This week’s lengthy Trouble with the TPP post focused on the likelihood that efforts to require online video providers to pay mandatory Cancon contributions would be challenged under the TPP. While I am not a supporter of extending contributions to companies like Netflix, including such a restriction within a trade agreement is bad policy. Today’s post continues with the culture theme, by examining the risk that other new policy innovations might also be stymied by the TPP.
The Globe and Mail’s Kate Taylor recently wrote a column arguing that Canadian cultural production is in crisis and calling for reforms to address the issue. For example, Taylor cited the possibility of tax credits for advertising on websites that meet a Canadian content threshold similar to the policy for television and radio broadcasters. ACTRA has long called for a similar policy, noting the benefits of tax deductions for advertising on Canadian-owned websites that give prominence to Canadian content.
But would such a policy pass muster on the TPP? It’s not totally clear that it would.
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Culture and the TPP has yet to garner much attention, but that is a mistake. The TPP departs from longstanding Canadian policy by not containing a full cultural exception and creates unprecedented restrictions on policies to support the creation of Canadian content. The Canadian position on trade and culture has been consistent for decades with successive governments requiring a full exemption for the cultural industries. The exemption, which is found in agreements such as NAFTA and CETA, give the government full latitude to implement cultural policies to support the creation of Canadian content.
The TPP’s approach to culture is different from Canada’s other trade agreements. Rather than include an exception chapter or provision, the TPP contains several annexes that identify “non-conforming measures.” This allows countries, including Canada, to list exceptions to specific TPP rules. Without an exception for the cultural industries, the TPP rules banning local presence requirements and national treatment for service providers would place Canadian cultural rules at risk. Annex II includes a Canadian exception for the cultural industries. The exception is promoted in the government’s summary of the TPP, which claims that the agreement:
includes a broad reservation under Services and Investment for existing and future programs and policies with respect to cultural industries that aim to support, directly or indirectly, the creation, development or accessibility of Canadian artistic expression and content.
That led to media coverage reporting that Canada had obtained a full exception to protect cultural policies. A closer look at the actual text, however, reveals that Canada did not obtain a full cultural exception. Rather, there are two notable exceptions to the general cultural exception, which state:
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Canada’s cultural industries greeted the election of a new Liberal government with considerable excitement, hoping to the turn the page on a decade of Conservative policies that were widely viewed as prioritizing consumers over creators. The Liberal platform was silent on major regulatory changes, but it did promise to reverse cuts to the CBC and to increase allocations to the Canada Council for the Arts, Telefilm, and the National Film Board.
The cultural sector will undoubtedly welcome the infusion of millions more in taxpayer support, but the bigger fight will be over legal reforms to treat telecom and Internet companies as cultural businesses and require them to make Canadian content contributions similar to those paid by conventional broadcasters.
My weekly technology law column (homepage version) notes that the prospect of telecom and Internet provider payments has been part of a long-standing campaign from cultural groups who fear that a shrinking broadcast sector will ultimately mean smaller handouts for Canadian content creation. The campaign has thus far failed to bear much fruit: the Supreme Court of Canada ruled in 2012 that Internet providers were not subject to the Broadcasting Act and last year the Conservatives led the charge against a “Netflix tax” that would have required the popular online video service to make Canadian content contributions.
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This week’s leak of country-by-country positions on a Trans Pacific Partnership included a notable reference to the inclusion of a cultural exception. Canada stands with a slight majority in seeking a cultural exception that would presumably exclude the cultural industries (broadcast, audio-visual, music, books, etc.) from the ambit of key TPP provisions such as foreign investment restrictions or other legislated forms of cultural protections. Other supporters of a cultural exception include Australia, New Zealand, Chile, Brunei, Malaysia, and Vietnam. Opponents include the U.S., Peru, Mexico, Singapore, and Japan.
The emergence of the cultural exception issue is interesting because U.S. lobby groups were specifically concerned with the prospect that Canada would pursue an exception if admitted into the TPP negotiations. For example, the IIPA (which represents the major music, movie, and software lobby groups) stated the following in January 2012 with respect to the possible admission of Canada into the TPP:
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Canada’s offer to the Europeans in the Canada-EU Trade Agreement negotiations on several key areas leaked yesterday. The documents reveal that Canada wants both telecom foreign ownership and cultural protections kept out the agreement.
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