsewhere. Data localization requirements are popping up around the world with European requirements in countries such as Germany, Russia, and Greece; Asian requirements in Taiwan, Vietnam, and Malaysia; Australian requirements for health records, and Latin America requirements in Brazil. Canada has not been immune to the rules either with both British Columbia and Nova Scotia creating localization requirements for government data.
The Trans Pacific Partnership (TPP), a massive trade agreement that covers nearly 40 per cent of world GDP, wrapped up years of negotiation earlier this month. The TPP immediately emerged as an election issue, with the Conservatives trumpeting the deal as a source of future economic growth, the Liberals adopting a wait-and-see approach (the specific details of the agreement are still not public), and the NDP voicing strong opposition.
The focal point of most TPP discussion in Canada has centered on two sectors: the dairy industry, who would experience a modest increase in competition and receive a staggering multi-billion dollar compensation package, and the automotive parts sector, which would face Asian-based competition as a result of new, lower local content requirements (the industry is also pressing for a compensation package).
My weekly technology law column (Toronto Star version, homepage version) notes that lost in the discussion over imported butter and Japanese-made auto parts are the broader implications of the TPP. New rules on corporate lawsuits could result in more claims by foreign corporations against the Canadian government over national policies or court decisions (pharmaceutical giant Eli Lilly is already suing the government for $500 million over Canadian patent rulings) and an extension in the term of copyright beyond the international standard would lock down the public domain for decades and potentially cost Canadians hundreds of millions of dollars per year.