OVHCloud's Quebec data centre servers. The nature and value of trade is no longer primarily about physical goods crossing borders. It is about data, cloud infrastructure, AI and digital services – the systems now driving productivity, write Patricia Goff and Ann Fitz-Gerald.Supplied
Patricia Goff is a professor of political science at Wilfrid Laurier University.
Ann Fitz-Gerald is a professor of political science and the director of the Balsillie School of International Affairs.
Prime Minister Mark Carney’s decision to appoint an advisory panel for the upcoming USMCA negotiations is welcome. Canada and its allies have long relied on such independent, cross-sectoral expertise to inform complex trade strategy.
The panel reflects that logic, drawing on knowledgeable and experienced voices from business, labour and policy. Yet one omission is striking: the absence of digital and knowledge-economy expertise.
The nature and value of trade is no longer primarily about physical goods crossing borders. It is about data, cloud infrastructure, AI and digital services – the systems now driving productivity and value creation across all sectors.
This reality is already clear in U.S. positioning in advance of mandated USMCA review talks, scheduled to get under way by July 1. The Office of the United States Trade Representative has explicitly flagged Canada’s sovereign cloud initiative and data governance frameworks as potential trade irritants alongside more traditional concerns like supply management and Buy Canadian programs.
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This signals the Trump administration’s priority to maintain dominance in the digital economy and pressure others away from their own digital sovereignty aspirations.
This tension is being felt beyond North America and emerged at a recent World Trade Organization meeting that ended with an impasse on digital trade and platform regulation. The more fragmented global environment in which countries are asserting divergent approaches to digital and data governance demonstrates how the issues surfacing in the USMCA talks are part of the broader global debate on digital economic governance, making the inclusion of such expertise on the Prime Minister’s advisory council even more important.
The risk is not simply that we underplay the importance of these issues in USMCA negotiations. It is that, by excluding relevant expertise from our advisory structures, we fail to acknowledge the prominence of these issues in the economy of the future.
Canada’s economic sectors increasingly operate on digital infrastructures, software systems and data platforms that are foreign-owned. This means that Canada generates the value, while foreign entities capture the intellectual property, data and platform rents. Reversing this decline in the country’s ability to capture wealth requires a solid understanding of this new economy, and the new factors of productivity which drive it.
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In the agricultural sector, Canadian farmers rely on sophisticated and data-driven equipment supplied by a small number of large U.S. firms. The same is true for the retail and e-commerce, and the arts and entertainment sectors. These large systems collect and process vast amounts of Canadian sectoral data and make Canadian producers pay to access and use insights derived from their own data, limiting domestic firms to scale in the face of entrenched platforms. This complicates a central assumption that often underpins trade discussions: that Canada runs sectoral trade surpluses with the U.S.
Once the knowledge layer is accounted for, the picture looks very different. If Canadian data are extracted, monetized and resold through foreign-controlled systems, then value is flowing out even where physical goods trade suggests otherwise. The result is a structural deficit in the very domains that will define future growth.
Understanding this requires more than traditional trade expertise. It requires fluency in how data, AI, cybersecurity and cloud infrastructure intersect with trade flows and firm-level competitiveness. It also requires recognition that these domains are inherently dual-use and shape both economic outcomes and national security.
If the goal is to ensure that trade supports prosperity, then advisory structures must reflect the full range of sectors where value is created and captured. This means defending key industries, like Canadian steel, aluminum, automobile and energy. But it should also mean developing and retaining Canadian intellectual property, data and platforms rather than relying on those that, despite local operations, rely on foreign-controlled technological foundations.
Historical concerns that Canada-U.S. trade talks would lead to a “branch-plant” economy run the risk of reviving similar dynamics in the forthcoming USMCA negotiations. This time, the peril is that Canada serves as a branch-plant economy for knowledge-intensive multinationals, with limited capacity to build and scale its own firms.
The advisory panel is an important step. But to be most effective, it must reflect the realities of today’s economy. The warning signs are already clear in U.S. positioning, sectoral dependencies and Canada’s struggle to scale firms. Ensuring that this expertise is at the table is essential to negotiating Canada’s economic future.