Thank you very much for the invitation to appear today.
The global economy has undergone an unprecedented 40-year transformation where wealth, power and security are rooted in the ownership and control of the intangible assets of intellectual property and AI data. These assets behave differently than tangible goods do, and they require different strategies. Today, they dominate, comprising 92% of the S&P 500's $55-trillion value, as shown in figure 1 of the annex to my brief.
Canada's economic thinking remains rooted in the 1970s, which was a tangible production economy era. Due to this—as shown in figure 2—Canada has been in a structural 40-year decline, ranking last in the G7 in productivity per capita, and it is projected to remain the worst-performing advanced economy in the OECD for the next 40 years.
I illustrate in figure 3 that Canada's original sin was missing the geopolitical shift in 1994 with its highly publicized “orange book”, which reinforced policies unfit for the emerging knowledge economy. Canadians are experiencing this decline in their everyday lives, especially during the emergence of the AI data-driven economy over the last 15 years.
Figure 4 shows the trillion-dollar-per-year GDP divergence to the U.S. over this period, which is equivalent to $100,000 annually per family of four. Figure 5 shows the exfiltration through Canada's outdated FDI strategies. Figure 6 summarizes how Canada's prosperity and security—especially in the intangibles economy of IP, data and AI—are restricted due to poorly negotiated trade agreements that focus on a 1970s economy.
My remarks today focus on three linked strategies that Canada must employ for its data and AI policy. Number one is fit-for-purpose privacy legislation. Number two is expertise to perform economic statecraft via regulatory frameworks. Number three is sovereign commercial alternatives.
Privacy and AI governance is a human rights issue. Figure 7 illustrates how inadequate governance in Canada of AI and data enabled a surveillance economy that caused a litany of harms to Canadians. They manipulate economic outcomes, enabling algorithmic pricing and wage suppression, which raises costs while lowering incomes, as my recent op-ed explains, which is in figure 8. Surveillance models also circumvent the knowledge rights I list in figure 9, which I map in figure 10 to failing Canada's commitments under the ICCPR. Figure 11 summarizes the big-tech capture and ensuing failure of the two recent attempts to upgrade PIPEDA. Canada cannot afford a third such misfire.
Canada’s policy-thinking never understood the central role of economic statecraft that created the intangibles economy for AI and more. The ensuing appendices briefly summarize examples from the last year where the U.S. deployed sophisticated capacity and strategies to utilize legal frameworks of economic statecraft to advance its prosperity and security.
Figure 12 shows that Canada is essentially absent in the three million AI patents issued globally, despite our taxpayers' funding foundational research. The resulting large and growing deficit on IP payments and receipts would be much larger if data flows were included.
Figure 13 shows the U.S. advancing its interests through coordinated policy instruments, including the AI white paper, the GENIUS Act, IEEPA tariffs and IP march-in rights. Figure 14 shows the U.S. push toward unified digital asset frameworks to control and capitalize on emerging tokenization opportunities. Figure 15 shows how the U.S. national security strategy integrates standards, IP and resource security into a single doctrine. Figure 16 summarizes how the USPTO established a working group that embeds U.S. patents into global standards bodies to convert IP into market power.
Figure 17 shows that when the U.S. exited multiple organizations, it deepened participation in three key standards bodies to drive more control over value chains. Figures 18 and 19 show how the U.S. and EU use standards setting to embed value capture and condition market access, especially for AI. Figure 20 details the recently released U.S. AI legislative framework. Figure 21 shows how the USPTO patent adjudication has been updated to favour domestic interests.
Figure 22 shows how the U.S. advisory structures integrated industry feedback into USMCA negotiations and how restrictions on Canada were a feature, not a bug. Canada is not participating in any of this statecraft, which is technical and requires expertise and capacity. This urgently needs to change.
In closing, we cannot do developing economy strategies and expect developed economy outcomes. In Figure 23, I list examples of sovereign commercial alternatives the government can and should support to ensure that AI delivers more sovereign prosperity, security and public good. This includes sovereign compute, national digital rails and unified ledger, a sovereign ad stack and a sovereign job board.
Thank you, and I look forward to your questions.