That is, in fact, how the law works in Canada, the US, and many other countries in the Western hemisphere. There is a narrow exception for embassy and consular

That is, in fact, how the law works in Canada, the US, and many other countries in the Western hemisphere. There is a narrow exception for embassy and consular employees which the government thought should apply to spies but which the court has overturned. It's an edge case that is not clear cut either way. I don't think it is right to punish the children (stripping them of their birthright citizenship) on the basis of the crimes of their parents (espionage), particularly when said children spent most of their childhoods in Canada.