Canadian telecom and data protection legislation prevent American cloud providers from exporting products and services, says U.S. Trade Representative report

Along with tariffs, the Softwood Lumber Agreement, restrictions on United States grain exports and other issues, the U.S. has cited Canada’s telecommunications and data protection policies as trade barriers.

In its annual Foreign Trade Barrier Report this week, the U.S. Trade Representative (USTR) said that Canada’s 46.7 per cent limit on foreign ownership of facilities-based telecommunications services “is one of the most restrictive regimes among developed countries.”

The USTR said these policies restrict American companies from providing end-to-end telecommunications services in Canada.

“As a consequence of these restrictions on foreign ownership, U.S. firms’ presence in the Canadian market as wholly U.S.-owned operators is limited to that of a reseller, dependent on Canadian facilities-based operators for critical services and component parts,” the USTR report said. “These restrictions deny foreign providers certain regulatory advantages only available to facilities-based carriers (e.g., access to unbundled network elements and certain bottleneck facilities).

The report also mentioned data privacy rules in British Columbia and Nova Scotia that mandate personal information in the custody of a public body must be stored and accessed only in Canada.

“These laws prevent public bodies such as primary and secondary schools, universities, hospitals, government-owned utilities, and public agencies from using U.S. services when personal information could be accessed from or stored in the United States,” the USTR said.

The USTR also noted that the Canadian federal government is consolidating information technology services across 63 email systems under a single platform but the request for proposals for the project includes a national security exemption that prevents the contracted company from letting data to travel outside Canada.

“In today’s information-based economy, particularly where a broad range of services are moving to cloud-based delivery where U.S. firms are market leaders; this law hinders U.S. exports of a wide array of products and services,” according to the report.

These laws, however, illustrate that the Canadian government is “clearly concerned by dangers associated with storing potentially sensitive emails outside the country,” according to Michael Geist, privacy advocate and University of Ottawa e-commerce law professor.

“In light of the Edward Snowden revelations of widespread surveillance by the National Security Agency, the answer for many Internet users will increasingly be that they are indeed uncomfortable with the loss of control over their data,” he wrote in a recent blog. “In recent months, many countries have begun to explore mandating local cloud providers to ensure that domestic data stays in the country.”

He also pointed out that Canadians are “already particularly vulnerable” to potential disclosure or personal data.

He cited a recent Organization for Economic Cooperation and Development (OECD) data that shows the majority of Canadian Web sites are hosted outside the country and Canada ranking among the lowest countries in the developed world for domestic Web site hosting.

“Moreover, Canadian Internet providers such as Bell exchange their Internet traffic in the U.S., ensuring that even simple domestic emails frequently enter the U.S. network before returning to Canada,” he said.

 

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