In watching Donald Trump become the U.S. president-elect after a long and divisive campaign that was full of vitriol and thin on substance, Canada’s tech sector is holding its breath as it enters uncharted waters in its relationship with the elephant to the south, and some industry observers worry of impending disaster.
After seeing Trump take a clear stance against free trade and the concept of open borders for people, many in the U.S. tech sector made a point to speak out against his policies. In an “open letter from technology sector leaders on Donald Trump’s candidacy for president” a long list of tech entrepreneurs – including the co-founder of Flickr, CEO of Meetup, CEO of Box, vice-president of product at Twitter, the co-founder of Reddit, and many more – slammed the Republican candidate’s ideas as “a disaster for innovation.”
Given that Trump admitted in his 1997 book that he “didn’t even know how to turn on a computer,” it’s no surprise to see the tech sector feels a disconnect.
Free trade uncertainty biggest concern
Now it seems that disaster is about to be realized and it’s bound to seep across the border to Canada.
The president-elect’s desire for a more closed border could pose serious challenges for Canadian tech, says Rory Capern, an experienced technology executive based in Toronto. Capern is currently the managing director of Twitter Canada, but makes it clear he’s not speaking on behalf of the company about the U.S. election.
“Canada’s tech sector has seen progress by opening up our relationships with the U.S. market and the U.S. tech industry,” he says. “To watch some of that progress get unwound by the thickening of the border and limits of immigration in and out of the country is a concern for me… there was talk of a physical wall across the border in some cases.”
Capern is referring to Trump’s early campaign promise to build a wall along the border with Mexico and make Mexico pay for it. While he didn’t focus much attention on Canada during the campaign, his open disregard for free trade may leave some eager to construct one.
What he was saying sounded like the economic policies of centuries past, according to Ian Lee, assistant professor at the Sprott School of Business at Carleton University. Trump often spoke of wanting to boost exports while limiting imports.
“Trump is a mercantilist, and mercantilism died 300 years ago,” Lee says. “He’s made clear he would put restrictions around the border on stuff coming in, wherever the States would be advantaged.”
While Clinton spelled out her plans for the tech sector and an innovation agenda in a lengthy “fact sheet” on her campaign website, Trump’s website only posted a specific policy on cyber security in regards to the tech sector. As a result, observers are left to guess on Trump’s approaches based on speeches, media interviews, and his Twitter feed.
Perhaps the top issue that had the most implications for the tech sector is free trade. During the course of the campaign, Trump often said he would “tear up” the North American Free Trade Agreement (NAFTA) and refuse to sign the newer Trans-Pacific Partnership (TPP) treaty. Clinton, on the other hand, was supportive of maintaining NAFTA, but also didn’t like TPP.
Even if the TPP was passed, the C.D. Howe Institute estimates that Canada would receive only a “modest economic” benefit from the agreement. Other critics have pointed to strict new copyright enforcement measures that don’t line up with Canada’s own policies in that area, such as Michael Geist, Canada’s Research Chair in Internet and e-commerce law at the University of Ottawa.
TPP would require Canada to extend its copyright provisions and “the last time we debated this, there wasn’t really a requirement to change it,” Geist said. “If the U.S. doesn’t move forward, Canada won’t either.”
Opening up NAFTA for renegotiation is the real boondoggle.
Rewriting a free trade agreement with Canada’s largest trading partner would be bad for the country’s overall economy and bad in particular, Carleton’s Lee says. The tech sector tends to be more globalized than any other sector in terms of information, people, and ideas moving freely across borders.
“Technology from the get-go has been a global phenomenon. When you build a better mousetrap or motherboard you want to sell it to the world,” he says. “Anyone that comes along and says that I’m going to throw a wrench into globalization is going to be bad for the tech sector.”
Talent exchange with the U.S. faces new barrier
A wall along the Mexican border isn’t the only way Trump plans to make immigration more difficult. He also plans to raise the mandated wage levels for workers using the type of visas often relied upon by tech companies to bring new talent into the country. Together with that, Trump wants companies to prioritize hiring Americans first.
It’s possible that Trump’s protectionist policies in the U.S. could see Canada benefit as it is making attempts to clear the way for talented immigrants to enter the country. Canada first introduced a startup visa program in 2012. Just last week, there was a commitment from the government to approve visas and work permits for approved companies in just two weeks.
Given that the U.S. has the advantage of being home to Silicon Valley, Canada’s efforts to woo top tech talent have to be better than the U.S., according to Lee.
“There is enormous pressure on Canada to not only match the U.S. policy but go beyond it,” he says. “We need to mitigate the clear advantages of tech entrepreneurs wanting to set up shop in Silicon Valley.”
For Capern, the idea of more restrictions around the flow of talent across borders is just a bad one overall. “Whatever benefit we got from that would be trumpted by a thicker border from a trade perspective.”
Data policy focuses on security, not privacy
As the Canadian Radio-television and Telecommunications Commission (CRTC) holds hearings this week to discuss net neutrality and differential pricing, Clinton’s policy plank makes clear that she supports the current standard of net neutrality in the U.S. Given that position, it’s hard to imagine Canada putting in place a different regulatory environment for its own flow of Internet data.
Trump wasn’t clear on his stance on net neutrality, but in a 2014 tweet he criticized Obama for passing a law that supported it.
https://twitter.com/realDonaldTrump/status/532608358508167168
“If there’s discussions around moving away from net neutrality, you’re putting more decisions in the hands of the distributor,” Twitter Canada’s Capern says. “You move into a world where corporations control what flows around the web.”
Trump has also been vocal in his support for law enforcement’s right to access data in conducting investigations. When Apple Inc. refused to hand over encryption keys to the FBI so it could unlock the San Bernadino shooter’s iPhone, Trump called for a boycott on Apple’s products until it relented.
“If you’re concerned about U.S. surveillance, I don’t think those concerns go away,” Geist says. “The obvious way to discourage data localization is to address the elephant in the room, the surveillance practices of the NSA.”
While there’s no requirement for many companies to store data in Canada beyond the public sector and in some cases the financial sector, many firms choose to store data on native soil rather than risk putting it in the U.S. Concerns about overreaching surveillance began with the Patriot Act, and were only inflamed by Ed Snowden’s leaks about NSA’s Prism program.