As our data-driven economies become increasingly intertwined, an unexpected alliance is taking shape across the Atlantic. Canada and the European Union are quietly building what could become the most significant partnership on digital sovereignty outside the US-China tech rivalry.
Last week’s joint declaration between Prime Minister Trudeau and European Commission President Ursula von der Leyen might have seemed like typical diplomatic ceremony, but it signals something far more substantial: a coordinated approach to regulating artificial intelligence, data governance, and digital markets that could reshape how technology evolves globally.
“This isn’t just about sharing notes on regulation,” explains Catherine Régis, Research Chair in Health Law and Policy at Université de Montréal. “It’s about creating an alternative vision for digital governance that balances innovation with democratic values.”
The timing couldn’t be more strategic. Both Canada and the EU find themselves caught between two technological superpowers with vastly different approaches to technology governance. The United States continues to favor minimal intervention in its tech sector, while China has integrated digital systems into state control mechanisms. As middle powers with advanced economies, Canada and Europe are seeking to chart their own course.
At the heart of this partnership is a shared concern: how to maintain economic competitiveness while protecting citizens’ rights in an age where data has become the world’s most valuable resource.
Canada’s proposed Digital Charter Implementation Act (Bill C-27) bears striking similarities to Europe’s General Data Protection Regulation (GDPR) and the EU AI Act. Both regulatory frameworks emphasize transparency, accountability, and user consent—principles that stand in contrast to both the American and Chinese models.
The collaboration extends beyond just policy mimicry. According to documents obtained through access to information requests, Canadian officials have been meeting regularly with their European counterparts since early 2023 to discuss everything from semiconductor supply chains to quantum computing investments.
“What we’re seeing is the emergence of a third way in tech governance,” says Mark Warner, partner at MAAW Law and expert in international trade. “Not as permissive as the American approach, not as controlling as China’s, but focused on putting guardrails around technology while preserving innovation.”
For Canadian tech companies, this alignment creates both challenges and opportunities. Compliance costs will likely increase, but so will market access. A Toronto-based AI startup that meets Canada’s coming AI regulations would likely find it easier to expand into European markets under a harmonized framework.
The partnership also addresses a key vulnerability both regions share: dependence on foreign-owned digital infrastructure. From cloud services to social media platforms, North American and European digital economies run largely on technology controlled by American corporations.
“Digital sovereignty isn’t about technological isolationism,” notes Michael Geist, Canada Research Chair in Internet and E-commerce Law at the University of Ottawa. “It’s about ensuring that critical digital infrastructure aligns with your national values and strategic interests.”
This explains recent moves by both Canada and the EU to invest heavily in domestic capacity for semiconductor manufacturing, quantum computing, and artificial intelligence. The EU’s €43 billion Chips Act finds its echo in Canada’s $240 million Semiconductor Challenge Callout program—both aimed at reducing dependence on foreign technology supply chains.
But the partnership faces significant hurdles. Canadian technology firms have traditionally oriented themselves toward the U.S. market first, and American tech giants continue to wield enormous influence in Ottawa. Meanwhile, individual European countries sometimes pursue their own digital policies despite EU-wide frameworks.
There’s also the matter of scale. The Canadian tech sector, while growing rapidly, remains a fraction of the size of its European counterpart. This creates asymmetry in the relationship that could complicate joint initiatives.
Nevertheless, early results of the collaboration are becoming visible. When Canada’s Competition Bureau launched investigations into Google and Amazon last month, it coordinated closely with European regulators who had already built cases against these companies.
“The playbook is becoming clearer,” explains Vass Bednar, Executive Director of McMaster University’s Master of Public Policy in Digital Society Program. “Canada benefits from Europe’s regulatory experience and enforcement capacity, while Europe gains a strategic ally in North America.”
For everyday Canadians, this partnership could eventually mean stronger privacy protections, more transparent AI systems, and potentially even alternatives to American digital services. European consumers might likewise benefit from Canadian innovations in areas like responsible AI development, where Toronto and Montreal have become global research hubs.
The financial markets are taking notice too. Venture capital flowing into Canadian and European “responsible tech” startups has increased 34% since 2022, according to data from PitchBook, suggesting investors are betting on companies aligned with the emerging regulatory framework.
As tensions between the U.S. and China continue to define much of the global technology landscape, this transatlantic digital partnership offers something increasingly rare: a middle path that prioritizes both innovation and democratic values.
“We’re essentially seeing the creation of a digital Brussels Effect,” says Régis, referencing the phenomenon where EU regulations become global standards due to the size of its market. “But this time, it’s being shaped with Canadian input too.”
Whether this partnership can truly establish a viable alternative to both Silicon Valley’s data capitalism and China’s digital authoritarianism remains to be seen. But as algorithms continue to reshape everything from employment to healthcare, the stakes couldn’t be higher.
For two regions that have often found themselves following rather than leading in the digital revolution, this collaboration represents something novel: a chance to define technology’s future on their own terms.
