How Canada, the EU, and the U.S. Can Work Together to Promote ICT Development and Use

Governments in Europe and North America want to harness information and communications technology (ICT) to boost productivity and innovation, but uncoordinated strategies and incompatible regulations make it difficult for them to benefit fully from the mutual gains that would come from greater transatlantic cooperation in the development and use of ICT. This report analyzes key policies shaping ICT innovation in Canada, the European Union, and the United States, and identifies opportunities for policymakers to ensure policies maximize productivity and innovation.

The report describes four policy areas: intellectual property rights (IPR), data protection, the wider regulatory environment, and support for digital innovation.

IPR—including rules on copyright, patents, and trade secrets—fosters much of the research and development that leads to innovation in the digital economy, as well as the creative content that consumers enjoy on digital platforms. Differences in IPR between different jurisdictions can create challenges as companies scale globally.

Data protection laws and regulations set the rules on how organizations can collect, share, and reuse data, and impact important new technologies such as data analytics and artificial intelligence. Data protection laws can be extremely complex, and are interpreted in divergent ways by different courts. Not only does this make it harder for data-driven firms to manage compliance in multiple markets, attempts to apply such laws extraterritorially can force firms to choose between competing legal environments.

The broader regulatory environment determines the legal environment in which businesses must operate. Divergent approaches to questions of anti-trust policy and technical standards threaten to create trade barriers by preventing companies with particular structures or standards from operating effectively across different markets, regardless of how they behave. Furthermore, regional variations within ostensibly single markets—whether they be American states, Canadian provinces, or EU countries—increase complexity and cost.

Government support, such as research grants and support for digital startups, can spur digital innovation. Moreover, cooperative policies, such as issuing joint calls for proposals for research and establishing cross-border research alliances, help deepen ties between the science and technology communities of countries.

To build a strong and competitive shared environment for ICT development and use, Canada, the EU, and the United States need the right combination of policies, including: strong yet flexible IPR laws; interoperable data-protection regimes that enable innovation while also protecting privacy; policies that support digital trade; intergovernmental science and technology cooperation related to digital innovation and research; and robust international cooperation to manage policy differences. This combination will be especially important as all three regions face increasing challenges from ICT competitors in other parts of the world, particularly China.

Policymakers on both sides of the Atlantic should take the following measures:

Intellectual Property

• Protect the free movement of knowledge, such as by allowing companies. participating in pre-competitive research to freely transfer ownership and access rights for IP to affiliates across and among Canada, the EU, and the United States.
• Agree on common protections for trade secrets on both sides of the Atlantic.

Data Protection

• Adopt data protection rules that reduce barriers to collecting and sharing data while also protecting consumers from harm.
• Avoid harmful restrictions on artificial intelligence, such as the so-called “right to explanation”. This would impose significant costs while failing to achieve its intended goals.
• Support the free flow of data by enshrining it in international agreements between governments: privacy protection of data does not depend on its physical location.
• Support strong encryption, and do not weaken cybersecurity through mandatory “backdoors.”

Wider Regulatory Environment

• Establish institutions and agree on rules for resolving conflicts that arise from policy differences between countries.
• Support free trade in ICT.

Government Support for Digital Innovation

• Help the market develop voluntary ICT standards to support interoperability.
• Establish a tripartite partnership for technology research.
• Revive and revise the Transatlantic Trade and Investment Partnership (TTIP).
• Review major new global technology challenges to prevent unnecessary regulatory divergence.