This report is part of a series on "Canada’s Trade in AI with the Indo-Pacific" from one of APF Canada's 2025-26 John H. McArthur Research Fellows, Kati Suominen. Read the first instalment here. Read the second installment here. 

Artificial intelligence is emerging as one of Canada’s most promising tradable assets. The first paper in this series showed that Canadian exports of AI-intensive industries, including information services, computer services, research and development, financial services, and professional services, have grown substantially faster over the past decade than Canada’s traditional exports of manufactured goods, minerals, and agricultural products. While the United States remains the primary market, the ongoing growth and digital transformation of the Indo-Pacific make the region a key future destination for Canadian AI-intensive firms, consistent with the objectives of Canada’s Indo-Pacific Strategy.

The second paper in this series assessed the trade policy landscape facing Canada’s AI-intensive firms in the Indo-Pacific. At the multilateral level, several Indo-Pacific countries such as India, Indonesia, and the Philippines offer only limited liberalization for AI-enabled services sectors under the General Agreement on Trade in Services (GATS). The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) meaningfully improves market access and legal certainty for various AI-intensive services sectors in Australia, Japan, Malaysia, New Zealand, Singapore, and Vietnam, but digital trade commitments are unevenly implemented. There are also applied barriers across the region such as data localization requirements, cloud licensing regimes, local presence requirements, restrictive procurement practices, and risks of source code disclosure.

These restrictive measures are compounded by an increasingly fragmented AI regulatory landscape, ranging from Japan’s principles-based AI Promotion Act and India’s light-touch AI Governance Guidelines to Vietnam’s prescriptive 2026 AI law, which obliges Canadian firms to adapt explainability, risk controls, and documentation to the requirements of each jurisdiction.

The urgency of deepening market access and fair treatment for Canadian AI-intensive firms in the Indo-Pacific has increased recently: at the joint review of the Canada-United States-Mexico Agreement (CUSMA) on July 1, 2026, the U.S., the destination for more than 60 per cent of Canada’s AI-intensive exports, declined to extend the Agreement to 2042. CUSMA remains in force until 2036, but it now enters a cycle of annual reviews that observers expect the U.S. to use as recurring leverage in renegotiations. 

Diversification toward the Indo-Pacific is now an urgent means to manage the risk of market access challenges in the U.S. for Canadian AI-intensive businesses. This third paper discusses ways to do so. 

Key Recommendations:

1. Include in the CPTPP AI-focused trade provisions among willing members and through the Agreement’s general review.
    
2. Broaden CPTPP membership to bring economies with considerable services trade barriers, such as Indonesia, the Philippines, and Thailand, under the Agreement’s negative-list architecture, in which every services sector is liberalized unless otherwise defined.
    
3. Ensure full implementation of existing CPTPP e-commerce commitments pertinent to AI, such as on free data transfer rules, through regular, evidence-based reviews and, where needed, formal enforcement in co-ordination with like-minded members.
   
   
4. Promote the adoption and mutual recognition of international AI standards, notably ISO/IEC 42001 and ISO/IEC 23894, at home and across the region.
    
5. Establish a network of AI cooperation memoranda of understanding (MOUs) with Australia, Japan, New Zealand, Singapore, and South Korea covering regulator dialogues, AI sandboxes, safety evaluation, and business facilitation.
   
   
6. Pursue open, non-discriminatory access to government AI procurement through dedicated chapters in new agreements and support for Government Procurement Agreement (GPA) accession by Indo-Pacific economies.
    
7. Champion copyright rules conducive to AI development across the Indo-Pacific and at home.
    
8. Lead an Indo-Pacific work program on agentic AI with Australia and Singapore, delivering non-binding guidelines on agent identification, disclosure, liability, and trusted agent-mediated payments.
    

Read the full report below, or download a copy above.