Canadian Prime Minister Justin Trudeau made headlines in 2016 when he responded to a reporter’s tongue-in-cheek question asking him to “explain quantum computing” with a remarkably lucid answer that earned him a standing ovation from the scientists in the audience. These impromptu remarks reinforced Canada’s global reputation as a technologically savvy nation at the forefront of innovation, a reputation it has earned from a wide range of activities from pioneering early research on artificial intelligence (AI) and taking an initial lead in deploying unmanned aerial vehicles (UAVs) by fast-tracking the permitting process. Unfortunately, some of Canada’s most recent technology policy initiatives raise doubts that its government still prioritizes innovation and is not instead turning to some of the precautionary and protectionist measures embraced by the EU.
Consider some of Canada’s major technology policy initiatives over the past year. Many of its efforts have been discriminatory policies targeting the tech sector, especially foreign companies. For example, the government has pursued a digital services tax on large technology companies in Canada. Over 140 countries are participating in a multinational process led by the Organisation for Economic Cooperation and Development (OECD) to align corporate tax rules and prevent multinationals from shifting profits to avoid paying taxes. Every country in this group except Canada has agreed to postpone any new digital services taxes for at least another year to give them time to reach a consensus. In contrast, Canada's Deputy Prime Minister and Minister of Finance Chrystia Freeland has pushed for its 3 percent tax on digital services to go into effect in 2024, a discriminatory measure that would largely impact U.S. technology companies and apply retroactively for the past two years. This proposal would raise prices for Canadian consumers and signal that Canadian policymakers would rather squeeze the tech sector for some fast cash than support its long-term economic growth.
Or consider the Online Streaming Act. The legislation, which received royal assent earlier this year, directs the Canadian Radio-television and Telecommunications Commission (CRTC) to impose domestic content requirements on online streaming services like Netflix, TikTok, and YouTube. These services must now register with the government and pay for and promote Canadian content. Once again, the policy seems more like another cash grab from foreign tech companies rather than a serious attempt at a pro-innovation digital policy that would help Canadian businesses and consumers. After all, if Canadian consumers want to watch Canadian content, these companies have every incentive to provide it to them.
And Canadian lawmakers have not stopped with streaming services. The government also enacted the Online News Act, a law that forces large online news aggregators to pay domestic news publishers for displaying links to their articles. While Canadian news publishers claim they have lost revenue to news aggregators, the reality is that any publisher can easily remove itself from these aggregators, but the overwhelming majority choose not to because it benefits them. Google eventually agreed to pay C$100 million ($73.6 million) annually, indexed to inflation, to a fund for Canadian news publishers. To avoid this shakedown, Meta announced that it would no longer display content and links from news publishers, both Canadian and international, to Canadian users of Facebook and Instagram. These policies have hurt consumer access to news domestically and reinforced the view that the Canadian government is hostile to the tech sector.
Even in AI, which Canada should be embracing given its foundational research in the field, the government approaches the technology with mistrust and suspicion. Rather than adopting the light-touch, sectoral-based regulatory approach favored by pro-innovation nations like the United Kingdom, Japan, or India, Canada’s legislative proposal—the Artificial Intelligence and Data Act (AIDA)—follows the EU’s path of imposing new obligations on many types of AI systems, establishing a new top-level AI regulator, and prohibiting certain uses of AI. While the government is still working out the details of AIDA, even its most recent set of proposed amendments still treats the technology as a danger to society that needs to be controlled rather than a tool for economic and social progress.
The global backlash against technology over the past few years has reshaped many political debates about digital progress, but few countries have seen such a sharp reversal in tone and treatment than Canada. While the nation still boasts a high-skilled workforce, a number of leading universities, and favorable immigration policies for foreign talent, these assets will not sustain it if the country develops a global reputation as a hostile environment for innovation. As leaders in Ottawa pursue new priorities in the coming year, they should reconsider what is really in their national interest and how their policies look to the rest of the world.
