Thanks very much. Good afternoon.
My name is Michael Geist. I'm a law professor at the University of Ottawa, where I hold the Canada research chair in Internet and e-commerce law. As always, I appear today in a personal capacity representing only my own views.
While there are many Canadian e-commerce success stories, often started small—everything from e-commerce platforms such as Shopify to services such as Hootsuite and retailers such as Clearly Contacts—there are also, as we've just heard, many smaller businesses that use a combination of e-commerce, social media, and online platforms to raise awareness and foster customer loyalty.
In my view, the question for this committee is what, if anything, the government should be doing to further facilitate e-commerce in Canada. Are there current regulatory or legal barriers? Are there opportunities for the government to help support e-commerce growth? Are there instances of an uneven playing field that disadvantages Canadian online businesses? I believe the answer is yes, and I'd like to quickly focus on five such instances.
I'll start with access as the first of these. It may be stating the obvious, but universal, affordable Internet access is the foundation for e-commerce. If Canadians are not online, they are not buying online. Minister Navdeep Bains was right when he said earlier this year:
We need every Canadian to be innovation ready—ready to spot opportunities, imagine possibilities, discover new ideas, start new businesses, and create new jobs. All Canadians need access to high-speed Internet, regardless of their income level or postal code. Until we bridge this digital divide, Canadians will not reach their full potential.
There is still much to be done to bridge this digital divide. Too many Canadians still do not have affordable access, and our pricing, particularly for wireless services, remains among the highest in the developed world. We need public investment to support universal, affordable access, and policy measures designed to foster enhanced mobile competition. Moreover, proposals such as the committee heard earlier this week calling for an Internet service provider tax and Internet tax, which by the advocate's own estimates would add more than $100 million a year to the costs of consumer Internet access, should be rejected.
Second is consumer trust and confidence. Even if Canadians are online, their willingness to engage depends on trust—trust that their information will be used appropriately and trust that online sellers will deliver what is promised. The need to foster trust has a government policy dimension.
For example, concerns associated with fraudulent spam undermine the potential success of all e-commerce activities. The industry committee is currently reviewing CASL, the anti-spam legislation, and there are business groups criticizing the law as overbroad, yet it is having a positive impact, with some studies finding that there's a 37% reduction in spam originating from Canada and a reduction of spam into Canadians' inboxes.
It is essential that Canada have a tough anti-spam law to help facilitate online trust. Further, we need to ensure that long-overdue security breach disclosure rules come into effect as quickly as possible, ensuring that our privacy legislation keeps pace with global standards, particularly those emerging out of the European Union.
Third is intermediary liability. If you were to canvass many of the biggest digital-first businesses today—social media and companies and other online services—about the relative legal risks in Canada as opposed to in the United States, many would likely point to the absence of safe harbour rules for content and the contributions of third parties in Canada.
That's an issue that remains largely hidden to the general public, but in the United States, Internet giants such as Google, Facebook, Amazon, and indeed eBay, as well as small companies that invite feedback comments and user participation, are protected from liability for the content of third parties through a statute known as the Communications Decency Act, the CDA, which provides that an intermediary is not liable for the third party content it hosts but does not actively review.
The standard makes sense. In a world in which platforms may have millions or even billions of users, placing editorial responsibility on the site is a recipe for disaster, with users going elsewhere.
Canada does not have a statutory equivalent. In practice what this means is that sites either relocate to the United States, where they have that safe harbour, or they simply remove content—often perfectly lawful content—for fear of liability. If we want to compete on the global e-commerce stage, we need laws that do not place Canadian businesses at a competitive disadvantage.
Fourth is intellectual property laws. As I mentioned in my last appearance before this committee, on NAFTA, Canadian companies, particularly those active in the digital environment, may be at a disadvantage with our restrictive IP laws as compared with some of the more flexible rules found in the United States. For example, the availability of “fair use” in copyright in the U.S. represents a significant competitive advantage for U.S. businesses and creators.
Similarly, Canada's anti-circumvention provisions, often referred to as digital lock rules, are among the most restrictive in the world and create unnecessary limits on innovation.
Finally, fifth, the committee has heard as recently as earlier this week about the need for an e-commerce or digital trade chapter in our trade agreements. I think there is some value there, but we should be wary of provisions that undermine legitimate public policy interests, including privacy and security. For example, the U.S. has identified restrictions on local data storage, often called data localization, as one of its objectives. The Canadian government should resist those efforts within NAFTA, or within the restarted TPP 11, to limit the ability of federal or provincial governments to establish legitimate privacy and security safeguards through data localization requirements.
Limitations on data transfer restrictions, which mandate the free flow of information on networks across borders, can raise similar concerns. The U.S. has been seeking a ban on data transfer restrictions, and I think we ought to ensure that our privacy and security rules aren't superceded by trade agreements such as NAFTA or the TPP 11.
In sum, we're succeeding in e-commerce, but we can do better and there is a role for the federal government to help make it happen.
I welcome your questions.