Playing the culture card in NAFTA good politics for Trudeau

Justin Trudeau says he won’t sign a new NAFTA deal unless it keeps protection for Canadian media and culture.

“It is inconceivable to Canadians that an American network might buy Canadian media affiliates, whether it’s newspapers or TV stations or TV networks,” the prime minister said Tuesday.

“It would be a giving-up of our sovereignty and our identity and that is something we will simply not accept.”

They were strong words and somewhat unexpected.

Until Trudeau promised to defend the so-called cultural exemption clause in the North American Free Trade Agreement, few had known it was under attack.

In part that’s because the clause, as written, is largely out of date. It was put in place in the original 1989 Canada-U.S. Free Trade Agreement to, among other things, protect Canadian book publishers and ensure that radio stations played at least some Canadian music.

Now most Canadian book publishers have gone out of business. And new online music options allow listeners to avoid radio entirely.

It may be inconceivable to Trudeau that Americans could buy Canadian media affiliates, such as newspapers. But that’s exactly what happened in 2010 when U.S. hedge funds took effective control of the Postmedia newspaper chain.

The Conservative government of the day happily accepted that loss of sovereignty. And so did the Trudeau Liberal government that succeeded it.

Nor has the Trudeau government been a path-breaker in newer forms of cultural nationalism. It refuses to extend to the world of online advertising the tax break that favours Canadian-owned print publications.

At the same time, by refusing to levy the HST on foreign video streamers like Netflix, the Liberal government is providing U.S. culture companies with a tax break not available to Canadian competitors.

So it is surprising to hear that this particular what-me-worry Canadian government has chosen the cultural exemption clause as one of its so-called red lines in the NAFTA talks.

It’s equally surprising that the Americans care enough about this out-of-date clause to press for its elimination.

A cynic might suggest that the culture issue has been raised simply so Ottawa can claim at least one win. Certainly, Canada’s other red lines have become blurred.

Trudeau promised to “defend” Canada’s system of supply management for dairy and poultry farmers. But then he also promised to be flexible.

The upshot? Look for a deal in which Ottawa agrees to weaken but not destroy supply management by allowing more U.S. dairy products to enter Canada duty free.

Trudeau has also promised that Canada will not sign a deal without some mechanism for settling trade disputes outside of the U.S. court system.

As written, this so-called Chapter 19 arrangement is already relatively weak. Dispute resolution panels set up under Chapter 19 are empowered to determine only whether the country being charged is following its own laws.

Canada has won some of the cases it has brought against the U.S. But in matters that count, such as the perennial dispute over softwood lumber, the U.S. responded to unfavourable judgments by simply changing its laws.

Most important, Chapter 19 as written still allows the U.S. president to impose punitive tariffs for reasons of alleged national security.

In this context, playing the culture card is good politics for Trudeau.

Unless Donald Trump insists on humiliating Canada’s prime minister completely, the Americans may find it convenient to let Ottawa boast a win — particularly if Washington can make gains in areas such as digital commerce and copyright, which really affect culture these days.