Transcripts
Scott Prescott: Welcome, everyone to the broadcasting episode of the podcast on Canada US,
Speaker:Mexico trade agreement. I'm Scott Prescott.
Speaker:I'm a partner at Fasken. My practice is focused primarily on broadcasting regulation.
Speaker:Uh, with me today is Ryley was an associate in our communications practice group and works closely with me on broadcasting and media matters.
Speaker:During our episode of this podcast, we will discuss CUSMA's impact on the broadcasting industry in Canada and on the legal framework that
Speaker:governs that industry. So with that brief introduction, this segment, uh,
Speaker:maybe I can ask you, Ryley, uh, to start by explaining what CUSMA currently says about broadcasting.
Speaker:Ryley Alp: Okay. So CUSMA says three things about broadcasting.
Speaker:The first is a Canadian cultural industries exception.
Speaker:So that's an article 32.6. So that exception allows us to adopt measures to protect our cultural industries,
Speaker:which includes books, magazines, music, film, video recordings, as well as radio,
Speaker:television and cable broadcasting undertakings and satellite programming services.
Speaker:So the provision effectively exempts cultural industries from CUSMA.
Speaker:With that being said, if Canada adopts measures to protect its cultural industries,
Speaker:including measures taken under the Broadcasting Act, the US and Mexico can retaliate in two ways.
Speaker:So first, they can adopt measures targeting Canadian goods, services or content that would normally be inconsistent with the agreement,
Speaker:but are permitted here because they mirror the kind of flexibility Canada receives under the cultural exception.
Speaker:Or they can adopt measures of equivalent commercial effect, which would not necessarily have to be a cultural measure.
Speaker:So Canada can protect its cultural industries, but doing so can trigger these two types of retaliatory measures.
Speaker:A second provision in CUSMA that affects broadcasting is chapter 19, which is digital trade.
Speaker:It requires the parties to provide non-discriminatory treatment to digital products.
Speaker:This means digital digital products such as online streaming services, digital platforms,
Speaker:podcasts, online news, user generated content, and e-book retailers, um, which all benefit from non-discriminatory
Speaker:treatment. Um, the third way CUSMA impacts broadcasting is found in chapter 15,
Speaker:which has two very, very specific provisions on cross-border trade and services.
Speaker:So the first requires Canada to allow us home shopping channels to be distributed in Canada.
Speaker:And the second relates to a measure known as simultaneous substitution.
Speaker:So Canada is prevented from adopting rules that would prohibit cable and satellite distributors from substituting the Canadian signal of the Super
Speaker:Bowl over the signal transmitted by a US TV station.
Speaker:So now that we know what CUSMA says regarding broadcasting, Scott, how about you tell us about how the broadcasting sector has been affected
Speaker:historically by trade negotiations, including CUSMA.
Speaker:Scott Prescott: Okay. Thanks, Rani. Uh, the original Canada-U.S.
Speaker:free trade agreement was signed in 1988.
Speaker:It actually included the same cultural industries exception that Riley just talked about.
Speaker:It also continued to be part of NAFTA when that came into effect in 1994 and until expired or renegotiated in 2020.
Speaker:Uh, because of that provision, Canada has adopted a variety of measures over the years to protect the broadcasting industry.
Speaker:I will highlight just a few of them here.
Speaker:Um, the first is that Canada maintains a strict broadcasting licensing regime that includes a strict Canadian ownership and control requirement.
Speaker:Uh, this effectively prevents foreign companies from owning and controlling Canadian television and radio broadcasters,
Speaker:as well as cable and satellite distributors.
Speaker:Uh, a second measure, uh, is the rule that limits the number of foreign linear programming services that can be
Speaker:distributed in Canada. The purpose of this rule is to protect Canadian broadcasters from those foreign services that the CRTC has deemed to be
Speaker:directly competitive with the. With Canadian programming services.
Speaker:And the third third measure I'll mention is, is one that I just touched on briefly was that the requirement for cable and satellite distributors
Speaker:to substitute a Canadian over-the-air TV signal for a US TV signal when the programs on the two stations are the same and are broadcast
Speaker:simultaneously. Uh. This simultaneous substitution rule is intended to protect program rights and advertising revenues,
Speaker:um, of the local Canadian television stations.
Speaker:So so the cultural industry exception acts as a shield for these and a number of other long standing sort of broadcasting statutory and
Speaker:regulatory requirements, which are designed to favour Canadian broadcasting companies.
Speaker:Uh, the US has at a very various time since 1988 objected to some of Canada's measures,
Speaker:including no ownership restrictions and simultaneous substitution.
Speaker:They argue that they reduce the value of US programming and limit American companies ability to compete freely within Canada.
Speaker:Despite that, these cultural carveouts have remained in place for almost 40 years now,
Speaker:and notwithstanding that, they have been a source of of sort of semiconscious consistent tension in the
Speaker:Canada-U.S. trade relationship.
Speaker:Ryley Alp: Okay, great. So now that we kind of have that background, what do you think might be on the table for renegotiation as a part of the current
Speaker:CUSMA review in the broadcast and media sector?
Speaker:Scott Prescott: Yeah. So I think there are I mean there are two recent statutes that that are that are um have become trade irritants.
Speaker:Um and I, they will likely discuss the, at the negotiating table this summer and maybe for many summers to come.
Speaker:If, uh, if a new Consensus on CUSMA has not reached this year.
Speaker:Um the first is the online streaming act.
Speaker:It came into force in 2023. Uh it gives the Canadian the CRTC which is Canada's broadcast regulator,
Speaker:the express authority to regulate foreign and domestic online streaming services that operate in Canada.
Speaker:So among other things, the CRTC has used that new power to require large foreign streamers to contribute 5% of their annual Canadian revenues to
Speaker:support the production of Canadian and Indigenous content.
Speaker:Um, this 5% contribution has been subject to appeal and judicial review by the Federal Court of Appeal,
Speaker:and a stay is still in effect pending the court's decision on those on that appeal,
Speaker:those appeals and judicial reviews. Um, the legal challenges were brought by foreign streamers.
Speaker:Uh, they questioned the scope of the authority under the act, uh, the obligations of specific obligations imposed on foreign undertakings and
Speaker:whether mandated contributions can be directed to support specific types of Canadian content,
Speaker:such as local Canadian news, which is a sort which is a type of content that is not provided by those forms streams.
Speaker:In addition to these legal challenges, the act has also been identified by some in the US Congress as a trade irritant.
Speaker:Earlier this year, a bill was submitted to the US House of Representatives targeting Canada's online streaming act.
Speaker:It's called the the Protecting American Streaming Innovation Act.
Speaker:If passed, it would trigger an investigation into the online streaming act under the US Trade Act of 1974,
Speaker:and which allows the US Trade Representative to retaliate, most commonly with tariffs against a foreign policy or law that is deemed unfair
Speaker:to US commerce. So while Canada continues to invoke the cultural industries exception,
Speaker:uh, the bill addresses this by noting that the exception, and I quote, traces the Canada-U.S.
Speaker:Free Trade Agreement era and retains a legacy definition of cultural industry centred on traditional publishing.
Speaker:Recordings in broadcasting rather than modern means of digital digital delivery,
Speaker:end quote. So based on this, it's clear that the online streaming act is a trade irritant.
Speaker:Um, it will be raised at this summer's scheduled review of CUSMA.
Speaker:Uh, many in the US view it as a threat to trade and see it as a mechanism to force streamers to subsidise Canadian content and culture.
Speaker:Uh, Canada's perspective is that the Act levels the playing field for domestic broadcasters and protects Canadian culture.
Speaker:Given, uh, US streamers growing presence in the Canadian market.
Speaker:This issue will come to a head soon. Actually, uh, recently, Canada's minister responsible for Canada US trade indicated that the cultural
Speaker:exemption was not being has not been the focus of trade discussions, and further stated that it would not be on the table.
Speaker:He reassured Canada's cultural community that it is the government's commitment to continue along those lines in the future.
Speaker:The second Canadian statute that will likely be discussed at CUSMA review is the online news act.
Speaker:It requires two large tech companies to negotiate payments with Canadian news organisations for the use of the comment content.
Speaker:Google reached a deal to pay 100 million annually to Canadian journalism groups,
Speaker:which includes broadcasters. Uh. Meta, for its part, chose instead to block news on Facebook instead in order to avoid being governed
Speaker:by the act. So the online news action has also been flagged as an irritant by the US Trade Representative.
Speaker:Um. Last summer, however, the Canadian Prime Minister suggested that it might be he might consider rescinding the act.
Speaker:So that matter would lift its ban on news articles being shared on its platforms.
Speaker:Um, given the US concerns about these two Canadian statutes in particular,
Speaker:they will no doubt be topics of discussion at the CUSMA regime.
Speaker:So Riley, having identified the two current trade irritants related to broadcasting,
Speaker:maybe you can talk about where Canada might see new trade challenges emerge to due to technological innovations.
Speaker:Ryley Alp: Yeah for sure. So I think based off of what you just talked about going forward,
Speaker:um, the central challenge is going to be that trade rules written for traditional broadcast and media are being applied to these rapidly evolving
Speaker:digital platforms, which is creating tension between cultural policy objectives and modern digital trade principles.
Speaker:So as more and more traditional broadcasting content is streamed online and across borders,
Speaker:it's going to become more difficult to impose traditional measures pursuant to CUSMA's cultural industry exception.
Speaker:It's also becoming apparent that while Canada continues to extend cultural policy tools to digital intermediaries,
Speaker:the US is much less willing to accept these measures remain that, and that they remain defensible under the cultural exception,
Speaker:which was originally negotiated in 1988.
Speaker:So that's well before the rise of these digital platforms and streaming services.
Speaker:Scott Prescott: So another question I have is what are Canadian stakeholders saying today about CUSMA and the need to protect cultural industries?
Speaker:Ryley Alp: Yeah. So Canada's cultural industry continues to encourage preserving and modernising the cultural um exception for the digital era
Speaker:to reflect the evolving content distribution environment.
Speaker:Um, but for the most part, Canada's production industry and most domestic broadcasters continue to strongly support the
Speaker:cultural protections afforded by CUSMA.
Speaker:So viewing them as fairly essential to maintaining Canadian content production and ownership and independence in the face of massive
Speaker:global competition. Uh, there was a recent survey conducted by Pollara Strategic Insights,
Speaker:and it was commissioned by the sea MPA, which is the Canadian Media Producers Association.
Speaker:And it, it, it states that 83% of Canadians support the online streaming act.
Speaker:So, um, still lots of support there. Um, I guess to wrap things up, Scott,
Speaker:uh, what should policy makers and industry and stakeholders expect going forward?
Speaker:Scott Prescott: I think Canada's policy policy makers and stakeholders should certainly expect heightened scrutiny.
Speaker:Canada's cultural and digital policy measures as part of the 2026 review.
Speaker:While the wholesale rate renegotiation of the cultural industry exceptions is unlikely,
Speaker:uh issues linked to digital trade regulation, streaming services and funding of Canadian news programming in particular will surely be
Speaker:discussed. Um, as I said earlier on, the online streaming act and the Online News Act have already been flagged as free agents by the
Speaker:US, indicating that these specific measures will be will be part of the new CUSMA negotiations.
Speaker:Uh, on top of that, Canada's cultural industry should also be prepared for some continued legal and political uncertainty,
Speaker:particularly when domestic regulatory proceedings, uh, court challenges, trade pressures are all happening at the same time that CUSMA is being
Speaker:reviewed. That state of uncertainty and apprehension, uh, will continue to grow if the review does not result in an extension of the
Speaker:summer and the parties cannot reach agreement this year or next year becomes subject to annual reviews with a potential expiration date of 2036.
Speaker:I think everybody on the Canadian side would agree that such an outcome would be problematic,
Speaker:uh, particularly given that all the other trade related challenges that exist today.
Speaker:So that's our overview of CUSMA from the broadcasting perspective.
Speaker:Uh, we would be happy to hear from any of you that are listening.
Speaker:If you have any questions about these issues.
Speaker:Uh, we will now turn things over to Leslie Milton and Paul Burbank for episode three dealing with telecom trade issues relating to CUSMA.
