Failure Of Enforcement Research Articles

Who blames corruption for the poor enforcement of environmental laws? Survey evidence from Brazil

Who blames corruption for the poor enforcement of environmental laws? The answer to this question is important since corruption is an important reason why environmental policies are not properly enforced, but previous studies of environmental public opinion do not address the issue. We analyze data from a survey fielded in Brazil in June 2012, immediately preceding the Rio+20 environmental summit. We test hypotheses on income, education, and perception of corruption as a cause of poor enforcement of environmental policy. We find that wealthy individuals are more likely to associate corruption with enforcement failure than their poorer counterparts. However, education is not associated with the belief that corruption is a primary cause of enforcement failure. These results suggest that since wealthy Brazilians have a higher exposure to corruption because of their interaction with government officials, they understand the role of corruption in policy failure. Conversely, the kind of general information that education offers does not raise concern about the role of corruption in environmental policy. The results have important implications particularly in democratic societies, where governments have stronger incentives to address the problem if the concerned public associates corruption with enforcement failure.

Rape Law Fundamentals

Modern American rape law is the product of historical contingencies, compromises, legislative inattention, successful reforms, and backlash. It is neither a puzzle to be solved nor a coherent system of rules and values. Perhaps the clearest lesson to draw from our criminal laws regarding sex is that there is no logic, reason, or consistency among them. As a result of its checkered past, myths and misunderstandings about rape law abound. Jed Rubenfeld’s recent article, The Riddle of Rape-by-Deception and the Myth of Sexual Autonomy, exemplifies the confusion many courts, scholars, and members of the public have about modern rape law. Rubenfeld’s specific proposal to base rape statutes on a right to self-possession, because it is derived from mistaken premises about rape law, would likely make legal over 90% of rapes in America. By replacing the non-consent element of modern rape statutes with a narrow force requirement, Rubenfeld’s recommendation essentially decriminalizes non-stranger rape and rape by a victim’s intoxication.In this Article, I examine the missteps Rubenfeld makes to explain why he ends up supporting such a disastrous conclusion. For example, Rubenfeld sees the need for his right to self-possession theory because he believes that autonomy is the sole basis that scholars offer for the foundation of rape law. However, rape is also properly supported as an independent offense by the nature and severity of harm caused, gender dynamics involved, and terror inflicted on the general population by widespread sexual violence. He also uses specious analogies and idiosyncratic conceptions of autonomy to establish the critical components of his argument.Despite the faults of his specific claims, Rubenfeld points rape scholars in a worthwhile direction. Instead of seeking diminishing returns with statutory tinkering, there is much to be gained by focusing on the foundations of rape law. By better integrating the fundamental values of rape law (autonomy, gender, harm, and terror), the major problems of high rape prevalence, law enforcement failure, and political hostility to rape victims that plague America can be better addressed.

Understanding the Enforcement Malfunction of Consumer Legislation in Serbia

The new Serbian Law on Consumer Protection was passed in October 2010, and its enactment and general outlook may be attributed to the continuous political pressure and financial and technical support by the European Union (EU). This paper outlines several factors that may have contributed to the weakness of enforcement in Serbia, so that while consumer legislation is fairly harmonized with the EU acquis, national standards of consumer protection lag behind those in the EU. These tentative explanations of the enforcement malfunction include (1) the lack of institutional capacity to receive the professional and technical support of the EU, (2) external pressure as the main incentive for legislative change, (3) the lack of belief in the social relevance of legislative changes as such, (4) the deficiency of the enforcement mechanisms and the lack of appreciation of their importance, and (5) the absence of cooperation between the stakeholders and institutional resistance to change. Consumer protection is not an exceptional field characterized by the risks of enforcement failure. Moreover, the difficulties described in the article are not limited to Serbia, as they also happen in other jurisdictions, even if in different shapes and forms. The success of aligning the national norms to those of the EU and the success of legal transplants in general are always quite uncertain. In that sense, the case of consumer policy in Serbia should be understood as an instance that may illuminate a class of phenomena.

Rule of Law with Chinese Characteristics: The Role of Campaigns in Lawmaking

China increasingly relies on its legal system to regulate a broad spectrum of social and economic activity. There is, however, widespread failure to observe the law, which periodically leads to social crises and popular unrest. The Chinese state is not, of course, alone in experiencing this, but it responds to enforcement failures in distinctive ways. This article examines one such response. In this article, we explore the role played by the enforcement campaign in the development of the Chinese legal system. We focus on one campaign in particular: the campaign that was waged between 2004 and 2007 to redress the chronic failure to pay wages. Chinese enforcement campaigns are not simply directed at securing greater compliance with existing law. They are integrally linked to cycles of law reform in the PRC. Whilst their main impact is on enforcement, they also have an important role in influencing the drafting of legislation and the interpretation of law. This article documents the impact of this campaign on the production of law: in speeding up the iterative process of lawmaking, interpretation, and implementation, with production of important reforms to existing labour law in 2007 and 2008. It is the strong “planned” nature of the campaign and its emphasis on state leadership of lawmaking and enforcement that continues to shape the development of China's particular version of the “rule of law.”

The durability of private sector-led marine conservation: A case study of two entrepreneurial marine protected areas in Indonesia

This paper investigates the durability of entrepreneurial marine protected areas (EMPAs) by exploring the role of the private sector in marine conservation. Set within a wider set of social science questions around the marine protected areas as negotiated interventions, we focus on whether and how tourism entrepreneurs can instill a long-term vision for marine conservation, funding and management, thereby overcoming commonly cited implementation and enforcement failures in state-led marine parks. The analysis is based on an empirical comparison of the Yayasan Karang Lestari coral restoration project in Pemuteran on the Northwest coast of Bali, and the marine tourism park around the island of Gili Trawangan off the west coast of Lombok in Indonesia. Our results show that the private sector is able to increase awareness of conservation amongst tourists and coastal communities, provide new income alternatives, and provide financial capacity to support marine conservation activities. It does not, however, appear to have the capacity to create durable, institutionalised arrangements without state support. These findings feed into a wider discussion on the formation of EMPAs, the role of alternative organisational structures and technologies in facilitating change in coastal areas, and how traditionally economic concepts such as entrepreneurship can contribute to a wider understanding of marine conservation governance.

The Politics of WTO Enforcement Mechanism

This paper attempts to develop a formal economic framework to analyze the influences of domestic political considerations by democratic governments in shaping the WTO enforcement outcomes following a violation ruling against the defendant. Since a different mix of import and export sectors in the defendant and complainant country will benefit from the various potential enforcement outcomes, they become competing forces which steer the strategic interactions between the disputing governments. The results of the paper illustrate the complainant's strategy in selecting the retaliation list, and the likelihood of the defendant's compliance or compensation in response to the proposed or foreseeable retaliation, given the political and economic environments on both sides of the disputing parties. This paper also captures the possibility of enforcement failures under the current WTO dispute settlement procedure, where the complainant does not have enough retaliation capacity to induce compliance or some form of compensation from the defendant.

Developments in Insider Trading: Lessons from Recent SEC Enforcement Failures and Successes

Currently front page news, insider trading is a topic that demands renewed attention by traders, as well as employees with inside information about their employers. In the past few years, the SEC has intensified its already considerable efforts to enforce the insider trading laws. These increased efforts are highlighted by the SEC’s far-ranging prosecution of alleged insider trading relating to the Galleon Group, including corporate insiders who purportedly tipped traders. They are also evident in the SEC’s recent extension of the insider trading laws to debt securities and credit default swaps, which are not generally traded in the United States via regulated securities exchanges and which were traditionally considered to be outside the reach of the insider trading laws. However, the SEC’s zeal in pursuing insider trading cases stands in contrast to the recent dismissal of insider trading claims against two former managers of Bear Stearns’ hedge funds and, in a separate case, Mark Cuban. As the Cuban case indicates, the complex case law circumscribes the reach of the insider trading laws, sometimes arbitrarily. This article analyzes the tension between these case-law constraints and expansive SEC enforcement. Because of this tension, more than one answer can be given to the question—What is the law on insider trading?—depending on whether the question is posed from a litigation or compliance perspective. <b>TOPICS:</b>Credit default swaps, information providers/credit ratings, financial crises and financial market history

GRAMMAR LESSONS LEARNED: DEPENDENT CLAUSES, FALSE COGNATES, AND OTHER PROBLEMS IN RULE OF LAW PROGRAMMING

The international donor community has spent decades working with developing countries to guide, promote, and even demand reforms aimed at improving socio-economic and political performance across a wide range of standards. One of the most prominent objectives has been to instill and establish stable rule of law where it is feeble or fractured, for a variety of noble reasons. Success in these endeavors has all too often been limited or temporary; positive gains, such as improved constitutions, are often offset by implementation and enforcement failures. Development assistance often focuses on the methods by which rule of law (ROL) is implemented. These technocratic or managerial solutions are only effective, however, if they are based on a proper understanding of the socio-political underpinnings of the work they are designed to advance.2 If the basic concept is wrong, then the mechanisms for achieving it are likely to be wrong. It is not good enough simply to do the wrong thing better. Improved delivery may require more than improved techniques; perhaps the fundamental failure is one of ideas, reflected and exacerbated, as this article will argue, in the very language of ROL reform. Some simple grammar lessons may help to reorient programming for effectiveness.

Comments for the United States Departments of Agriculture and Justice Workshops on Competition Issues in Agriculture

The Department of Justice and the Department of Agriculture have combined to hold a series of workshops related to the competitive issues affecting America's farmers and ranchers. These comments summarize the competitive issues merit attention in this process. On the farm output side they include the use and abuse of the Federal Milk Marketing Order System as well as other agricultural market orders. These orders are being abused in various ways that harm both producers and consumers. Some of these problems stem directly from the way the USDA has failed to police the ways in which the orders have been written while other problems stem from the failure of antitrust enforcement to control concentration at both the processing and retailing stages of the dairy industry as well as policing the exclusionary practices of dominant cooperatives and milk processors. With respect to livestock and poultry, the competitive problems come primarily from the failure of the USDA to use its authority under the Packers and Stockyards Act to facilitate fair, efficient and open competition in the changing contexts of the poultry and livestock industries, but the DOJ has also failed to limit the increase in concentration on the buying side of these markets which has contributed to the problem of anti-competitive conduct and exploitation. In crop markets, the problems that are emerging relate to the increased concentration of the buying markets, again the result of lax merger enforcement as well as the misuse of market orders in some fruits. Finally, on the input side, there are serious problems for competition resulting from the dominance of important new genetically modified seed technologies by a firm that has used its power to impose unjustified burdens on farmers and is now acting to frustrate technological competition. More generally, farmers are victims of higher input prices resulting from increased concentration in all of the markets providing their inputs.

Beyond Corruption

Over the past two decades, human trafficking has become an increasingly serious problem for Russia. Because it has been framed as a manifestation of transnational organized crime, law enforcement has the primary role in making sure that traffickers are found and punished. Russia's performance in dealing with the problem, however, has been roundly criticized by domestic and foreign actors alike. As of October 2007-despite the December 2003 passage of a law criminalizing human trafficking-of the over 350 cases of human trafficking registered under the new law, only 10 of them had been brought to court.1Scholars and policymakers have identified a number of causes for Russia's poor performance, but corruption almost always appears near the top of the list.2 Though corruption is certainly a contributing factor to the spread and persistence of human trafficking in Russia, it does not fully explain Russian law enforcement's behavior. It does not, for example, explain why a non-corrupt law enforcement agent might choose not to pursue a human trafficking case when the evidence seems to clearly indicate trafficking. To understand this situation, it is important to look at human trafficking in the context of the criminal justice system as a whole.I argue that the basic structure of law enforcement creates a series of barriers that deters prosecution of many crimes in Russia. Investigative and prosecutorial functions are strictly separated, creating a situation in which no one can take ownership of a case and see it through to completion. The process is further complicated by a system of career advancement that relies heavily on the number of cases cleared, leading law enforcement agents to fear anything that is new and unfamiliar to them. As a new crime, human trafficking presents its own set of challenges. It requires law enforcement to learn new techniques for dealing with witnesses who are also victims. It also requires that they learn strategies for how to apply the new law effectively.In this article, I examine how Russian law enforcement implemented the human trafficking law from its initial passage in December 2003 until an amendment was made in November 2008. The amendment was a relatively minor change to the wording of the law but was a response to law enforcement complaints about why they could not do more.3 It therefore provides a convenient stopping point to analyze the first four years of law enforcement practice and a starting point for future analysis of improvements.The data for this project come from eleven months of fieldwork in Russia as a Fulbright scholar (September 2007 to July 2008) and a trip for follow-up data collection in the summer of 2009. In-depth research into law enforcement practices in Russia is relatively rare since law enforcement agencies continue to operate in a non-transparent fashion and are reluctant to open up their practices to scrutiny by outsiders. This is especially true of an issue like human trafficking, which has garnered widespread international attention largely because of law enforcement's failure to act.During my research, I spoke with police in the Interior Ministry (MVD-Ministerstvo Vnutrennykh Del), prosecutors (Generalnaya Prokuratura)4 and agents in the security services (FSB-Federalnaya Sluzhba Bezopasnosti). To account for potential regional variation in enforcement practices, I visited cities across Russia: Moscow, Vladivostok, Khabarovsk, Yoshkar Ola, Kazan, Saratov, Stavropol and Irkutsk (all capital cities of their regions). Moscow, Vladivostok, Khabarovsk and Yoshkar Ola all had at least one trafficking prosecution during the time period of my study. In those cities, I sought out law enforcement agents (MVD, prokuratura and sometimes judges) and other stakeholders (non-government organizations and experts) who had experience with the trafficking laws to better understand the challenges they faced.5 Other cities, (Stavropol, Kazan and Irkutsk) initiated their first prosecutions after my research trips there, so I was only able to attend conferences and speak with conference attendees. …

Will The SEC Survive Financial Regulatory Reform?

The Securities and Exchange Commission’s (“SEC”) conspicuous failures during the financial crisis of 2008 have led many to question the agency’s relevance in the modern financial era. Some commentators have called for the creation of new super-agencies to assume a substantial portion of the SEC’s duties. Others highlight enforcement failures and question the agency’s commitment to its investor protection mission. Despite its recent missteps and persistent calls for regulatory overhaul, the SEC’s future seems secure for now as President Obama’s reform proposals (the “Obama Plan”) as currently conceived preserve the agency’s independence.

Environmental regulatory failure and metal contamination at the Giap Lai pyrite mine, Northern Vietnam

The causes for the failure in enforcement of environmental regulations at the Giap Lai pyrite mine in northern Vietnam are considered and the environmental impacts that are associated with this mine are evaluated. It is shown that sulphide-rich tailings and waste rock in the mining area represent significant sources of acid rock drainage (ARD). The ARD is causing elevated metal levels in downstream water bodies, which in turn, represent a threat to both human health and to aquatic ecosystems. Metal concentrations in impacted surface waters have increased after mine closure, suggesting that impacts are becoming progressively more serious. No post-closure, remediation measures have been applied at the mine, in spite of the existence of environmental legislation and both central and regional institutions charged with environmental supervision and control. The research presented here provides further emphasis for the recommendation that, while government institutions may need to be strengthened, and environmental regulations need to be in place, true on the ground improvement in environmental quality in Vietnam and in many other developing countries require an increased focus on promoting public awareness of industrial environmental issues.

Flag Waving as Visual Argument: 2006 Immigration Demonstrations and Cultural Citizenship

During the 2006 immigration rallies and demonstrations, hundreds of thousands of immigrants and their supporters turned out to protest proposed immigration legislation. Flag waving was a key element of these demonstrations, in which participants employed both the U.S. flag and other national flags, most prominently Mexican flags. In this essay, we examine how flag waving functions as a visual argument that offers possibilities for establishing cultural and national citizenship and creating a visual form of refutation. Specifically, we argue that anti-immigration advocates see foreign flags as visual ideographs that represent recent immigrants' failure to assimilate, immigrants' deviant cultural practices, and failure of law enforcement. Immigrant rights advocates see foreign flags as a visual ideograph that represents cultural pride, unity, and civic participation that creates space for cultural citizenship. These oppositional tensions create a framework for understanding flag waving as a refutative process.

Failure of Enforcement Controlled Substance Laws in Health Policy for Prescribing Opiate Medications: A Painful Assessment of Morbidity and Mortality

Controlled substances can be used for legitimate medical purposes to relieve pain and suffering, and allow management of medical and surgical conditions, whether acute or chronic in duration. However, because these are attractive, addicting drugs, diversion from sources such as physicians and pharmacists can lead to serious health problems. Of importance is that addiction to opiate medications can interfere with treatment of the original pain condition, and can lead to life threatening states because of poor judgment and depressed mood in the users. Consequently, the public has a vested interest in protecting the medical uses of these medications on the one hand, although reducing the morbidity and mortality from their diversion and addictive use. The controlled substance laws contain 3 sources of policy framework that governs the medical use and diversion of controlled substances: (1) international treaties, (2) federal laws and regulations, and (3) state laws and regulations. These laws are aimed at balancing the need to controlling use with adverse consequences against the therapeutic benefits opiate medications provide the public.

The Number of Independent Kruppa Constraints from N Images

It is well known that without any priori knowledge on the scene, camera motion and camera intrinsic parameters, the only constraint between a pair of images is the so-called epipolar constraint, or equivalently its fundamental matrix. For each fundamental matrix, at most two independent constraints on the cameras’ intrinsic parameters are available via the Kruppa equations. Given N images, N(N−1)/2 fundamental matrices appear, and N(N−1) Kruppa constraints are available. However, to our knowledge, a formal proof of how many independent Kruppa constraints exist out of these N(N−1) ones is unavailable in the literature. In this paper, we prove that given N images captured by a pinhole camera with varying parameters and under general motion, the number of independent Kruppa constraints is (5N−9) (N > 2), and it is less than that of independent constraints from the absolute quadric by only one. This one-constraint-less property of the Kruppa equations is their inherent deficiency and is independent of camera motion. This deficiency is due to their failure of automatic enforcement of the rank-three-ness on the absolute quadric.

The Challenge of Treaty Structure: The Case of NAFTA and the Environment

My remarks will focus on the challenge that treaty structure poses addressing the tension between trade, investment, and environment. The question I ask is whether trade, investment, and environment are closed boxes not only each other, but also non-state participants, especially members of civil society. I will use the NAFTA Environmental Side Agreement (1) illustrate this issue. My main point is that treaty structure creates biases in how trade and environment issues are resolved. With treaty structure I refer the design of treaties either primarily as contractual arrangements or more like public regulatory regimes. Trade treaties tend resemble the former, while environmental agreements are being configured increasingly resemble the latter. By their design, public regulatory regimes tend be better at promoting civil society involvement and vindicating public values than contractual arrangements. A BRIEF OVERVIEW OF THE NORTH AMERICAN AGREEMENT ON ENVIRONMENTAL COOPERATION AND ITS CITIZEN SUBMISSIONS PROCESS The environmental side agreement was intended promote environmental cooperation and ensure that NAFTA states would not regress in their environmental protection efforts because of increased competitive pressures. Under the side agreement, the parties are required ensure high levels of environmental protection (2) and their environmental (3) The agreement also contains citizen submission process through which anybody, including private individuals, EGOs, and corporations, can complain about NAFTA party's failure to effectively enforce its environmental law. The submissions process is well-known, and I will skip the details. In broad outline, there are five basic steps: (1) petition or submission the Commission for Environmental Cooperation alleging failure effectively enforce environmental laws; (2) review and decision by the secretariat that the submission is essentially non-frivolous, and request for response from the target state; (3) decision by the Council, made up of the environmental ministers of the NAFTA countries, on whether develop factual record; (4) Commission preparation of factual record, which may take from months years; (5) Council vote on whether release the final report the public; two-thirds majority vote is required for public release. At this point, the process has run its course. There is no substantive remedy at the end. The outcome is report documenting the facts underlying the enforcement failure allegations. The side agreement, however, does contain bilateral dispute settlement process in Part V. The standard for triggering that process is that country must have engaged in a persistent pattern of failure ... effectively enforce its environmental law. (4) The standard is thus higher than for triggering of factual records. Theoretically, however, the Article 14 factual records could provide the factual predicates for such dispute settlement proceeding. To date, the Secretariat has received fifty-three submissions; eleven are pending, and another eleven have resulted in factual records. The rest never made it the factual record stage. There have been no Part V proceedings. THE IMPORTANCE OF STRUCTURE; THE CHALLENGE OF CONTRACT FOR PROMOTING PRIVATE AND PUBLIC VALUES Why is treaty structure important? Structure creates biases in how issues are resolved. Contractual arrangements are fundamentally designed advance individual, private interests the extent that they are mutually compatible. In contrast, public regulatory regimes are designed promote public norms and shared values. The result is bias of treaty outcomes toward private or public values depending on the structure of the treaty. For trade agreements, which are largely based on the contract model, outcomes are biased against public values like environmental quality and toward private interests. …

The Reactions of Mock Jurors to the Department of Justice Guidelines for the Collection and Preservation of Eyewitness Evidence

Failure to follow the recommended guidelines for conducting lineups set forth by the Department of Justice (DOJ) could result in fewer convictions. To test this supposition, mock jurors read 1 of 3 versions of a court transcript. In 1 version, no issues were raised about how the investigating officer conducted the photo array. In the second version, 2 procedural errors made by the investigator were highlighted. In the third version, the defense attorney highlighted 2 procedural errors and mentioned that these errors violated the DOJ guidelines. Mock jurors informed of the procedural errors their violation of the DOJ guidelines found the prosecution's case against the defendant to be weaker than mock jurors in the other 2 conditions. Also, mock jurors informed of the procedural errors were less likely to find the defendant guilty than mock jurors in the other 2 conditions. Thus, the failure of law enforcement to implement the DOJ guidelines could be used to discredit the prosecution's case in the jurors' eyes.

The Effectiveness of the NAFTA Environmental Side Agreement's Citizen Submission Process: A Case Study of the Metales y Derivados Matter

Among the most visible features of the North American Agreement for Environmental Cooperation, commonly referred to as the NAFTA Environmental Side Agreement, has been its citizen submission process. The submissions process allows private individuals to trigger an official international investigation into a NAFTA government's failure to effectively enforce its environmental laws. It remains one of the most advanced institutional mechanisms aimed at addressing international environmental issues related to trade liberalization. Some commentators have been optimistic about its usefulness. However, an examination of one of the more recently published factual records, the Metales y Derivados matter, paints a more mixed picture. Metales y Derivados is a former battery and lead waste recycling facility located in Tijuana, Mexico that was abandoned by its U.S. owner. For years, the poor and working-class neighboring community complained about pervasive environmental violations by the facility. When Mexican environmental officials finally instituted criminal enforcement proceedings, the owner fled across the border to the U.S. rather than face charges in Mexico. Left behind were thousands of tons of wastes and contaminated soil containing lead and other heavy metals. To this day, years after the facility was first abandoned and after the publication of a factual record detailing the enforcement failures of the Mexican government, little has changed. The piles of lead slag and barrels and sacks of waste still sit at the plant, and the toxic waste remains uncontrolled. This article examines the Metales matter as a case study of the effectiveness of the citizen submission process and the implications for environmental governance more broadly. The first part of the article outlines the events that led to the filing of the citizen submission, the handling of the submission by the CEC, and the aftermath. Part two examines claims of success and failures of the process, especially with respect to promoting transparency and accountability. My conclusion is that while the case can be seen as a success in promoting openness and increasing public knowledge about governmental processes, it must, at present, also be considered a failure in bringing about substantive environmental improvements, enhancing enforcement activities, and improving public participation in environmental governance. The third part of the article locates the reasons for the Metales failures at three levels: failures of 1) international governance, 2) national regulation, and 3) market and social mechanisms. The failures are rooted in the nature of international organizations, including the difficulty of enforcing the international obligations under the NAAEC, the political economy of the border region, and the failure of social institutions and markets. The fourth and final part addresses the lessons for improving environmental governance at the border and the effectiveness of the citizen submissions process. In particular, the articles suggests a set of reforms to the submissions process that will make it more autonomous from control by the Council and the NAAEC parties. To address substantive issues of environmental governance, especially political accountability, at the border, the article proposes the creation of a binational border environmental quality district with a commission that is directly elected and accountable to border residents. Ultimately, Metales is not only a cautionary tale about the effectiveness of the citizen submission process. Understanding its implications also yields broader insights into the role of civil society involvement in efforts to monitor and enforce state compliance with international environmental agreements as well as the relevance of North-South equity and environmental justice issues.

Enforcement, Regulation and Development

After discussing examples of enforcement failures for regulatory contracts in Africa, we develop a regulation model with asymmetric information and imperfect enforcement. Either the regulator succeeds in forcing the regulated firm to fulfill the contract or renegotiation takes place. The probability of renegotiation decreases with the level of enforcement expenditures which is chosen by the regulator. The model suggests that the endogenous level of enforcement decreases with the proneness to corruption, and increases and then decreases with the level of development. Finally, we document this relationship empirically. Copyright 2003, Oxford University Press.

No Bite, No Bark: The Mystery of Magazine Policy

It has been over one hundred years since the federal government first introduced policies aimed at managing magazine production and distribution (Canada 1999, 6). Since that time, successive governments have expressed concern over the extent of overflow and split-run circulation of American periodicals in Canada. (1) This has led to the introduction of an array of domestic policies that, over the years, have caused conflict between the two countries but most of that friction has been resolved by informal negotiations. The most recent case was referred to the dispute settlement mechanism of the World Trade Organization (WTO). Elsewhere we have examined these disputes and in the process have been struck by important details that the debate has either ignored or overlooked, our subject here (Acheson and Maule 1999, 186-205, 2000, 2001). Proponents of Canada's position have developed a consistent rhetoric along the following lines: the viability of Canadian magazines is threatened by foreign overflow and split-run publications that draw advertising revenue from their Canadian competitors; existing foreign magazines compete unfairly with their Canadian counterparts; and, in the absence of the array of Canadian policies (tax, tariff, subsidy, and ownership restrictions), a large number of new split-runs will enter Canada. But the evidence does not jibe with the rhetoric: governments introduced tax and tariff policies but appear not to have enforced them; entry was possible but no commercially significant American magazine other than Time has offered a split-run in Canada on a sustained basis; and dumping or unfair competition charges have never been laid. In this paper we focus on the failure of policy implementation, the absence of entry, the fairness of competition, and some of the anomalies of past policies. Policy Failure Over the years, successive Canadian governments have claimed that the policy package was necessary to provide support for domestic magazines. In 1993, the government announced that the electronic transmission of content into Canada to publish a Canadian edition of Sports Illustrated meant that the tariff item was no longer effective in discouraging split-runs. The puzzling aspects of this claim are that in the period up to 1993, prior to the entry of Sports Illustrated, neither the tax nor the tariff policy had been enforced and none of the interested parties had drawn attention to this failure of enforcement. (2) In the remainder of this section we address the tax and tariff issues. Income Tax Provisions: A Maginot Line The evidence is as follows. Subsequent to the amendment to the income tax act in 1976, Canadian advertising in the split-run of Time (or in any other foreign split-run publication) could no longer be deducted for tax purposes by the advertisers. Time reacted by cutting its advertising rates so as to compete with advertising placed in Canadian publications such as Maclean's. In January 1976, a comparable advertisement in Time and Maclean's was C$5160 and C$5185 respectively. (3) After the amendment, the rates were C$1880 and C$5608 respectively. On a cost-per-thousand (CPM) basis, which allows for circulation differences, Time went from having a CPM 40 percent higher than Maclean's to one that was 50 percent of Maclean's. The action was taken by Time in order to compete for advertising on an after-tax basis. Over the subsequent years, Time's advertising rates rose significantly, as did Maclean's. By 1986, on a CPM basis, Time's rates were almost equal to and by January 1991 were 18 percent higher than Maclean' s. Thus, despite the fact that advertisers could not deduct their advertising in Time, they were willing to pay a higher CPM on an after-tax basis. Two possible explanations are, first, that Time without tax deductibility is a significantly more attractive vehicle for advertisers than Maclean's and, second, that the tax measure was never enforced. …