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What we heard: Consulting Canadians on a possible Canada-European Union Digital Trade Agreement

From June 25 to August 25, 2025, Global Affairs Canada conducted public consultations to gather input from Canadians on the scope and priorities of a potential Canada–European Union Digital Trade Agreement (DTA). Public consultations were announced through a Canada Gazette notice and a dedicated webpage. Global Affairs Canada invited all Canadians to share their views regarding the development of this agreement, including feedback on its potential scope and content, as well as identifying potential areas of interest.

Background

Digital trade covers digitally-enabled transactions involving trade in either goods and services that can be digitally or physically delivered to consumers, firms, and governments. Canada’s international trade initiatives in the context of digital trade aim to facilitate commercial activity, address potential market access impediments, and build consumer trust and confidence.

DTAs serve as complementary instruments to comprehensive Free Trade Agreements (FTAs). They can be leveraged to update existing trade commitments to keep pace with the ever-evolving digital landscape and ensure alignment with Canada’s current digital trade practice, such as in the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), for which negotiations were concluded in 2014.

Pursuing exploratory discussions for a possible Canada-EU DTA is aligned with the Government of Canada’s international trade policy objectives, including encouraging the digital economy as a means of facilitating and diversifying international trade and investment. These types of agreements could include trade commitments that seek to advance digital trade priorities for both economies and improve regulatory predictability for businesses conducting trade online.  Through a Canada-EU DTA, Canada could address emerging technology issues, promote its interests in inclusive trade, and be at the forefront of the development of international rules governing digital trade.

Early input from stakeholders was deemed essential to identify Canadian priorities, interests, and concerns in order to help define the scope of a potential agreement with the EU.

Summary of consultations submissions

Global Affairs Canada received a total of 45 written submissions, including:

Most respondents were larger organizations and associations representing multiple stakeholders or partners. In addition to the provinces that provided written responses, two other provinces provided comments and expressed support for pursuing a Canada-EU DTA during meetings.

What we heard

Stakeholders were supportive of Canada pursuing a DTA with the EU. Through their submissions, they provided recommendations on designing a high-standard and innovative agreement. Most stakeholders expressed enthusiasm for deeper digital engagement with the EU. The consultation revealed a strong desire for Canada to lead in shaping global digital norms while safeguarding national interests. A dominant common theme among written submissions was the importance of including provisions that support the free flow of data across borders.

The DTA is seen as a strategic opportunity to set global norms, empower SMEs, and protect national interests. While enthusiasm for cooperation was high, stakeholders emphasized the need to preserve Canadian autonomy, avoid over-alignment, and ensure enforceable, transparent mechanisms.

Stakeholder views

Canadian business and industry associations

Canadian business and industry associations strongly supported provisions that enable trusted cross-border data flows, viewing it as essential to innovation, competitiveness, and service delivery. There was strong opposition to data localization requirements, which were described as costly and counterproductive. Other recommendations included rules that protect intellectual property and enable SMEs to scale internationally. Several submissions called for alignment that minimizes compliance friction and the elimination of digital customs duties, citing precedents in agreements such as CUSMA, CPTPP, and CETA.

Others requested mutual recognition of e-signatures and authentication, interoperable e-invoicing systems (referencing EU initiatives), and SME-friendly single-window portals including simplified compliance tools and digital onboarding support. Identity and trust interoperability was also identified as a priority, with proposals for recognition between Canadian and EU frameworks without compromising domestic standards governance. Additional recommendations included exploring integration with European payment systems to enable real-time euro transactions, supporting Data Free Flow with Trust (DFFT) principles, advancing AI standards cooperation, and strengthening cybersecurity information-sharing and incident response alignment.

International business and industry associations

International associations advocated for the following principles: no customs duties on electronic transmissions, no forced source-code or algorithm disclosure, no data-localization mandates, and explicit protection for strong end-to-end encryption. One submission stressed the importance of unrestricted cross-border processing for electronic payment services.

Other submissions highlighted evidence of productivity and supply-chain benefits from cross-border data transfers and warned that localization undermines innovation. Media stakeholders asked that AI and search platforms respect intellectual property, provide fair compensation and clear attribution, allow opt-out from AI overviews without penalizing publishers, and refrain from discriminatory ranking.

Canadian civil-society organizations

Civil-society organizations proposed frameworks to mutually recognize digital identity and trust services across Canada and the EU using international standards, with recognition of emerging credential formats and privacy standards. Several submissions pointed to the need for AI testbeds, regulatory sandboxes, and deeper research. Others warned against replicating an overly precautionary EU model and urged mutual recognition and innovation-friendly AI rules. Some respondents prioritized privacy and sovereignty for sensitive data, consumer affordability, and an AI framework aligned with rights-centric EU principles rather than a laissez-faire approach.

International civil-society organizations

International civil-society organizations called for a balanced and inclusive DTA that prohibits unjustified localization and embeds transparency and accountability while protecting innovation and IP. Recommendations included strengthening consumer protection, and creating joint Canada–EU committees to manage barriers and reduce regulatory fragmentation. Other submissions supported end-to-end encryption, warned of Direct Memory Access (DMA) security trade-offs, and discouraged a DST due to trade-friction risks. Some emphasized protecting the public domain and enabling text and data mining exceptions for research and AI.

Consultants

Consultant submissions advocated reduced dependency on foreign platforms and consideration of fiscal instruments such as DSTs to rebalance market power. Additional recommendations included rural connectivity, harmonized online consumer protections, and practical data and cybersecurity cooperation.

Academics and experts

Academic submissions recommended a differentiated dispute-resolution architecture: state-to-state dispute settlement complemented by issue-specific monitoring and enforcement for AI, privacy, cybersecurity, cloud, and platform rules. Other contributions called for open-by-default non-sensitive datasets, adoption of open contracting standards, and funding for digital public goods.

Provincial and territorial governments

One provincial government emphasized aligning with language and consumer contract rules for e-commerce, and limiting open-government-data obligations to federal-level data. Another provincial government highlighted priorities such as open and secure internet access for trade, common standards for cybersecurity and digital identity, responsible AI, better IP commercialization, green data centres, and broadband inclusion for rural, remote, and Indigenous communities.

Individual citizens

Individual submissions ranged from support for a DTA to support diversifying markets, to opposition to a DTA over concerns about digital sovereignty, or a potential increase in  existing trade frictions. One respondent suggested leveraging zero-knowledge proofs, a technology that would help ensure a real person is behind an account without deanonymizing the account’s owner, to balance anonymity and anti-spam goals.

Theme-by-theme findings

Cross-border data flows and localization: Most stakeholders support free flow of data with trust. Submissions urged provisions protecting the movement of data and avoiding localization mandates.

Encryption and privacy: Multiple submissions asked the DTA to explicitly support strong end-to-end encryption and reject obligations that would weaken device or platform security.

Source code and algorithm protections: Stakeholders requested clear prohibitions on forced source-code or algorithm disclosure as a condition of market entry, with narrow, court-supervised exceptions for public interest cases.

AI governance and safety: There is broad support for risk-based, interoperable AI governance with regulatory sandboxes and standards cooperation, though views differ on alignment with the EU AI Act.

Cultural measures: Three respondents advocated for a cultural exemption or the exclusion of cultural industries from a Canada–EU DTA and referenced the UNESCO Convention, with the goal of preserving policy space for discoverability and cultural measures.

Payments and e-invoicing: Several submissions called for modernizing the Canada–EU trade infrastructure. Respondents advocated mutual recognition of trust services and e-documents, structured e-invoicing interoperability, and exploring participation in European payment systems to enable real-time euro payments.

Digital identity and trust services: Submissions proposed a Canada–EU equivalency instrument for digital identity and trust services grounded in international standards, with recognition of emerging credential formats and privacy standards. One respondent suggested zero-knowledge proofs to verify attributes without deanonymizing users.

Open data and civic tech: Respondents recommended open-by-default non-sensitive datasets, adoption of open contracting standards for procurement transparency, API standardization, and support for digital public goods.

Platform regulation and media: Positions diverged on DMA-style obligations. Some warned about the security impact of certain interoperability mandates and urged security-by-design. Media stakeholders sought AI and search transparency, fair compensation, clear attribution, non-discriminatory ranking, and opt-out mechanisms that do not penalize publishers.

Digital Services Tax (DST): Opinions were split. Some urged avoiding a DST due to trade risks and consumer cost pass-through; others contended fiscal tools can counterbalance concentrated market power if carefully designed.

Cybersecurity: Respondents proposed early-warning systems, joint incident-response protocols, and alignment of cloud and critical-infrastructure standards.

Dispute resolution: Stakeholders recommended pairing state-to-state dispute settlement with issue-specific monitoring and enforcement bodies for AI, privacy, cybersecurity, cloud, and platform rules.

Digital inclusion and MSMEs: Stakeholders stressed a “think-small-first” approach: paper-free border processes, mutual acceptance of e-documents, SME-friendly compliance tools, rural and Indigenous broadband, and affordability measures.

Summary

Across submissions, a strong interest was demonstrated in trusted cross-border data flows, protection of encryption and privacy, no forced tech transfer, interoperable identity and trust services, SME-friendly agreement design, and cybersecurity cooperation. Stakeholders differ on localization for sensitive data, DMA-style platform obligations, cultural policy scope, and DST. Overall, there is support for pursuing a Canada-EU DTA.

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