Ottawa needs to protect Canadian news media

While Prime Minister Justin Trudeau works to get a seat on the United Nations Security Council to ensure the world hears Canada’s unique voice on global issues, the distinctive voices of Canada’s news media are being muffled as they struggle to survive.

This is because global social media platforms are eroding the economic viability of Canada’s independent news media.

Platforms such as Facebook and Twitter are freely sharing Canadian news organization content, annually collecting the more than $5 billion in advertising this information generates.

Not only do these platforms rebroadcast content for free, they do not share profits from the ads nor do they collect sales tax on this advertising, which Canadian companies are obliged to do.

It is time that the government protects our Canadian news media and those distinctive Canadian voices that Trudeau is so set on sharing with the world. There are provisions to do just that built into the new United States-Mexico-Canada Agreement (USMCA). Inexplicably, Canada is ignoring these tools.

Before signing the USMCA,

Trudeau said a Cultural Industries Exemption was essential for Canada to approve any successor to the North American Free Trade Agreement. The prime minister secured the continuation of a broad exemption as part of the USMCA to promote cultural industries, including news media and broadcasting. The exemption protects Canada against treaty obligations, including the new Article 19.4 that requires that U.S. or Mexican-owned social media platforms receive the same treatment as Canada’s fragile news media organizations.

However, the Cultural Industries Exemption means that Canada is not bound to USMCA provisions whenever Canada makes policy regarding cultural industries, such as news or broadcasting.

Previous governments, irrespective of political stripe, aggressively relied upon the Cultural Industries Exemption when taking issues before the World Trade Organization and NAFTA tribunals. These independent bodies gave a broad interpretation to the exemption allowing Canada to apply government measures for sensitive cultural industries. The other treaty partners understood that cultural industry protection was integral for any trade deal with Canada. The only limitation is the creativity and willingness of governments to promote and protect Canada’s cultural industries.

Perhaps the best part of the Cultural Industries Exemption is its ease of use. Canada merely has to say that a policy is covered by the exemption. No advance permission is needed.

Trade treaties have other broad policy reservations that could be used to enhance Canadian cultural industries even without applying the Cultural Industries Exemption, such as subsidies, labelling rules and sectoral development programs. And there are other areas such as tax policy in which governments retain broad regulatory scope. For example, Canadian cultural industries can receive more favourable tax treatment than foreign social media platforms for advertising deductions, or other tax preferences like an exemption from collecting and remitting valueadded tax.

At the moment, the Canadian government collects sales tax from Canadian news media on advertising revenues. At the same time, it receives no sales tax from foreign platforms because the government decided not to make the foreign platforms pay. The difference in treatment is amplified because the foreign entities have economies of scale and currently occupy a massive part of the market — making fragile Canadian competitors more expensive to advertisers simply because Canadians comply with Canadian tax laws while the foreign platforms are exempt.

This lack of fairness favours the global companies and punishes the locals. It looks like a policy to end Canadian news media and silence diversity of Canadian voices. This backward-facing approach certainly cannot constitute sensible public policy.

Invoking the Cultural Industries Exemption does not mean that Canada will not see a pushback from social media platforms. Why would our government allow Canadian independent news media to wither on the vine? The timely failure to act will inevitably squelch Canadian voices and also hurt diversity.

We risk an end to local and minority Canadian perspectives, editorials and news, as well as preserving and promoting Canadian experiences, values and culture from diverse regions and perspectives.

The Canadian media meet independent professional reporting standards to assure fair and ethical reporting. Allowing global platforms to bankrupt

Canadian news media weakens the independent scrutiny of government policies by the media, putting all Canadians at risk.

Fifty years ago, Sen. Keith Davey issued a landmark threevolume report on the state of Canada’s mass media. The Davey Commission outlined the special and integral importance Canadian news media has in our civic life, saying:

“The job is crucially important, for what is at stake is not only the vigour of our democracy. It also involves survival of our nationhood.”

Now, more than ever, Canada’s distinctive news voice needs protection.

Immediate public policy reform is needed to protect diversity and prevent the utter devastation of Canada’s news media and the placing of another nail in the coffin of Canada’s cultural heritage.

Barry Appleton is an international lawyer at Appleton & Associates International Lawyers LP. He is also senior fellow and co-director of the Center for International Law at the New York Law School. He is the author of two books about NAFTA and is a frequent commentator about international trade, digital trade and dispute resolution.