Canadian Bar Association weighs in on Canada’s potential DEPA accession

The Canadian Bar Association has issued recommendations as part of the Government of Canada’s continued exploratory discussions into joining the Digital Economy Partnership Agreement.

First signed by Singapore, New Zealand and Chile on June 2nd, 2020, the agreement’s purpose is to support trade in an increasingly globalized and digital economy. DEPA addresses some of the key digital economy issues regarding business and trade facilitation, data issues, emerging trends and technologies, digital inclusion, and small and medium enterprises (SMEs) through party cooperation.

Underlying many of the provisions in the agreement is the recognition that increasing transparency and the exchange of information would help facilitate commerce and reduce barriers to cross border trade for SMEs. Article 2.2, for instance, states that parties should endeavor to develop systems to support the exchange of data relating to trade administration documents and electronic records used in commercial trading activities. Module 10 of the agreement includes provisions that require parties to foster close cooperation of SMEs amongst countries and promote their growth. This enhanced cooperation is facilitated likewise through a mutual “exchange of information and best practices in leveraging on digital tools and technology to improve SMEs’ access to capital and credit”.

The Government of Canada’s interest in joining the agreement is outlined on their website.

“The DEPA aligns well with Canada’s international and domestic policy objectives. This includes encouraging e-commerce as a means of facilitating international trade and enabling trade diversification for Canadian businesses, including SMEs, in the near term.”

The Government likewise acknowledges the barriers businesses face in operating in the digital economy.

The Canadian Bar Association, as part of the ongoing consultation and exploratory discussions phase, issued their own recommendations to Global Affairs Canada on Thursday. The CBA’s Business Law, International Law, Commodity Tax, Customs and Trade and Intellectual Property Sections weighed in on the changes that would need to be addressed to ensure that DEPA adequately advances international digital trade. 

The CBA Section issued a number of suggestions, but of key importance to startup businesses were those regarding the inclusion of financial services within the ambit of DEPA, stronger standards for the regulation of artificial intelligence, and greater protection of intellectual property rights across borders.

Article 1.1 of the DEPA excludes financial services (outside of electronic payments) from the application of the agreement. The CBA Sections write that this exclusion may be a hindrance to emerging financial technology companies that often provide a broad range of services, including budgeting and personal finance software, outside of simply financial services. The integration of financial services and technology means that these companies rely on access to financial service providers’ data, the CBA recommendations state. Conversely, Article 8.1 seeks to promote the cooperation between financial technology and the parties to the agreement, and writes that parties “shall” promote the development of FinTech solutions for businesses and collaboration of entrepreneurship between counties in the FinTech sector. The CBA states that these provisions may be counteracted by the exclusion of financial services companies and the support they inherently provide to the FinTech sector.

Further, the CBA Sections write that the standards regarding artificial intelligence are too weak relative to their “high-risk nature”, and through its use of non-committal language, DEPA would be inadequate in imposing international consensus in this sector. Article 8.2(3) states that, “the Parties shall endeavour to promote the adoption of ethical and governance frameworks that support the trusted, safe and responsible use of AI technologies (AI Governance Frameworks).” However, the CBA states that these requirements are too vague, and would ultimately run the risk of creating a race-to-the-bottom effect and inspire “forum shopping”.

“If certain member states impose rigorous standards such as algorithmic transparency, ethical AI development and bias elimination, but other members adopt a more laissez-faire approach, entrepreneurs and innovators from the “rigorous” jurisdictions be penalized as it takes longer for them to get to market than their counterparts from less regulated member states.”

Finally, the CBA Sections recommend greater protection for intellectual property rights across borders. Article 9.4 subsection 1 of the DEPA states “[t]hat parties recognize that cross-border data flows and data sharing enable data-driven innovation” and this innovation is enhanced through the use of regulatory data sandboxes where this data is shared amongst parties. Subsection 3 writes that parties shall collaborate on these data-sharing projects and Article 9.5 focuses on facilitating public access to open data. The CBA recommends that these data sharing projects should not only have privacy and data protection, as well as ethical innovation, built in, but likewise should “address issues of data innovation and licensing agreements to facilitate data sharing.” By defining intellectual property rights explicitly in the transmission of this information, the DEPA can better clarify the rights of SMEs. Among these considerations, the CBA recommends that discussions include “mechanisms for content removal and protection against censorship and disinformation”, “protection, enforcement, and penalties for IP infringement”, standardized language for online licencing, and education and support for SMEs on protecting their online business, data rights, public domain information, etc.

A special thank you to Julia Nowicki for her help and contributions to this article!

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