The Shadow of Past Failures and the EU's Blueprint
Canada finds itself at a critical juncture in its approach to artificial intelligence (AI) regulation, looking to learn from past missteps and international models. The failure of Bill C-27, the federal government's previous attempt to overhaul digital privacy and AI policy, has left the nation without a cohesive national AI strategy for four years. During this period, the European Union has forged ahead, implementing its own robust AI legislation. Canadian policymakers are now closely examining the EU's AI Act, seeking to adapt its principles to the Canadian context. This renewed effort comes as the global conversation around AI safety and governance intensifies, highlighted by initiatives like the International AI Safety Report 2026, spearheaded by Canadian AI pioneer Yoshua Bengio.
Navigating the Tightrope: Innovation vs. Regulation
The core challenge for Canada lies in striking a delicate balance between fostering AI innovation and mitigating potential risks. Critics warn that overly stringent regulations, such as those mirroring the EU's comprehensive approach, could inadvertently discourage companies from operating or investing in Canada. Michael Fekete, a technology partner at Osler, emphasizes the importance of adoption, stating, “The biggest element of economic growth will come from adoption.” He cautions against creating impediments that could hinder this growth. The government acknowledges this tension, with Innovation, Science and Economic Development Canada indicating a focus on international best practices to ensure a flexible legislative framework that can respond to emerging risks. The goal is to leverage AI for economic well-being and global competitiveness, a sentiment echoed by Fekete, who advocates for legislation that is adaptable and responsive.
A Evolving Landscape of AI Governance
Canada's journey toward AI regulation has been marked by incremental steps. Following the demise of Bill C-27, the federal government introduced a voluntary code of conduct for generative AI, outlining expectations for safety and transparency. In 2025, Prime Minister Mark Carney appointed Evan Solomon as Canada's first AI minister and initiated a national consultation process, drawing over 11,000 contributions to shape a new AI strategy. While a comprehensive federal AI statute remains elusive, existing laws in areas such as the Criminal Code, Competition Act, financial regulations, and privacy laws already address some AI-related risks. However, the need for clearer accountability, particularly for businesses developing and deploying high-impact AI systems, is evident. The proposed Artificial Intelligence and Data Act (AIDA) aims to fill these gaps, establishing clear responsibilities for identifying and mitigating risks associated with AI bias and harm, aligning with the EU's risk-based approach.
The Path Forward: Proactive Compliance and Monitoring
As Canada moves towards a potentially new AI legislative initiative, organizations are urged to adopt a proactive stance on compliance and risk management. This involves continuously assessing AI activities against current legal obligations and preparing resources to adapt to future regulatory changes. The upcoming year is anticipated to be a significant one for AI in Canada, with expectations of a successor bill to the previous AIDA being tabled. Minister of Artificial Intelligence and Digital Innovation Evan Solomon has indicated a desire for a new regulatory initiative distinct from AIDA. Businesses are encouraged to monitor legislative and policy updates closely, ensuring they are well-positioned to navigate the evolving legal and regulatory landscape of AI use in Canada, managing both opportunities and potential liabilities.