Getting the details right

The Digital Economy Partnership Agreement, or DEPA, between Chile, New Zealand and Singapore came into force January 7, 2021. Canada had previously expressed its interest in joining DEPA, and started exploratory discussions as well as consultations to that end.

In its submission to Global Affairs the Canadian Bar Association’s Business Law; International Law; Commodity Tax, Customs and Trade; and Intellectual Property Sections encourage Canada to make sure our obligations under DEPA are clear and that we incorporate measurable targets where appropriate. “Certain parts of the DEPA give clear requirements and obligations, while other areas are largely aspirational and nebulous,” the Sections say. “The lack of binding obligations and hard targets can create inconsistencies between jurisdictions on important matters such as privacy, mutual recognition of trustmarks, interoperability and compatibility, and the potential for forum shopping.”

Here is an overview of the Sections’ main recommendations.

Financial services, FinTech

In its existing form DEPA does not apply to financial services except electronic payments. The Sections believe it should, to empower the FinTech sector and achieve the goals of article 8.1 of DEPA on financial technology cooperation.

“The line is continuously blurring between ‘financial services’ and other digital services – such as budgeting and personal finance software – that may require access to financial service providers’ data. For FinTech businesses that rely on this data, Article 8.1’s purpose will be hindered if DEPA does not apply to financial services,” the Sections write.

The agreement should also tighten its definitions, as FinTech can mean different things to different people, including alternative lending, consumer finance, insurtech, wealthtech, digital assets, financial services IT, payments systems, regtech, money transfer and capital markets. “We wonder if FinTech referred to in Article 8.1 is meant to cover all these aspects,” the submission reads.

Trade facilitation

The agreement could add videoconferencing to the recommended list of tools to ease cross-border logistics in article 2.4, “particularly where originally signed documents may still be required (or identification verification is required).”

DEPA, in article 2.6, would require Canada to release express shipments within six hours. “It is not clear if this is consistent with the Canada Border Services Agency’s standard operating procedures, and whether this would result in an onerous obligation for Canada,” the Sections caution, adding that Canada would also need to consider the implications of that article’s express shipment procedures and de minimis thresholds.

The submission recommends adding a common definition or parameters of what is considered a small and medium-sized enterprise, and the creation of a one-stop-shop as well as common forms “to streamline information-gathering for SMEs seeking to expand beyond their borders.”

Data privacy, safety online, AI

DEPA should contain an exemption to its article 3.4 concerning cryptography to allow the application of local requirements to providers of members states.

The CBA Sections believe DEPA should consider minimum standards for the legal framework on protecting personal information. It should also prioritize end-user control and decentralized data storage. “This would replace an outdated consent-and-notice approach that relies heavily on a centralized holder of personal data accurately describing what it does with personal information and the individual trusting their privacy choices are respected.” In addition, a focus on end-user control would help catapult digital innovation “by building on a growing movement of decentralized and data ‘sovereignty’ for individuals.”

The agreement should also contain a commitment to minimum online safety standards. “There should be certain no-go zones and high standards of privacy and security, including age-appropriate design in online products and services geared toward or likely to be used by children and support for parents to make informed decisions,” the submission reads, adding that taking down non-consensual or image-based sexual abuse ought to be a priority.

The Sections consider DEPA “too weak for the high-risk nature of artificial intelligence (AI) and emerging technologies. This is especially true as a global consensus is emerging on responsible AI development. The non-committal language is outdated given the serious risks of developing AI or other emerging technologies with no ethical, privacy and security considerations,” they say.

In particular, article 8.2(4) needs stronger language and clear examples of appropriate frameworks. “If certain member states impose rigourous standards such as algorithmic transparency, ethical AI development and bias elimination, but other members adopt a more laissez-faire approach, entrepreneurs and innovators from the ‘rigorous’ jurisdictions will be penalized as it takes longer for them to get to market than their counterparts from less regulated member states. This could lead to weakened regulation or to forum shopping. Without agreed upon high minimum standards, there is a serious risk of a race-to-the-bottom effect,” the submission says.

Intellectual property

It would be beneficial if DEPA addressed issues of data innovation and licensing agreements to facilitate data sharing. “Defining ownership of IP is imperative as the DEPA focuses on transmission of information across jurisdictions. Expressly defining IP ownership and rights of use would help prevent disputes and clarify the rights owners and third parties, including small and medium enterprises (SMEs),” the Sections believe.

In an effort to bolster innovation and creativity, article 9 should address the protection of online creative content such as music or videos, and cybersecurity to protect trade secrets.

Sustainability, inclusion, Indigenous self-determination

The CBA Sections recommend including mechanisms to promote online participation from civil society groups and “align or reference the United Nations’ Sustainable Development Goal 8 encouraging inclusive and sustainable economic growth, full and productive employment and decent work for all. As well, they believe DEPA should reference Article 3 of the UN Declaration on the Rights of Indigenous Peoples on the right to self-determination and Indigenous People’s right to freely determine their political status and pursue their economic, social and cultural development.