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

Jan­u­ary 14, 2008

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.