Could C-51 hurt Canada’s Business Community? Yup.

“Much has been made about how the Canadian government’s proposed Cybersecurity Information Sharing Act, Bill C-51, could make criminals of ordinary people and expand warrantless spying.

But not as much has been said about how the legislation, which the Conservatives are trying to ram through Parliament with little debate, will affect business.

A recent post in The Guardian suggests Canadian companies that operate globally – in this particular case, e-book seller Kobo – could be hurt by so-called anti-terror measures in the same way that National Security Agency spying has negatively affected the interests of U.S. businesses abroad.”

  • Will Canada’s C-51 anti-terrorism bill hurt Kobo?, March 11, 2015 by Peter Nowak (Twitter: @peternowak) alphabeatic.com

What if the best argument against bill C-51 was an economic argument? What if companies, fearing NSA like spying activities, decided to set up shop in Western Europe, the United States or another friendlier jurisdiction? Would you change your mind if this extrapolation was based on a report from the English Newspaper “The Guardian” and Canadian technology writer Peter Nowak (a man that has reported for the Globe and Mail, the CBC and various other media concerns)?

This simple extrapolation might seem farfetched but think about the experience of various American companies like Google, Facebook, Microsoft and Twitter after leaks of classified documents from Edward Snowden and Bradley Manning (now Chelsea Elizabeth Manning) as well as reporting from various journalists like Glenn Greenwald and Laura Poitras. Senior technology officials like Google Chairman Eric Schmidt started to lobby Congress to change the system. Some executives were fearful that American spying would lead to regulatory and administrative changes in other countries which would diminish their ability to do business.

While, a “few companies, including Cisco Systems Inc. and Qualcomm Inc., have said they believe they lost some deals in China and other emerging markets because of concerns about U.S. spying. Germany did cancel a contract with Verizon this summer, citing a fear that it may provide customer phone records to the NSA. Some tech startups and telecommunications companies in France and Switzerland have claimed an increase in sales to customers who are wary of U.S. providers.” (Google, Senator Discuss Government Spying, Silicon Valley execs had their chance to speak out against government spying programs in a forum convened by Senator Ron Wyden, by BRANDON BAILEY for Associated Press, Published on Inc.com, on: Oct 9, 2014)

Additionally, although Daniel Castro, a senior analyst at the nonprofit Information Technology and Innovation Foundation in Washington, D.C, noted that “companies don’t always know about the deals that they weren’t invited to be a part of,”; he did estimate that by 2016 American business could have lose out on as much as $35 billion USD worth of opportunities.

If you think, he is joking let us look at the world’s reaction. In India, the government has asked “all its employees to stop using Google’s Gmail for official communication, a move intended to increase security of confidential government information after revelations of widespread cyber-spying by the US.” (Indu Nandakumar & J Srikant, Cyber-spying fallout: Govt may restrict usage of Google’s Gmail for employees, India Times.com, ET Bureau Aug 30, 2013, 09.53AM IST) The European Parliament is considering, and has considered, legislation that would fine private telecom and internet firms operating in Europe that turn data over to the NSA or give it a back door into their systems. While, an Irish judge has asked European Union’s highest court to consider whether Facebook has violated Irish law by transferring data from European to US services that might have let to the NSA access information of European Citizens. (Europe’s High Court Will Look at Facebook’s Possible Role in NSA Spying, By Carol Matlack, Bloomberg.com, June 18, 2014) Reactions to the spying activities of the Five Eyes Network/Alliance (i.e. Australia, New Zealand, US, Canada, UK) has been swift and strong. It has been felt in Brazil, Germany and various other places.

So the question is will the Harper’s new anti-terrorism measure destroy the trade progress of the Harper Government? For the Harper Administration is proud that they brought into force a number of new trade agreements. These include the Canada – European Free Trade Association and FTA’s between Peru, Colombia, Jordan, Panama, Honduras and Korea. These trade agreements were supposed to go beyond “traditional” trade barriers and deal with labour mobility, intellectual property and investment.

(http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/fta-ale.aspx?lang=eng on March 29, 2015) If that is the case, could our new anti-terrorism provision be painted with an unfavourable brush in those countries?

If you don’t think it is possible, I would ask you to think of the Chinese Example. Chinese telecom business are largely excluding for bidding from government contracts in the US and Australia. (Canada ‘at risk’ from Chinese firm, U.S. warns, By Greg Weston , CBC News Posted: Oct 09, 2012 5:17 AM ET Last Updated: Oct 09, 2012 11:14 PM ET),  (China tech firms pose security risk, U.S. panel warns, by the Associated Press, Published by CBC.ca Last Updated: Oct 09, 2012 12:37 AM ET). In fact, the Republican head of the American Congressional Committee at the time said that ordinary Canadians should be worried about Huawei and other Chinese telecom companies. While, Google found that it had to exit mainland/Communist China because it could not manage the incompatibility of their values and those of the Government of China.

So with that being said has anyone in the Harper Administration thought about the international impact of C-51? Will a company like Kobo or Blackberry have to change jurisdictions because of the perceptions or the realities of the new legislation? Will that mean that because of our change that a company will not be formed in Toronto, Montreal, Calgary or Vancouver but that a Canadian will move to Silicon Valley, New York, London or elsewhere? Think this is impossible, well think again. Vancouver-based Lululemon Athletica has transferred all of its stocks from Toronto to New York because of the perception that the NYSE is a better global trading floor than the TSX; even though both are among the 10 ten stock markets in the world. On the other hand, take the story of Elon Musk. Before Zip2, X.com, Paypal, Space X and Tesla Motors and because of his mother’s Canadian Citizenship, serial entrepreneur Elon Musk became a Canadian Citizen so he could get out of South Africa. Imagine what would have happened if he had stayed here?

Perception is important in business. Businesses locate in some countries because of objective fact but they turn away from others because they feel that the business climate is inappropriate. For many modern companies, perceived freedom, independence and protection of material is important. If you are an internet firm, you need to know that the government is not monitoring you or that if the government is that it can fight for you around the world. In Canada’s case, Bill C-51 does not necessarily do either. It just might make entry into larger markets – like Brazil, Europe, the US or China – more difficult. Consequently, does this law pass the test of good government? A test which looks at the greatest benefit for the greatest number, an examination which balances the rights of minorities so that our country does not create a situation that John Stuart Mill describes as a “tyranny of the majority”. I don’t think that Bill C-51 does and I think our corporations, entrepreneurs, labourers and professionals might suffer the consequences of a national silence on the issue.

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