The U.S. Embassy in Canada says it is concerned that the Liberal government’s online broadcasting bill could discriminate against U.S. businesses.
In a statement sent to The Canadian Press, an embassy spokeswoman, Molly Sanchez Crowe, says U.S. officials were consulting with companies about how Bill C-11 might affect their operations. “We are concerned that this will affect digital streaming services and discriminate against American businesses,” she said.
The bill seeks to update Canada’s broadcasting law to reflect the advent of online streaming platforms such as YouTube, Spotify and Netflix. If the bill passes, these platforms would be required to contribute to the creation of Canadian content and make it available to users in Canada or face stiff penalties.
The text has come under scrutiny after observers and companies argued it left too much room for government control over user-generated content and social media algorithms.
The chairman of the Canadian Radio-television and Telecommunications Commission (CRTC), who would be given new enforcement powers under the bill, played down those concerns during a Senate committee hearing last month, although some lawmakers have expressed concern about the vagueness of the bill’s wording.
YouTube, which is owned by Google, said it was not worried about further regulation. But he argued the bill opens the door to some promotion of certain content and would give the government control over what users see.
Under the free trade agreement between the United States, Canada and Mexico, a country can challenge a law when it believes it is being discriminated against.
US Trade Representative Katherine Tai has previously expressed concern about the bill, but did not say whether her country sees it as grounds for a trade dispute.
Canadian International Trade Minister Mary Ng said the online streaming law is consistent with Canada’s trade obligations.
However, Marc Froese, professor of political science at Burman University in Alberta, believes that a procedure may be launched against Canada. He recalls that there was a cross-border dispute that Canada faced 25 years ago over split-run magazines, or American magazines sold in Canada with the same content but with Canadian advertising. The percentage of Canadian ads they could include had already been strictly limited since the 1960s and in 1994 the government added a hefty excise tax to the equation.
Professor Froese points out that the Government of Canada wanted to prevent the cultural invasion of the Americans in this way. But the United States challenged the policy through the World Trade Organization (WTO) and threatened retaliation under the then North American Free Trade Agreement, NAFTA.
“We played hard and the Americans came after us…and we lost,” recalls Professor Froese.
Jean Chrétien’s Liberal government was forced to back down, although some restrictions on imported magazines remained. Marc Froese observed that since then, Canada has learned a great deal about trade disputes and cultural exemptions and has become one of the main users of dispute resolution mechanisms on the world stage.
For his part, Lawrence Herman, a trade lawyer with Herman & Associates in Toronto, doesn’t think the bill will encounter many more hurdles. “The Government of Canada will do whatever is necessary to ensure that these measures are implemented in a perfectly legitimate manner,” he said.
Bill C-11 was passed in the House of Commons on June 21; he awaits a final vote in the Senate.