Canada-EU digital trade deal could set global standard for data, privacy regulations: experts

Canada could shape global standards by negotiating a digital trade agreement (DTA) with the European Union (EU), but first it must navigate the ‘data trilemma’ and its own archaic regulatory landscape, according to Patrick Leblond, international trade researcher and associate professor at the University of Ottawa. Talks of a DTA between the two jurisdictions have been bubbling since June, and negotiations officially kicked off earlier this month. But Canada’s lack of modern digital policy is the elephant at the negotiating table. “It’s not that lagging behind, but the EU is just really far ahead,” said Mark Camilleri, Canada-EU trade lawyer, and president and CEO of the Canada EU Trade and Investment Association. To name a few examples, the EU was the first major jurisdiction to regulate artificial intelligence (AI), an area where Canada currently has no regulations. It has its own version of an online harms law, called the Digital Services Act, whereas Canada has historically failed to pass any legislation. The EU also has the General Data Protection Regulation (GDPR), which applies strict rules to how organizations can collect, use, or monitor the data of residents. Canada's privacy framework, the Personal Information Protection and Electronic Documents Act (PIPEDA), has had some amendments over the years, but its main structure is more than 20 years old. AI Minister Evan Solomon has previously expressed plans to modernize PIPEDA. Leblond told The Wire Report that not only does the start of negotiations provide a good opportunity for Canada to beef up its digital policies, but the EU might insist on it. “If we share the same kind of regulatory standards and environments, then we can feel secure from a Canadian perspective that whatever services are being offered from the EU will be equally protected or trustworthy and vice versa,” Leblond said. Camilleri, on the other hand, noted the EU is well aware of Canada’s regulatory landscape, and entered into negotiations anyway, suggesting it may not be a big irritant. He also said the EU has recently reapproved Canada’s ‘adequacy’ rating on the GDPR, which means it sees Canada’s personal data protections as acceptable. Camilleri was in Toronto speaking with government officials when the negotiations were launched. He said both sides have expressed interest in finalizing an agreement by the end of the year, which would not give Canada much time to play catch-up. Instead, he said, Canada and the EU will likely work together to recognize each other’s regulatory standards and establish a base level of trust to ensure consumers’ and business’ information are protected across borders, while still allowing the free flow of data. Leblond said even if Canada does not update its online policy laws before entering the DTA, new digital regulations are overdue, and these negotiations may incentivize the government to move on some former bills that could be reintroduced. At the very least, he said, Canada needs to find a minimum that meets its own needs while satisfying minimal requirements from the EU’s perspective. Canada faces a ‘data trilemma’ The purpose of a DTA is to maintain market access by allowing data to flow freely between two jurisdictions and eliminate barriers to digital trade. This is where the ‘data trilemma’ comes into play. Leblond argues that Canada (or any jurisdiction negotiating a DTA, for that matter) cannot simultaneously achieve free data flow, strong national data protection laws, and high trust in the digital environment. If Canada wants to establish sovereign laws that are protectionist in nature, they may provide high levels of trust, but they will hinder data flow because they impose restrictions on businesses and kill interoperability. At the same time, if Canada aligns with a jurisdiction with little to no standards on data protection (Leblond offers the U.S. as an example), that alignment will allow interoperability and data flow, but degrade trust. The solution to this, he said, goes back to accepting each other’s regulatory standards and aligning ourselves with likeminded countries. If Canada and the EU share similar high-trust regulatory environments, then they can agree on safety standards without adopting protectionist legislation, therefore allowing free data flow. While negotiating the agreement will have its challenges, Camilleri said the EU has already started updating its trade agreements with other countries to scope in the digital environment. Canada and the EU have the Canadian-European Union Comprehensive Economic and Trade Agreement, but Camilleri said its language does not fully consider digital trade. As transactions move increasingly online, the DTA will look to ensure neither jurisdiction loses access to the market. The EU has already negotiated DTAs with Singapore and South Korea, Camilleri said, and those agreements will serve as a model for its negotiations with Canada. But, with Canada, there could be a desire to do more, Camilleri said. Together, Canada and the EU could shape digital trade standards. Currently, there are no global standards for things like e-invoicing and e-signatures. This creates what Leblond calls a “digital noodle bowl,” a web of complex, overlapping standards that cripple data flow. If Canada and the EU manage to enter into a deep agreement, Leblond said, they could work towards bringing other likeminded international leadership on board. If more countries adopt Canada/EU trade standards, interoperability worldwide will increase, allowing for more free trade and thereby decreasing reliance on U.S. platforms and service providers. It would be difficult, Leblond said, but if Canada and the EU can invite other countries inside the walls of their “free and open alliance”, while simultaneously avoiding a U.S. trade war, it could force the U.S. to end its bid for deregulation and join the club if it wants to maintain market access. “Otherwise,” Leblond said, “they would stand outside and lose as a result.” mcollins@thewirereport.ca

Canada-EU digital trade deal could set global standard for data, privacy regulations: experts

Regulatory |
By Maria Collins
|March 20, 2026

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