Canada's Cultural Trade Quandry

Abstract

CULTURE TRADE ISSUES HAVE BEEN A BURR under the saddle of Canada-United States trade relations for well over a decade. Notwithstanding the claims of politicians that 'culture was not on the table,' the bilateral free trade agreement negotiated in the latter half of the 1980s specifically addressed some of the problems then outstanding. In addition to eventually removing all tariffs on cultural products imported from the United States, Canada was required to recognize the intellectual property rights of copyright holders of United States television signals re-transmitted in Canada through cable networks and to remove the 'printed-in-Canada' requirement relating to deductions for advertising in Canada's Income Tax Act.(f.1) Canada also had to ensure fair compensation to United States companies facing forced divestiture of Canadian cultural businesses indirectly acquired by them, through government purchase if necessary.(f.2) Canada and the United States also agreed to co-operate in the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) and in other international forums to improve protection of intellectual property rights.(f.3)Otherwise, cultural industries were exempt from the provisions of the agreement. But if one party took actions under the umbrella of the exemption, the other had the right to retaliate with measures of equivalent commercial effect.(f.4) Thus, Canada was free to take measures to protect its cultural industries so long as it was willing to pay the price. And the price might well be paid by Canadians engaged in some other sector, as we saw in the threatened retaliation list suggested informally by the Americans in the context of the magazine advertising dispute.Canada claims to have one of the most open markets in the world for imported cultural products. Levels of foreign penetration into various cultural market segments are frequently cited as justification for this claim. For example, 'foreign firms and products account for: 34% of book sales in Canada; 81% of English-language consumer magazines on Canadian newsstands and over 63% of magazine circulation revenue; 79% (over $910 million) of retail sales of tapes, CDs, concerts, merchandise and sheet music; 85% ($165 million) of the revenues from film distribution in Canada; and between 94 and 97% of screen time in Canadian theatres.'(f.5) In light of these high levels of domestic market penetration by foreign cultural products (mostly from the United States) and the potentially overwhelming presence of our enormous neighbour to the south, Canada has, over the years, put in place a wide variety of measures to foster or protect Canadian cultural expression and Canadian cultural products. The objective of these measures is to ensure that Canadians have a wide range of choice in cultural products, and that the choice includes Canadian products in each market segment. The measures differ from segment to segment as there is no workable 'one-size-fits-all' approach for all cultural product sectors.Even though they have a very high share of Canada's market for almost all cultural products, Americans frequently claim that Canadian cultural trade policies are inappropriately protectionist and exclusionary, a claim that is difficult to credit in light of the statistics just quoted. Nonetheless, the Americans are very concerned about unhelpful precedents in culture trade policies, and the applicable test in international trade law is not market share but the negative impacts government measures may have on conditions of competition in a given market segment.There are basically two reasons for Canadians to be concerned about the international regulation of trade in cultural products. One is the socio-political importance of national cultural expression; the other is the special characteristics of the production and distribution of cultural products.THE SOCIO-POLITICAL IMPORTANCE OF CULTURAL EXPRESSIONA mantra popular among cultural nationalists is that Canadians must have opportunities to hear themselves speak in their own voices. …