The Wrong Test: “Not American” Is Not A Sovereignty Standard

European authorities have effectively redefined sovereignty by adopting a standard that equates ‘not American’ with sovereignty, a move that has significant implications for international data governance and procurement. This shift, while seemingly straightforward, is based on a proxy that overlooks complex legal distinctions, especially regarding Canadian data laws and jurisdictional protections.

Recent European policy statements and procurement practices suggest a move away from assessing sovereignty solely based on geographic or legal incorporation within the EU. Instead, the focus has shifted to whether a company is American, under the assumption that US jurisdiction, exemplified by laws like the CLOUD Act, compromises data sovereignty. Canada’s legal framework complicates this narrative: Canadian law explicitly protects data of its own citizens and does not fall under the reach of the CLOUD Act, as Canada has not signed a bilateral executive agreement with the US. Canadian courts have also rejected the US third-party doctrine, strengthening data protections for Canadians.

Despite this, European policymakers and buyers often treat ‘not American’ as a proxy for sovereignty, which the analysis suggests is a flawed shortcut. The Canadian case demonstrates that jurisdictional sovereignty involves nuanced legal protections, oversight mechanisms, and international agreements that cannot be reduced to simple nationality markers. The recent European adequacy decisions for Canada, reaffirmed in January 2024, are based on PIPEDA’s commercial data protections, but these do not cover all data types or provincial laws, raising questions about the adequacy’s scope and reliability.

Implications of Using ‘Not American’ as a Sovereignty Proxy

This shift impacts how European entities evaluate foreign technology providers and data sovereignty. Relying on the ‘not American’ proxy risks oversimplification, potentially leading to procurement decisions based on incomplete or misleading assumptions about jurisdictional protections. It also raises broader questions about the effectiveness of sovereignty measures when proxies are used instead of direct legal assessments. For Canadian providers, this means their legal protections may be misunderstood or undervalued in European markets, despite being stronger than the simplified proxy suggests.

Legal and Jurisdictional Foundations of Data Sovereignty

The concept of sovereignty in digital data has traditionally hinged on jurisdictional sovereignty—whether a country’s laws and courts can enforce protections over data within its borders. The CLOUD Act exemplifies how US law extends influence over data held by US-incorporated providers, but Canada’s legal architecture offers stronger protections for its citizens’ data, explicitly prohibiting targeting Canadians and requiring oversight for intelligence disclosures. Canada’s long-standing status under the EU’s adequacy decision, reaffirmed in January 2024, reflects recognition of its legal protections, but these are limited to specific data types and entities.

European policymakers have historically viewed US jurisdiction as a threat to sovereignty, leading to the adoption of the ‘not American’ proxy. However, the Canadian legal framework demonstrates that sovereignty is more complex, involving oversight, legal protections, and international agreements that are not reducible to simple nationality markers. The recent policy shift suggests a broader redefinition of sovereignty, but the underlying legal realities remain nuanced and contested.

“Canada remains an adequate jurisdiction for data transfers under EU law, reaffirmed in January 2024.”

— European Commission

Legal and Practical Limits of the ‘Not American’ Proxy

It remains unclear how European policymakers will reconcile the proxy with the legal realities of jurisdictions like Canada, especially as procurement and data transfer practices evolve. The adequacy decision covers certain data types and entities but does not fully address provincial laws or all data categories, raising questions about the proxy’s reliability and future revisions.

Potential Revisions to Sovereignty Assessments and Policies

European authorities may refine their sovereignty assessment criteria, moving beyond proxies to more direct legal and jurisdictional evaluations. Ongoing negotiations and legal challenges could influence future adequacy decisions, and Canadian providers may need to clarify their legal protections to European buyers. Additionally, the debate highlights the need for clearer standards and measurement tools to assess sovereignty in digital data governance.

Key Questions

Why does Europe rely on ‘not American’ as a sovereignty marker?

Europe has historically viewed US jurisdiction, especially laws like the CLOUD Act, as a threat to sovereignty, leading to the use of nationality proxies to assess legal protections.

Is Canadian law weaker or stronger than US law regarding data protections?

Canadian law is generally stronger in protecting Canadians’ data, explicitly prohibiting targeting Canadians and requiring oversight for intelligence disclosures, and has explicitly rejected the US third-party doctrine.

What are the limitations of the EU’s adequacy decision for Canada?

The adequacy decision primarily covers commercial data under PIPEDA and does not extend to all data types or provincial laws, such as those in Quebec, Alberta, and British Columbia.

Could the ‘not American’ proxy lead to misjudging data sovereignty?

Yes, relying solely on nationality as a proxy ignores complex legal protections and oversight mechanisms, potentially misrepresenting actual sovereignty and data security levels.

Source: ThorstenMeyerAI.com