CCA Bulletin 1/08

January 14, 2008

CCA to Competition Policy Review Panel: Foreign Ownership Restrictions Vital for Canadian Cultural Expression

Just the Facts

The Canadian Conference of the Arts (CCA) has submitted its views on the future of foreign ownership restrictions in broadcasting and the cultural industries. It has reminded the Competition Policy Review Panel set up by the federal Minister of Industry that the current rules have been specifically designed to create a space for the creation and distribution of Canadian cultural expression in these sectors which are vital not only to our economy but also to our identity as a sovereign nation.

The submission notes that the time frame for response on these important issues was lamentably short and that no one on the Panel has a background in cultural policy, The CCA has accordingly sent a letter asking the Minister of Industry, the Hon. James Prentice, to either add to the Panel members with expertise and experience in cultural policy or to create a sub-Panel to ensure that the questions related to foreign ownership restrictions in the cultural sector are given the careful examination that they require.

The CCA also provides data on the profitability of Canadian broadcasters, calling into question the need for loosening the current rules concerning foreign ownership for these enterprises. It also notes that given the rapid pace of change in content distribution technologies, it may be time to consider a new approach to the Broadcasting Act and the Telecommunications Act. The challenge will be to ensure that the cultural objectives of the Broadcasting Act are preserved and that purely industrial imperatives do not diminish cultural commitments to the production of Canadian content, which is best assured if effective control of these industries remains in Canadian hands.  

The CCA considers that federal policies affecting the arts and cultural industries are wholly consonant with Ottawa’s ongoing obligation to promote the public good and with its strong commitment to further the objectives of the UNESCO Convention on cultural diversity. Dismantling cultural policies should not be done at international trade negotiating tables nor unwittingly through broader policy exercises such as “Sharpening Canada’s Competitive Edge”.

Tell Me More

Canadian foreign ownership restrictions in the cultural industries and broadcasting sector have been under pressure from a number of sources for quite some time.

Negotiations for the GATT ( General Agreement on Tariffs and Trade) and the GATS ( General Agreement on Trade in Services) at the World Trade Organization have seen efforts by some of our powerful trading partners to open these and other cultural policy measures to negotiations.

These pressures have also included challenges to Canadian cultural policies such as the American appeal to the World Trade Organization (WTO) in the 1990s on the postal subsidy provided by the federal government to Canadian publications. As a result of the findings of the Tribunal investigating the appeal, the Publications Assistance Program (PAP)  at the Department of Canadian Heritage had to be changed to conform to some of the issues identified in the ruling.

The PAP was the object of another appeal under the North American Free Trade Agreement (NAFTA) in 2000 by UPS, which contended that Canada Post was cross-subsidizing its courier business from its monopoly over mail delivery and demanded $ 160 million US in damages. NAFTA’s Chapter 11 allows foreign corporations like UPS to challenge governments if they think their investments are restricted by government measures. UPS challenged the PAP because it was not eligible for similar treatment under the Program. In May 2007, the Tribunal upheld the Program,  noting that when UPS entered Canada, it should have been fully aware of the PAP. However, a number of analysts believe this victory may be only temporary relief for the Canadian government.

In another file, the Canadian Radio-television and Telecommunications Commission (CRTC) recently approved the CanWest Global take-over of Alliance Atlantis despite the fact that in the opinion of many critics, the financing of the deal cedes effective control to Goldman Sachs an American lending institution. Holding of 64% of the debt of CanWest Global, Goldman Sachs could indeed be perceived to be in effective control of the corporation, thus violating foreign control limitations in broadcasting/audio/visual sectors.

In its brief, the CCA also recommends that in applying the “net benefit test” to any increase in foreign ownership within existing limits, funds be directed to new enterprises in the cultural industries and new media. Such investment would advance both economic and cultural objectives and contribute to the development of the creative economy in a much more efficient manner than current practices allow.

What Can I Do?

If you share the concerns of the CCA regarding maintaining existing ownership restrictions write to your Member of Parliament, the Minister of Canadian Heritage, the Hon. Josée Verner and the Minister of Industry, the Hon. Jim Prentice and let them know your views. You could also endorse the CCA recommendation that people with a solid background in cultural policy issues be appointed to the Competitiveness Panel or a sub-Panel be created to examine these issues with the care and rigor that they merit.