Tag: CUSMA

The CRTC Streaming Announcement, and CUSMA: An Update (It’s Changing by the Day)

Flags of Canada, the United States, and Mexico arranged together.

Image: Shutterstock

Scarcely was the ink dry on the blog I posted on Monday, June 1, when things began to happen. The next day Canada officially informed the US and Mexico that it wished to renew CUSMA, and Dominic Leblanc, Minister responsible for Canada-US Trade (among several other responsibilities) went to Washington to meet with US Trade Representative Jamieson Greer. There he was given the laundry list of US grievances which surely included the Online Streaming Act (OSA) and in particular the CRTC decision to impose a 15% levy on the Canadian revenues of large foreign (read US) streamers to fund domestic Canadian production (only some of which the streamers could use at their discretion). The day after that, June 3, the Carney government announced that it would be providing “direction” to the CRTC to review its decision, on the basis that additional costs imposed on the streamers would likely be passed on to Canadian consumers.

To sweeten the pot, the government announced the creation of a $600 million annual fund to “provide stability and immediate support to Canada’s audio and audiovisual sectors”. This is to offset the funding the streamers may no longer be contributing, including the initial five percent contribution still held up in the courts owing to a legal appeal. Six hundred million dollars is a good chunk of change; it’s about the same amount the streamers would have contributed based on CRTC calculations estimating that the original five percent levy (currently suspended pending a decision from the Federal Court) would have generated $200 million annually. This would suggest either that the streamers may not be expected to make financial contributions or that their contributions will be additional to the base amount. Even though the government has thrown a lot of money at the problem, this has not satisfied the cultural sector however. The Coalition for the Diversity of Cultural Expression (CDCE), a major cultural industries umbrella group, has just issued a press release calling Ottawa’s request for the CRTC to reverse course “a major setback for cultural sovereignty”. The CDCE doesn’t mind the offer of $600 million. It’s just that such funding is at the whim of the government of the day whereas embedded funding through regulation of online streamers would be part of the broadcasting regulatory framework and thus more predictable and reliable.

As for the argument that a levy on the streamers would be passed on to consumers, Howard Law in his blog MediaPolicy.ca points out that “Netflix upped the price on its standard plan from $14 monthly to $15 in 2020. Then to $16.50 in 2022. Then to $19 in 2025. That was twice the rate of inflation.” But of course, no-one could blame the government for these increases. That was just greedy old Netflix. The streamers will price their product at whatever level is optimal from their perspective, just like any other business. If they price themselves too high, people will find alternatives, either a competing service or (horror of horrors), a pirated feed. The industry is well aware of the limits of consumer tolerance, particularly in this age of stressed household finances. Nonetheless, the Carney government’s “concern” for consumers is good politics.

Why didn’t the government just tell the CRTC what rate to set? By statute the government does not have the authority to reverse or overrule CRTC decisions in matters other than the issuance of broadcasting licences (the CRTC being an independent quasi-judicial body), but the government does have the authority to issue policy directives as to how legislation is to be implemented. What that guidance will be, Heritage Minister Marc Miller (the point person on this file), was not willing to say except that the amount of the streamer’s contributions would be reduced. By how much, we do not know. However, he hinted they would still be required to contribute. Once again, the CRTC will need to consult stakeholders and hold hearings. There is lots of wiggle room (or room for further negotiations with the streamers).

There was no mention of the CUSMA negotiations being a factor in the government’s decision but if you don’t think CUSMA was in play, you have been living on another planet. Nonetheless, the action the government has taken suggests it has learned a lesson from its previous policy reversal on the Digital Services Tax, when it scrapped the legislation on the very eve of implementation to appease the Trump Administration and get CUSMA negotiations back on track. That concession achieved absolutely nothing. In the case of the Online Streaming Act (OSA), it will continue in force as legislation for which the CRTC is required to develop implementing regulations. The government has signalled flexibility but has not rescinded the authority of the CRTC to regulate streaming services in Canada, nor has it definitively exempted the streamers from making a financial contribution or meeting discoverability requirements. It thus retains the OSA as a bargaining tool, something it could have done with the DST if it had only suspended the imminent application of the tax instead of withdrawing it completely. Once burnt, twice shy. Its action on the CRTC decision is exactly what it should be doing, signalling flexibility but retaining the essentials of the policy as a bargaining chip.

The other significant development on the trade negotiations front, announced coincidentally on the day that Leblanc and Greer were meeting in Washington, was the announcement by the US Trade Representative’s Office that they will be imposing tariffs ranging from 10 to 12.5 percent on over 60 sixty countries who allegedly either don’t block goods produced with forced labour or do so inadequately. Canada is one of half a dozen countries in the latter category, along with the EU. Everyone else completely fails on this score, according to USTR. Not a single country is exempted although “only” 60 of the US’s major trading partners are targeted. There will be hearings to examine the USTR announcement but the results are a foregone conclusion.

I mentioned in my earlier blog post this week that the Trump Administration will do whatever it takes to justify its unilateral imposition of tariffs, whether or not this is in violation of bilateral and multilateral treaties. Once its “fentanyl tariffs” imposed under the International Emergency Economic Powers Act (IEEPA), were overturned by the US Supreme Court, the Administration resorted to whatever other excuse it could find, including using both national security (Section 232 of the Trade Act of 1962) and balance of payments (Section 122 of the US Trade Act of 1974) as pretexts. These are “temporary” measures authorized by Congress to address specific emergencies. The Trump Administration has made a mockery of these remedies, employing them on the flimsiest of pretexts. But even these measures are time limited, (although for some the time can be measured in years). However, the Section 122 tariffs imposed in lieu of the IEEPA tariffs after they were overturned will expire in July so Trump and USTR had to come up with another justification in US domestic law to maintain their import tariffs. The answer was trade in products produced with forced labour. Suddenly, most of the world’s trading economies are accused of allowing goods produced with forced labour to undermine international markets, so sixty countries must be punished by the US through the imposition of tariffs on their exports to the US. This ludicrous misuse of Section 301 of the US Trade Act is clearly for purposes other than dealing with forced labour.  

While the US does have a robust regime to block the import of products produced with forced labour, it is far from perfect itself. According to the Canadian Centre for Policy Alternatives, a labour oriented self-declared “progressive” publication, last year the Trump administration cancelled around $577 million from the Bureau of International Labor Affairs (ILAB) in grants allocated to various programs meant to promote labour rights abroad. Also, products produced for private companies by prison labour in the US have been a concern. Last year, the University of Toronto produced a report “Uncovering US Prison Labour in Canadian Supply Chains” that concluded “the Canadian supply chain has many likely linkages to prison-made goods from the US, particularly in the automotive and food sectors.”

Canada’s hands aren’t completely clean either. Prime Minister Carney has just announced his government will introduce new legislation this month to strengthen the current Canadian ban on imports made with forced or child labour. However, while forced labour is a real issue, the USTR action is not only hypocritical, it also demonstrates the lengths to which the Trump Administration will go to use any pretext or legal loophole it can find to impose tariffs. Even if Canada had the tightest regime in the world to prevent the import of products produced with forced labour, this would not stop the US from using this, or some other pretext, to fill the tariff gap created by the collapse of the fentanyl tariffs. When the fentanyl tariffs were first announced, Canada responded by creating a “fentanyl czar” and equipping the RCMP with new Blackhawk helicopters for improved surveillance, among other measures to beef up border security. While useful, this did not exempt Canada from US tariff punishment. It wasn’t about fentanyl; it was about imposing tariffs on a trading partner that had naively expected CUSMA rules to be followed.

This has been one of the problems with CUSMA.  While—remarkably considering what has been going on in Washington– much of the trade conducted between Canada, Mexico and the US under the CUSMA/USMCA/TMEC agreement continues tariff-free (for now), the sectoral exceptions introduced by the US based on contrived grounds (e.g. the imports of fentanyl from Canada) raise the question of whether the US really intends to honour what it has agreed to, or will agree to in future. That is also a point I made in Monday’s blog when examining the issue of the Cultural Exception to CUSMA (Article 32.6) and whether the US would try to use it to impose retaliatory tariffs on Canada. Using Article 32.6 against Canada would likely fail “legally” (i.e., the OSA is not a violation of the terms of CUSMA, and therefore Canadian action to implement the legislation would not need to be justified by Article 32.6), but then the US could find another excuse if it really wanted to take action. Fentanyl, national security, forced labour, smoke from Canada. Take your pick.

Assuming the US agrees to extend CUSMA/USMCA through renegotiation, a lot will be up for grabs. For example, the US apparently wants to further increase the percentage of US and North American content in automobiles traded under the Agreement. While a good idea in principle, will it make US or North American vehicles more competitive? Maybe Article32.6, the Cultural Exception that applies only to Canada, will disappear. While in theory cultural industries in Canada can be exempted from the terms of the Agreement, the penalty for doing so is so draconian that the Exception is really more of a political fig-leaf than a policy reality, although it may salve Canadian pride. Canada for its part will want some assurances that the sectoral “national security” tariffs on steel, aluminum and lumber will be lifted and not reimposed on a whim. Whatever eventually happens, some sense of economic certainty and security will be the goal.

Right now, things are changing by the day. Stay tuned for the next update. It could be tomorrow!

© Hugh Stephens, 2026. All Rights Reserved.

The Recent CRTC Decision on US Streamers and CUSMA

Will the CRTC Decision Requiring US Streamers to Make Additional Financial Contributions to Canadian Production Lead to Retaliatory US Tariffs Impacting Other Sectors because of CUSMA’s Cultural Exception Clause?

Should Canada Rescind the CRTC Decision Now to Facilitate CUSMA Negotiations?

Logo of the CRTC (Canadian Radio-television and Telecommunications Commission) featuring stylized lettering and a circular design.

Summary

Since this is a long post on a complex subject, here is the very short version of my answers to these two questions, the Executive Summary if you will. On the first question, I posit that the CRTC decision is not a violation of the terms of CUSMA, and therefore Canada does not need to justify the CRTC measures by using the shield of the Cultural Exception, which if applied could legitimize US tariff retaliation. That is not to say that I agree with the CRTC decision in all its aspects, nor that the Online Streaming Act might not become a bargaining chip in the renegotiation of the Agreement. For the US to justify tariff retaliation on the basis that Canada was using the Cultural Exception as a shield would require a determination by a trade panel. That is most unlikely to happen. Given the general US disrespect for the CUSMA Agreement since the advent of Trump 2.0 and the way in which the US has ridden roughshod over the protections that the Agreement was supposed to provide, the niceties of its text seem largely irrelevant. US streamer’s hopes of securing protection under the CUSMA have been undermined by aberrant US trade policy. As for whether the Carney government should walk back provisions of the Online Streaming Act to facilitate CUSMA renegotiation, the Digital Services Tax climbdown illustrates well the folly of unilateral concessions. The US can wield a big stick, but Canada is not without cards to play. When you are playing with a master bluffer, don’t fold your hand early. That’s the short version. For more detail, read on.

The CRTC Announcement

Since the CRTC announced on May 21 that, among other requirements, it will increase the mandatory contribution to be made to Canadian productions by large foreign streamers (those generating in excess of $100 million annually in Canada) from 5 percent of their Canadian revenues to 15 percent, commentary—largely in the form of criticism– has come from all sides. The CRTC decision itself is not the easiest to understand even with its embedded graphic. The Motion Picture Association-Canada did not mince words;

“The Motion Picture Association strongly condemns the CRTC’s decision to impose unprecedented, unnecessary, and discriminatory investment obligations on American streaming services operating in Canada. This burdensome framework unfairly targets global streamers with requirements that directly violate Canada’s obligations under the United States-Mexico-Canada Agreement (USMCA).”

MPA-Canada and some individual streaming services have already challenged the initial five percent “downpayment” levy on the basis that the requirement for streamers to pay for local news (one of the allocations of the initial levy, not repeated in the new CRTC regulations) is a discriminatory measure exceeding CRTC authority because none of the streamers even produce news coverage. The plaintiffs also argue that the levy constitutes a tax, which is beyond the competence of the CRTC. Indeed, the taxation angle was repeated by Opposition Leader Pierre Polievre who accused the CRTC of imposing a tax that would ultimately be paid by Canadian consumers. He demanded that the Carney government overrule the CRTC, something the government says it does not have the authority to do. If pushed, however, it could of course amend or withdraw the legislation, the Online Streaming Act, that is behind the CRTC actions.

Others were also quick to criticize, including University of Ottawa professor Michael Geist who published the day after the CRTC announcement, pointing out that the Online Streaming Act is already in the crosshairs of the US in the lead up to negotiations to renew the CUSMA/USMCA. Indeed, US Ambassador Pete Hoekstra, who seems to be unable to fathom why Canadians might be upset at a US Administration that has routinely broken the rules it agreed to under Trump 1.0 with the renewal of NAFTA (not to mention the 51st state nonsense), immediately called the CRTC decision “making a bad situation worse”. Geist followed up with another post titled “From Levy to Liability: Why Canada Risks Facing Hundreds of Millions in Retaliatory Tariffs Due to the CRTC’s Online Streaming Act Ruling”.

Copyright Ownership Issues

Now, I am not here to try to justify the CRTC’s Canadian program expenditure announcement, which is a complicated beast. While I believe a legitimate argument can be made that participants in the Canadian broadcast space should be expected to support Canadian content and Canadian production to a certain degree, I have a problem with the requirement that prevents the funders from owning and exploiting, as they see fit, the product they have invested in. I know this view is not shared by many in the Canadian content industry. Part of the CRTC decision involves an obligation to spend 30 percent of their contribution on what is described as “enhanced partnerships”. This is CRTC-speak for production partnerships where Canadians hold the majority of the copyright in the programming.

This would seem to reverse the flexibility in defining Canadian Content (CanCon) that was introduced by the CRTC late last year. As I explained in a blog post last November, the revised CanCon definition outlined by the CRTC for broadcasting and streaming purposes allowed for up to 80% of the copyright in a production to be held by a foreign enterprise, subject to some other CanCon requirements such as the director and screenwriter both being Canadian. This was designed to encourage co-productions, and was a slight relaxation of the hardline rules that required foreign streamers to contribute to Canadian productions but then denied them the right to own and exploit the copyright (including distribution rights) in those productions. Now whatever flexibility that was introduced has been rolled back; at least one streamer production contribution dollar in three must be invested in a production where the rights are held by someone other than the funder, with that person having to be a Canadian. This is despite the fact that the production might have qualified as Canadian (story, director, location, music etc) in every other way. The purpose of the levy is clearly not to promote Canadian content but Canadian production.

Do the CRTC Measures Violate CUSMA Obligations?

While I, like Michael Geist and others, have concerns that the CRTC decision has flaws, and may be indeed become an additional irritant to be dealt with during the forthcoming CUSMA negotiations, my main quibble is with the argument that Canada will face millions in retaliatory tariffs under the CUSMA framework because of the CRTC mandated contributions. Prof. Geist and others are recycling the argument put forward by a US industry group, the Computer & Communications Industry Association (CCIA), claiming that the CRTC decision violates the terms of CUSMA, specifically, Article 14.10 that refers to investment performance requirements;

“No Party shall, in connection with the establishment, acquisition, expansion, management, conduct, operation, or sale or other disposition of an investment of an investor of a Party… impose or enforce any requirement, or enforce any commitment or undertaking…to achieve a given level or percentage of domestic content”

CCIA argues, echoed by Michael Geist, that given this situation, Canada will therefore be required to defend its action by means of the Cultural Exception clause (Article 32.6). This is an “escape clause” that says;

This Agreement does not apply to a measure adopted or maintained by Canada with respect to a cultural industry.

Broadcasting meets the definition of a cultural industry. However, if the CCIA is right and Canada falls back on the Cultural Exception, this is itself a problem because in that case the US would be entitled to retaliate (take a measure of equivalent commercial effect) in any sector. In other words, the automotive, aluminum, steel, mushroom or maple syrup industries, or any other, could be lumbered with retaliatory US tariffs as a result of measures applied to US streamers that are discriminatory or otherwise non-compliant with CUSMA.

If the measures are non-compliant or discriminatory, that is. If they are not, Article 32.6, the Cultural Exception, does not apply and therefore there would be no grounds for the US to retaliate. (Not that the need to respect the terms of CUSMA would stop them, as I discuss below). In the past, I have argued that the Cultural Exception is not applicable. This is because Article 14.10 refers to investment (Chapter 14) whereas streaming services fall under a different chapter of CUSMA, cross-border trade in services (Chapter 15). National treatment (non-discrimination) applies to cross-border services, and the streamers are in fact treated more favourably than their equivalent Canadian streaming counterparts. You can read all about it here.

But what if I am wrong? My interpretation has not been tested in “trade court”, which in the case of CUSMA (Chapter 31) allows for a state-to-state dispute settlement process through establishment of arbitration panels. The US could call for such a panel but could also simply assert that Canadian actions were in contravention of the Agreement and that Article 32.6, the Cultural Exemption, applied. This would allow for the application of retaliatory tariffs. However, under the terms of the Agreement, Canada could challenge the US assertion, and so, in effect there could ultimately be a panel review to determine the outcome.

US Trade Actions to Date

That is how the Agreement is supposed to work, but that process is now effectively irrelevant given that the US has violated both its terms and spirit several times, basically arrogating to itself the right to do anything it pleases. The so-called “fentanyl” tariffs were the first such example, where the US imposed a 25 percent tariff on Canadian goods on the specious pretext that Canada was responsible for “the extraordinary threat posed by illegal aliens and drugs, including deadly fentanyl” which “constitutes a national emergency under the International Emergency Economic Powers Act (IEEPA)”, according to an announcement issued by the US Embassy in Canada.  Quite apart from the fact the US is responsible for enforcing its own border security, not Canada or Mexico, Canada was the source of less than 1 percent (between 0.1 and 0.2 percent in fact) of illegal fentanyl flowing to the US. More fentanyl probably flowed the other way. The IEEPA tariffs were subsequently struck down by US courts as being an unjustified usurpation of the taxing power of Congress.

Not daunted, the Trump Administration has turned to other legislation, such as Section 232 of the US Trade Act of 1974, to impose tariffs on Canadian steel, aluminum, cars, furniture such as kitchen cabinets, and lumber on the basis that such imports threaten US national security. In addition, Canadian goods that do not have a CUSMA certificate of origin are subject to tariffs under Section 122 of the US Trade Act that deals with balance of payments issues. Then there is the Canadian financed Gordie Howe Bridge that the Trump Administration seems to want to keep in limbo because the owner of the competing bridge is a large Trump donor. I could go on, but the point is, the terms of the USMCA/CUSMA seem to exercise very limited restraint on the Trump Administration. Therefore, why would the Administration care whether Canadian measures imposing a levy on US streamers to fund Canadian productions fall under the Cultural Exemption or not? They don’t. If they want to impose a tariff, they’ll find a pretext.

Should Canada Rescind the CRTC Ruling to Facilitate CUSMA Renewal?

From a trade negotiating perspective, for Canada to roll back the CRTC decision now would be a tactical mistake. Look what happened to the planned implementation of a Digital Services Tax. Long planned, with an implementation date well publicized a couple of years in advance, and with the revenue already booked, the Carney government got cold feet and at the last minute cancelled the tax. This was supposedly to get CUSMA negotiations restarted. As I described it at the time, it was a “humiliating climbdown” to mark Canada Day, 2025. Yes, negotiations resumed for a few weeks until the US pulled the plug once again to signal its displeasure with Ontario Premier Doug Ford’s TV ads during the Super Bowl that enlisted Ronald Reagan to fight tariffs. The DST climbdown achieved nothing. That lesson appears to have been learned. The Canadian Government has made it clear it is not prepared to pay an “entry fee” to begin CUSMA discussions, and will not make concessions simply to get to the table. So, from a trade policy perspective, why should it pull the Online Streaming Act, or intervene with the CRTC?

This is not to say the CRTC got this decision 100 percent right. It is also not to say that, hypothetically, elements of the Online Streaming Act might not be on the chopping block as part of an eventual CUSMA 2.0 deal. That is assuming the US can be trusted to implement what it agrees to. As the smaller partner, Canada has always relied on the US sense of justice, respect for the rule of law and a willingness to surrender some sovereignty for greater overall economic and political security as reasons to expect that the US will honour what it agrees to. Under the Trump Administration, that faith has been shaken. The US streaming industry has every right to invoke the supposed protection of CUSMA and to seek protection under the Agreement. The problem is that the current US Administration has so brutally abused the CUSMA framework as to make it scarcely credible. The streamers are being sideswiped by the aberrations of US trade policy.

But back to the topic at hand. Will the CRTC decision on streaming lead to the imposition of hundreds of millions of dollars in retaliation by the US? Probably not, although such an outcome is not impossible. If it happens, it won’t be because of the Cultural Exception clause in CUSMA, but because the US can wield a big stick and will do so if it suits the mood in the White House at any given time. Canada, however, has some cards to play, to use a Trumpian analogy, and those cards (energy security, critical minerals, lower-cost inputs to US industry such as aluminum, specialty steel, and car parts) are important to the US. The Carney government is playing a waiting game on CUSMA negotiations and renewal. The decision on US streamers is just one more element in this high-stakes poker game. When you’re playing with a master bluffer, you don’t fold your hand before the game is over.

© Hugh Stephens, 2026.

Broadcasting Policy Beyond Broadcasting: Canada’s Online Streaming Act and the U.S. Response

By Christine Rose Cooling

(This is an occasional guest post. I am delighted to publish this analysis by Christine Rose Cooling, whose bio you will find at the end of the post).

An illustration featuring a smartphone displaying digital media platforms, a clipboard with media and broadcast regulations, a gavel on a wooden block, and a computer screen with hands holding microphones, labeled 'Online Streaming Act'.

Image: Shutterstock.com (modified)

When then-Minister of Canadian Heritage Pablo Rodriguez introduced Bill C-11, the Online Streaming Act, in the House of Commons in February 2022, he invoked earlier optimism about the Internet as a space for democratic participation and cultural opportunity. This sentiment recalls John Perry Barlow’s 1996 “Declaration of the Independence of Cyberspace,” which infamously imagined the Internet as a space beyond the sovereignty of nation-states, where the “weary giants of flesh and steel” would have no power. That naïve idealism has since given way to emerging concern about the role of global streaming platforms in shredding Canada’s cultural fabric. Left unregulated, Rodriguez suggested, these services risk weakening Canadian sovereignty.

More than three decades after Canada’s last modernization of the Broadcasting Act in 1991, debates about Canadian broadcasting policy returned with renewed intensity. With Royal Assent granted in April 2023, the Online Streaming Act extends the Canadian Radio-television and Telecommunications Commission’s (CRTC) regulatory authority to streaming services operating in Canada, requiring them to contribute to Canadian content (CanCon) production and support the discoverability of Canadian programming.

The Online Streaming Act represents both policy modernization and inertia in an effort to extend broadcasting policy beyond national broadcasting systems. Although the Act incorporates streaming platforms into the Broadcasting Act as “online undertakings,” these services differ fundamentally from traditional broadcasters—think spectrum allocation, scheduled programming, and territorially bounded signals.

Canada is not alone in attempting to retrofit twentieth-century broadcasting frameworks to the regulatory challenges posed by twenty-first-century streaming platforms. What distinguishes the Canadian case is the degree to which such efforts unfold within a trade environment shaped by structural dependence on access to U.S. markets, making Canadian cultural regulation unusually susceptible to bilateral pressure. Further, the Act operates within a volatile geopolitical arena in which platform regulation is being interpreted through the language of free trade and industrial competition rather than longstanding cultural logics.

Enter Stage Left: The U.S. Response

In June 2024, the CRTC announced that major online streaming services would be required to contribute five per cent of their Canadian revenues toward domestic production funds supporting Canadian and Indigenous content, including genres the streamers do not produce, such as news reporting. The decision has since been the subject of dispute by Apple, Amazon, and Spotify as well as the Motion Picture Association-Canada, though streamers will likely be prepared to pay some amount.

More recently, on March 19, 2026, Congressman Lloyd Smucker introduced the Protecting American Streaming and Innovation Act in the U.S. House of Representatives. This draft legislation, if adopted, would direct the U.S. Trade Representative (USTR) to investigate whether the Online Streaming Act discriminates against American streaming companies. The bill sets the stage for retaliatory action under Section 301(c) of the U.S. Trade Act of 1974 if such discrimination is found and if Canada does not remedy the discriminatory measures within 180 days, although use of Section 301 would violate the Canada–United States–Mexico Agreement (CUSMA).

Article 19.4 of CUSMA requires that countries treat digital products from other member states no less favourably than their own. In principle, this national treatment provision applies to streamers operating in Canada. However, Article 32.6 creates a broad exception for cultural industries, allowing Canada to adopt cultural policy measures affecting broadcasting and audiovisual production even if they conflict with the agreement. While specific U.S. industry interests have argued that Canada may need to rely on Article 32.6 to justify the measures it is taking under the Online Streaming Act, it is important to note that to date the U.S. government has not formally adopted this position. That said, the exemption does not eliminate the possibility of U.S. retaliation; indeed, it explicitly legitimizes it. Under CUSMA, the United States may respond with measures of equivalent commercial effect in any sector if it determines that Canadian cultural policies disadvantage American firms. Canada can, however, challenge whether Article 32.6 is applicable. Also, an argument can be made that the way in which the Online Streaming Act regulates streaming services is not discriminatory, i.e. it does not violate national treatment obligations.

Although Congressman Smucker’s Protecting American Streaming and Innovation Act may never see the light of day as it is but one of many bills introduced into Congress to highlight issues of concern to U.S. industry interests, it nonetheless renders the politics of broadcasting policy quite visible. Smucker’s unlikely counter-legislation—decrying the Online Streaming Act as an attack against U.S. companies, creators, and workers—makes it blatantly clear how debates about cultural regulation increasingly extend beyond national institutions. Such actions function less as the basis for dispute settlement than as policy posturing intended to exert bilateral pressure on Canada.

From Signals to Streaming

Canadian broadcasting policy has long been shaped by historical disputes, cultural tensions, and geopolitical pressures. From the early licensing of commercial radio stations in the 1920s to the establishment of the Canadian Broadcasting Corporation (CBC) that we know (and at least some of us love) today, Canadian broadcasting policy developed not just as an industrial response to spectrum scarcity but also as cultural protectionism against American dominance over Canadian airwaves.

Conundrums aside, legacy regulatory strategies like Canadian content (CanCon) requirements and ownership rules remain measures through which broadcasting policy has sought to pursue cultural objectives beyond economic ones. The Online Streaming Act extends this analog-era regulatory philosophy into the digital age, transforming unresolved debates over the legitimacy of Canadian cultural regulation.

We should also remember that the transformation of broadcasting policy in Canada did not emerge suddenly with the Online Streaming Act. During the CRTC’s Let’s Talk TV hearings between 2013 and 2014, the Commission heard from Netflix representative Corie Wright who argued that online streaming services primarily supplemented rather than replaced traditional broadcasting services. Netflix declined to provide evidence supporting this claim, and the Commission ultimately ruled the argument as anecdotal. This line of uncertainty later informed the work of the Liberal-appointed Broadcasting and Telecommunications Legislative Review panel, whose 2020 report Canada’s Communications Future: Time to Act recommended restructuring communication legislation to reflect a new networked environment. Among its most consequential recommendations was the proposal to extend regulatory authority over online streaming services operating in Canada.

Concerns about the trade implications of regulating online streaming services are, likewise, not new at all. Early in 2020, Professor and Canada Research Chair in Internet and E-Commerce Law at the University of Ottawa, Michael Geist, warned that requiring foreign streaming services to contribute to Canadian production funds without equal access to those funds could invite retaliatory trade responses. Similar concerns surfaced in 2022 before the bill passed, when former U.S. Trade Representative Katherine Tai officially took notice of the Online Streaming Act during a CUSMA meeting with Canada’s former Minister of International Trade, Mary Ng.

Despite the unlikelihood of its adoption, Smucker’s Protecting American Streaming and Innovation Act represents less a sudden escalation than a continuation of a contested shift in how cultural regulation is interpreted both within and beyond Canada. This is entirely unsurprising, as platform infrastructures shaped by recommendation systems, black-box algorithms, and cross-border media flows increasingly blur the boundaries between cultural forms and digital markets.

© Christine Rose Cooling, 2026

Biography

Christine Rose Cooling is a PhD student in Communication & Culture at York University whose research examines how Canadian cultural policy continues to shape cultural expression in a platform-mediated media environment. Her work focuses on broadcasting regulation, streaming platforms, and the cultural significance of live music within contemporary debates about national identity and cultural sovereignty.

US Musicians Unsuccessfully Seek Royalty Benefits in UK they are Denied in US: Maybe They Should Fix the Problem at Home?

A cheerful radio host sitting at a desk with a microphone, computer, and coffee cup, wearing headphones, with an 'ON AIR' sign in the background.

Image: Shutterstock

US artists and musicians, unable to get Congress to grant them royalties for their performances broadcast over terrestrial radio networks in the US, continue to try to obtain in foreign countries what they cannot get at home. Sometimes they have been successful, as in the case of Canada where as part of the update of NAFTA and its replacement by the Canada-US-Mexico (CUSMA) Agreement (or USMCA if you prefer) in 2020, Canada granted US performers “national treatment”. This means they get treated “no less favourably” than—i.e. just as well as—Canadian performers with respect to royalty payments. In other words, they get paid.  Canadian performers in the US also get national treatment, which means they get treated just as badly as their US counterparts, receiving no royalties at all when their music is broadcast terrestrially. The US music industry, or at least the part of it affected by US restrictions on royalty payments (performers and labels), has long lobbied to remove this inequity. A few years ago legislation designed to fix this problem, the American Music Fairness Act, or AMFA, was introduced into Congress. As I explained at the time;

“US terrestrial radio stations are not required to pay royalties to performers or labels for playing recorded music on air. Online broadcasters and streaming services do, but not over-the-air AM/FM radio stations. Terrestrial stations do, however, pay royalties to composers and songwriters for music played on air, but not to performers.”

It is a strange, assymetric exemption from the requirement to pay royalties. Passage of AMFA would close this loophole by ensuring that performers (artists, singers and musicians) as well as owners of the sound recording copyright, normally labels, receive royalties when a work is broadcast commercially on terrestrial radio. But the AMFA bill, and successive versions introduced since, did not make it across the finish line.

If this seems odd and inequitable, it is. It relates to the influence of the National Association of Broadcasters (NAB) in Congress. For decades the NAB has managed to block legislation that would fix this anomaly by arguing that terrestrial stations provide “free airtime” that promotes new recordings. This is a specious argument akin to the canard that platforms distributing pirated content promote legitimate business by giving new content greater exposure. If the “free exposure” argument was ever valid, it is no longer in a world where new music is promoted on digital radio channels and through Spotify, YouTube and Tiktok. Nowadays, triggering algorithmic discovery is key, yet over-the-air radio stations are still getting a free ride when playing recorded music. Given the strength of the NAB lobby don’t look for AMFA to pass Congress any time soon, despite the concerted efforts of the American Federation of Musicians. And it is not just a US problem. Not only do US performers not get paid when their music is broadcast terrestrially on radio in the US, neither do non-US performers or labels. This leads to another dimension of the issue.

The failure to allow foreign performers to collect royalties in the United States usually has a knock-on effect for US artists when their music is played abroad–unless the US has been able to obtain national treatment through a special bilateral agreement. Performers’ organizations in other countries object to US musicians being granted royalties in their own country because if US artists gain access to a national royalty pot, the amount paid out to domestic performers is reduced (by the amount paid to US artists). When US artists are denied royalty payments on the basis of reciprocal as opposed to national treatment, the collected royalties that would normally go to American performers are redistributed to domestic counterparts or retained by performing rights organizations for the benefit of the domestic music industry as a whole. Normally, payments going to US performers abroad would be offset by payment of royalties in the US to foreign musicians–and everyone would gain–but because of US legislation, the US royalty revenue stream for this music category is non-existent, for everyone. Therefore, from the point of view of domestic musicians, it is unfair for US artists to expect a benefit abroad that is denied to foreign performers in the US. International copyright treaties allow for withholding of national treatment benefits under the principle of material reciprocity. Put bluntly, this means that “If you withhold royalty payments from our performers, we will do the same to yours”.

While material reciprocity is a well recognized principle of international copyright, it’s not all that simple because there are provisions in some international treaties that require national treatment (i.e. payment of royalties) for recordings based on where they are first released even if the artists themselves are from countries (like the US) that deny royalty benefits. This would override reciprocity provisions. In 2020, the EU Court of Justice ruled that denial of royalties to US performers in Ireland on the basis of reciprocity was inconsistent with EU law, which does not mention reciprocity. Since then the Netherlands and Sweden have dropped the reciprocity rule and allow payment to US performers, but most EU countries still do not. Nor does the UK, a non-EU member since January 31, 2020.

It is ironic that Ireland was the jurisdiction where US performers made a legal breakthrough in terms of overseas royalty payments given the WTO Irish Music case. Here the US continues to ignore a WTO panel finding made over 25 years ago, in 2000. The WTO panel ruled that another royalty exemption, in this case a US law that allows business establishments to play licensed music without royalty payments as long as it is “background music”, is non-compliant with US treaty obligations. The US Administration at the time was unable to get Congress to amend the law and offered to pay compensation, but this lasted only three years. This case remains an outstanding irritant between the US and the EU, with the US continuing to say that it will “work closely with the U.S. Congress and will continue to confer with the European Union in order to reach a mutually satisfactory resolution of this matter.” So far nothing has happened, and Irish musicians are out of pocket at least $1 million dollars a year for Irish music played as background entertainment in US business establishments. (i.e. Irish pubs in the US).

If you are looking for consistency in abiding by trade obligations when it comes to large countries versus small ones, you will be disappointed. The Irish Music Case is a good example of assymetric respect for international trade rules. The Donald Trump technique of respecting trade obligations very selectively, or not at all, is not a new phenomenon, although it is far more apparent today. In any event, if you are an advocate for a particular constituency, such as US performers, consistency is not the issue. Results are. It was in this vein that the American Federation of Musicians (AFM) challenged recent British legislation that denied payment of royalties to US performers. The UK has maintained the principle of material reciprocity for many years, but its recent accession to the CPTPP Trade Agreement (the Comprehensive and Progressive Agreement for Trans-Pacific Partnership) opened the door, or so thought the AFM , to revisiting the issue. They brought forth a number of interesting arguments, but in the end did not prevail. In my next blog post, I will look at the issues raised, and the reasons for the British court’s decision.

At the end of the day, the best solution for everyone would be to close the US loophole. This would eliminate the reciprocity issue once and for all. Maybe it’s time the AFM redoubled its efforts to fix the problem at home.

© Hugh Stephens, 2026. All Rights Reserved.

The Online Streaming Act or Dairy Supply Management: Which one should Canada Surrender to the US in CUSMA Trade Negotiations? Or is it a Question of Putting Some Water into the Wine of Both?

A person pouring water from a ceramic jug into a large clay pot.

Image: Shutterstock

Should Canada give up the Online Streaming Act (OSA) in forthcoming CUSMA negotiations in order to preserve dairy supply management, as a former Vice Chair of the CRTC, Peter Menzies, suggested in a Globe and Mail oped earlier this month? Perhaps he was just being deliberately provocative although the question hits one of the raw nerves of Canadian politics. The cultural community– particularly in Quebec–would be enraged if this happened. But then if supply management is watered down to allow more imports from the US, especially in dairy, the dairy farmers–particularly in Quebec–will be equally enraged. Which group has the greater political clout? In both cases, Quebec-based interest groups have a card to play denied to others in Canada. It is called the Bloc Quebecois, and if enough support bleeds from the Liberals to the Bloc, that could just open the way to the Conservatives to form the national government they so desperately crave. The cultural mavens in Toronto have little choice; either support the Liberals or face a worse fate when those Conservative cowboys from Alberta take the reins of power.

The Quebec cultural community which insists that measures are needed to ensure that foreign streamers both contribute financially to support Canadian content (Cancon) and ensure that Cancon (when expressed in French) is “discoverable”, has yet another card up its sleeves. It is called Bill 109, Quebec legislation (that is probably ultra vires since broadcasting clearly falls within federal jurisdiction) that purports to regulate the discoverability of French-language cultural content in the digital environment. If Canada gives way on the Online Streaming Act in CUSMA negotiations, watch Quebec fill the void. So where does all this leave the Carney government? Between a rock and a hard place.

It is true, as Menzies has pointed out, that the CRTC has been very slow, plodding even, in dealing with implementation of the OSA. It may even be overwhelmed, with inadequate staff as he suggests. The fact that implementation is still a work in progress makes it easier for the US government to bring pressure to stop or at least to modify rollout of the legislation, whereas other objectives mentioned in recent USTR hearings, such as changes to the Bank Act to benefit US financial institutions or measures to terminate supply management would require significant legislative and regulatory change to undo measures that have been in place for decades. Best to nip it in the bud, or to kill it in the egg, as they say in Quebec.  

Canada’s planned introduction of a Digital Services Tax (DST) is a prime example of a nipped-in-the-bud policy. A DST deals with tax avoidance measures implemented by large digital multinationals by taxing their in-country revenues rather than their manipulated profits. Some countries, such as the UK, France, Spain, Italy etc had already implemented a DST before Trump’s return to office and seem to have got away with it, even though Google, Microsoft, Amazon, META and others of that ilk have the Trump Administration’s ear. Canada intended to implement a DST several years ago but dithered and dragged its feet, finally passing legislation in 2024 that would have brought a DST into effect on June 30, 2025, backdated to 2022 when the law should have been put into effect in the first place. Unfortunately for Canada, the implementation date fell right in the middle of the Trump tariff war and Canadian efforts to negotiate some relief. But rather than postponing implementation yet again–and using the possibility of a future DST as negotiating collateral–Canada “bravely” announced it was going ahead with implementation (regardless of the consequences). Until it wasn’t. Trump tweeted that he was cancelling trade negotiations with Canada because of the DST and voilà, over a weekend, the DST was cancelled (on June 29, 2025).

Trade talks resumed and actually appeared to be making some progress with respect to sectoral tariffs such as steel until the next excuse Trump found to end them. This time it was over Ontario’s World Series free trade ads that ran on US television, using Ronald Reagan’s words from a 1980s era speech praising free trade and condemning protectionist tariffs. The content of those ads may have been accurate, but the result was one of Canada’s more prominent “own goal” moments. While Doug Ford may have derived some brief satisfaction from getting under Donald Trump’s skin, the steelworkers of Sault Ste. Marie, who might have benefited from a rumoured sectoral deal on steel, have been paying the price. I think this fiasco helps explain the public anger of US Ambassador to Canada Pete Hoekstra (who surely wins the 2025 “Bull in a China shop” award) who crudely vented his frustration that a deal so close to fruition got blown out of the water through Premier Doug’s ill-considered initiative.

But what about supply management? Canada should be taking a long, hard look at the wisdom of continuing to defend this 1970s policy that almost every other country has since abandoned. Instead, it should use the CUSMA negotiations as the reason to ditch a monopoly that protects a few chosen producers of supply managed commodities at the expense of consumers and the rest of the economy. Unfortunately, that won’t happen because of Canadian political realities but there is still scope for some wiggle room. In recent years, Canada has been forced as part of its trade negotiations to open slivers of the dairy market to EU countries, CPTPP trading partners, and to the US through the CUSMA. The dairy industry screamed blue murder but was paid off for having to face a bit more competition. As part of liberalizing as little as possible, Canada routinely plays games with its commitments by awarding import quotas to the same domestic dairy industry with which exporters of dairy products to Canada are competing. Some additional foreign cheese and dairy products become available to consumers but in effect the fox is in charge of deciding which chickens get let in, and at what price. Even though this policy is an albatross around Canada’s neck, such is the power of the dairy industry (which is reputed to control the outcome of no less than eight ridings in Quebec) that all political parties support keeping supply management off the table in all trade negotiations, and passed legislation to this effect. In a political environment where the government is one vote short of a majority, risking the ire of Quebec dairy farmers is a risky business.

Does that mean that supply management is completely off the table and instead there should be another sacrificial lamb, such as domestic broadcasting and cultural policy, as Peter Menzies has suggested? This is a doubtful proposition. Despite all the posturing about supply management being “off the table”, there will almost certainly be some concessions to the US, even if it is only in the way the tariff free import quotas are managed. The Carney government will claim it is defending supply management, while making some tweaks to the system. It can do the same for cultural industries. Defend the essence but find compromises that US industry can live with.

Like supply management, the Online Streaming Act also has wiggle room in its implementation. Already we have seen the CRTC announce changes to Cancon definitions that introduce greater flexibility and go some way toward meeting the concerns of the (largely US-based) content streamers, while preserving elements of protection for Canadian production. (Canadian makeup and hair design artists will be happy as use of their services adds an element of “Canadianness” to a production that could be useful in meeting the Cancon definition. This just goes to show that you can never discount the influence of a specific lobby). While the US has laid out some maximum wish-list objectives, including withdrawal of the Online Streaming Act (as well as the Online News Act), there are domestic political realities in Canada that will constrain Canadian trade negotiators from sacrificing the cultural sector to gain other objectives, just as there are with regard to supply management. The US may hold a big stick in the negotiations, but Canada is not without cards to play. It just has to be careful how to play them, and when mobilizing support inside the US to do so in a way that does not offend the touchy amour-propre of Donald Trump.

The end result for Canada will not be water or wine, but rather how much water to allow into the wine. Some dilution will be necessary but at the end of the day, for domestic political reasons (particularly in Quebec), the liquid in the glass still will still have to resemble wine more than water. This applies equally to cultural industries and broadcasting as well as to supply management. It is far from an either/or situation.

© Hugh Stephens, 2026. All Rights Reserved.

The Year That Was: Looking Back at Copyright Issues in 2025

A graphic featuring the text '2025 A Look Back' inside a magnifying glass on an orange background.

Image: Shutterstock.com

In last year’s annual retrospective, I commented that just about the only significant copyright story in town was the impact of AI on copyrighted content. There were three primary dimensions, unauthorized use of copyrighted content for AI training, copyright infringing outputs produced by AI platforms and whether works produced by or with AI qualify for copyright protection. The first two elements, especially the unauthorized use of copyrighted content for AI training, continues to be the big story in 2025. Little has changed in terms of the fundamental issues, although this year there were two key court rulings in the US that provided some legal guidance. These were the Bartz v Anthropic and Kadrey et al v META cases, both decided within hours in the same courthouse in San Francisco, but by different judges. As I noted in a blog post at the time, in July, the results were a very mixed bag. (Hold the Champagne: The Two AI Training/Copyright Decisions Released in the US Last Week Were a Mixed Bag for AI Developers). While both judges found the copying of copyrighted works to train AI algorithms “transformational”, and thus tending toward fair use, in the Anthropic case the AI developer was castigated for initially using two pirate data bases (Library Genesis, aka LibGen, and Pirate Library Mirror, aka PiLiMi), as source material. This use threatened to result in hundreds of millions of dollars in statutory damages for authors whose works were included in these databases (if they had registered their works with the US Copyright Office). Thus, it was with no great surprise that the world learned in September that Anthropic had agreed to a $1.5 billion settlement to bring an end to the case. (When the End Does Not Justify the Means: Anthropic’s $1.5 Billion Lesson). In the Kadrey case, the judge suggested the plaintiffs should have made a stronger market dilution argument, which might have overridden the transformation finding. (New AI works produced based on unauthorized inputs of copyrighted works will devalue and dilute the market for the original works). That theory has yet to be fully tested.

While the Anthropic settlement seemed large in absolute terms, many criticized it as just another cost of doing business that failed to protect authors. But that is what licensing is, a cost of doing business. The damages could have been larger than the settlement, so Anthropic made a strategic decision to settle. Given the precedent, META must be worried given the clear evidence that its top executives gave the green light to use LibGen for training purposes despite internal warnings about the risk of doing so. (Is it Ethical to Use Pirated Content for Commercial Purposes? META Thinks So). The Anthropic decision gave impetus to ongoing licensing discussions between AI developers and content owners, especially large corporate rightsholders, like news media, music labels and big studios, such as Disney. The list of companies striking significant licensing deals with AI developers, either for AI training or outputs containing derivative content, is rapidly growing. Meanwhile lawsuits, such as New York Times v OpenAI, continue in lieu of settlement agreements.

Outside the US where the “fair use” doctrine along with its transformation interpretation doesn’t apply, there are also lawsuits against AI developers (in Canada and India for example). However, in these “fair dealing” countries AI developers are in a potentially tighter spot. In many countries there is no statutory exception to allow unauthorized access to copyrighted content for AI training, commonly known as text and data mining (TDM). Where there is such an exception (as in the UK or EU), it is confined to very specific circumstances such as non-commercial research, or else it requires that rightsholders be provided with an opt-out mechanism. Given these inconvenient facts (and their inability to rely on fair use arguments outside the US), AI developers have been mounting a full-court press to have TDM exceptions introduced into national legislation using the pretexts that a) everyone is doing it (which is certainly not true) and b) if governments don’t create an exception allowing TDM for AI training, all those AI development funds will flow elsewhere. In other words, throw rightsholders and creative industries under the bus in order to chase some ephemeral AI research funds. Australia has just rejected this binary approach, announcing that a TDM exception will not be part of its review of copyright laws to help address the needs of the AI industry. A number of Asian countries are reviewing the need for a TDM exception, but are rightly being very cautious not wanting to sacrifice the vital cultural and economic interests their creative sectors represent. Canada is another country without a TDM exception, a situation that has made OpenAI jittery since they are being sued in Ontario Superior Court by a consortium of Canadian news publishers for copyright infringement, bypassing Technical Protection Measures (protected paywalls) and breach of contract. OpenAI has been trying to get the case moved to the US by challenging the jurisdiction of the Canadian court, so far unsuccessfully.

Just as lawsuits in the US are providing the impetus for settlement discussions between AI developers and rightsholders, lawsuits against the AI industry outside the US will potentially have the same effect. The big story of 2025 is how many licensing agreements have been already reached. Even META, which in Canada and more recently Australia insisted it doesn’t need news content and would not pay for it, has reached a news media licensing deal with a number of companies including USA Today, People, CNN, Fox News, The Daily Caller, Washington Examiner and Le Monde. Back in 2021 META agreed to license news content in Australia as a result of the introduction of the Australian News Media Bargaining Code, but when Canada enacted a similar provision, it refused to do so and evaded the obligation to pay for local news by blocking it on its Facebook and Instagram platforms. Subsequently, when the Australian Code came around for renewal this year, META balked. Australia is still contemplating its next steps and while it is treading carefully, indications are that it is prepared to move against META.

One reason why Australia is moving carefully is the Trump factor. Trump’s erratic behaviour including the tearing up of the established rules of international trade is the second big copyright theme of 2025, after AI’s predations and encroachments. Not that Donald Trump knows much about copyright or understands it, but in his broadsides against trading partners and the international trading system, copyright industries inevitably become caught up in his web. Whether it is threatening tariffs on movies filmed outside the US, regardless of the fact that the largest slice of the box office comes from non-US sources and many films are either co-financed by offshore producers or require non-US settings (Trump’s Threatened Tariffs on Hollywood Films Produced Outside the US: The Medicine Could be Worse than the Disease), or taking aim at the policies of other countries that may have a digital or content component, like the Digital Services Tax in Canada,and its Online News Act, Trump is unpredictable and often off-target. His initial tariff measures against Canada included everything from steel to autos, based on the specious “national security” argument that there was a flood of fentanyl coming into the US from north of the border (actually about 0.2% of the total in 2024), but so far he has not specifically targetted the cultural industries. That may all change as the negotiations for renewal of the CUSMA/USMCA begin in the new year and as Canada struggles to redefine “Canadian content”.

There are industry groups in the US that claim provisions of the Online Streaming Act violate the terms of the CUSMA/USMCA by discriminating against US content providers, and that the only way Canada can justify these provisions is to invoke the cultural exception clause of the CUSMA. This would allow the US to retaliate in any sector with equivalent commercial effect. I have questioned this interpretation but we will probably never know who is right because the Online Streaming measures are unlikely to be challenged by the US prior to the start of CUSMA/USMCA renegotiations in early 2026. In those negotiations, the US will almost certainly take aim at various elements of cultural legislation like Online News and Online Streaming, along with other issues like dairy supply management. These may or may not be subject to negotiation as part of the renewal of CUSMA, if indeed the US or Canada are prepared to renew it.

Even if Canadian actions are consistent with the terms of the Agreement, this is essentially meaningless given the way the Trump Administration operates, as demonstrated earlier this year when Trump overrode various tariff free commitments in the Agreement on the basis of unilaterally declared national security concerns. These included the specious fentanyl trafficking claim mentioned above. Not only did the miniscule numbers give the lie to this assertion but the US claim somehow made Canada responsible for ensuring the security of the US border. As professor Fen Hampson of Carleton University has eloquently pointed out, the fate of CUSMA/USMCA depends not so much on where the economic interests of the United States lie, but on the fickle and unpredictable whims of Donald Trump personally.

As we head into 2026, there will be more Donald Trump uncertainty affecting copyright industries, more AI disruption, more lawsuits, more settlements and more licensing agreements to avoid lawsuits and settlements. That’s a pretty safe prediction based on looking back on 2025.

© Hugh Stephens, 2025. All Rights Reserved.

The Online Streaming Act: Dealing with US Industry Concerns (The Cancon Factor)

A vintage television set displaying the Canadian flag.

Image: Shutterstock

Last month I wrote about the spectre of US trade retaliation against measures impacting or possibly impacting US streaming services as the Canadian Radio-Television and Telecommunications Commission (CRTC) proceeds with implementation of the Online Streaming Act (formerly Bill C-11). The Computer & Communications Industry Association (CCIA), a US trade association that includes, among others, Amazon, Google, Meta and Apple, has taken aim at this process, claiming it is discriminatory and violates Canadian commitments under the CUSMA/USMCA, the trade agreement that replaced NAFTA. A core element of CCIA’s argument is that the very concept of Canadian content (Cancon) is discriminatory because it violates Article 19.4 of CUSMA which calls for “national treatment” of a digital product;

“No Party shall accord less favorable treatment to a digital product created, produced, published, contracted for, commissioned, or first made available on commercial terms in the territory of another Party, or to a digital product of which the author, performer, producer, developer, or owner is a person of another Party, than it accords to other like digital products”

What is Article 19.4 intended to cover? As an example, if rules are imposed prohibiting digital products from causing harm to children, the same rules should apply to both domestic and foreign products. However, do special requirements regarding Cancon audiovisual or music products (such as airtime quotas on radio or possible “discoverability” requirements for streamers) constitute discrimination against US digital products? Maybe. Is all music and AV content fungible or is Cancon somehow different, i.e. not a “like digital product”? If Cancon is “different”, what is it that differentiates it? That is not an easy question to answer because of the many criteria that go into determining whether a product is considered Canadian for regulatory purposes.

I took a stab a couple of years ago at explaining how Cancon is defined (“Unravelling the Complexities of the Canadian Content (Cancon) Conundrum”). For AV products, it is basically a combination of four elements; production control, copyright and distribution rights, creative positions and production spend. The CRTC definition and the definition used by the Canadian Audio-Visual Certification Office (CAVCO), which distributes certain tax credits, are slightly different with the latter being more stringent. For music there is the MAPL system. As explained by the CRTC, to qualify as Canadian content, a musical selection must generally fulfil at least two of the following conditions: M (music): the music is composed entirely by a Canadian; A (artist): the music is, or the lyrics are, performed principally by a Canadian; P (performance): the musical selection consists of a live performance that is recorded wholly in Canada, or performed wholly in Canada and broadcast live in Canada, and L (lyrics): the lyrics are written entirely by a Canadian. The CRTC is proposing that the “P” criteria be dropped owing to changing patterns in the music industry, notably the many Canadian artists recording outside Canada, such as in Nashville.

Qualifying as Cancon is complicated, but it has value. Cancon certification provides access to various subsidies and funds as well as providing a product that meets airtime and broadcast obligations, where and when they exist. In the aftermath of the enactment of the Online Streaming legislation, a key question is whether streamers (like broadcasters) will be required to meet certain content quotas, if indeed it is even feasible to impose content quotas on streamers. The different delivery model, where it is the consumer who “pulls” content from a broad menu rather than a broadcaster who “serves up” a given offering, makes it almost impossible to impose content quotas. Theoretically, you could require a streamer to make available a specified inventory of Cancon, or even to promote Cancon (referred to as “discoverability”), but there is no way of making consumers actually watch or listen to Canadian productions. Trying to apply a 20th century broadcast model of regulation to 21st century streaming is not a good fit. Regulators around the world are grappling with this reality. One of the arguments for imposing an expenditure requirement on streamers, both domestic and international, to support the creation of Cancon is to compensate for the lack of applicability of content quotas in a streaming environment.

A core feature of certified Cancon at present is that it cannot, by definition, be produced by a non-Canadian regardless of whether all the creative talent (writers, directors, performers, designers, composers etc.) and production spend would otherwise meet Cancon criteria. There is a complicated formula that awards points for creative roles filled by Canadians, with a specified number of points required to qualify under different programs.  The fact that a non-Canadian production may be a Canadian story filmed in Canada with Canadian actors is irrelevant with respect to Cancon certification. In short, the colour of the money (the production company) is a determining factor. Additionally, under CAVCO rules, a foreign studio or producer cannot hold the intellectual property, (the copyright) in a Cancon production. A Canadian production company must be the copyright holder for all commercial exploitation purposes for a minimum of 25 years.

As part of implementing the Online Streaming Act, the CRTC was instructed to review the definition of Cancon. The Commission subsequently held public hearings in which ownership of copyright became a key issue. Opinions ranged from expanding the CAVCO requirements to all forms of Cancon to eliminating copyright ownership as a factor. The streamers, who now have (contested) financial obligations to fund Cancon, generally prefer to own copyright in productions. It is not a surprise that they object to being required to fund Cancon productions while being denied the opportunity to own and exploit the rights. Supporters of a more restrictive Cancon definition point out that foreign streamers are free to license Cancon qualifying productions from the Canadian rightsholder. However, a restrictive definition tied to financing and copyright ownership eliminates the possibility of direct financing by foreign streamers and could mean they would in effect be paying twice, first by contributing to the Fund that financed the production and second, by paying to acquire the rights. Moreover, there is no guarantee that the rights would be available on acceptable terms.

Those advocating for a comprehensive Cancon definition that includes financing and IP ownership as factors argue this is necessary to create and maintain a viable Canadian industry. But such restrictions have two effects. First, if copyrights must be retained, this removes from Canadian producers/rightsholders the ability to sell the rights at a time of their choosing (and possibly use the funds to produce more Cancon). Not all productions will have a sustaining revenue stream over time. It should be left to the producer to judge whether to cash out now or license the product while retaining ownership. Second, requiring that the producer be Canadian for a production to be certified as Cancon disincentivizes foreign streamers from self producing content showcasing Canadian stories, artists, locations etc. They can do so but are denied all Cancon credit for such productions. The cost of such productions does not count against their required financial contribution (currently 5% of revenues) nor does the production qualify as Canadian content in terms of meeting existing (or possibly future) content quotas. If a goal of Cancon policy is to promote expressions of Canadian culture through creation of financially viable productions, disincentivizing foreign producers from putting their toes into the Cancon lake makes no sense. Production of Cancon by global enterprises like the streamers will help ensure global distribution, meeting both cultural projection objectives as well as exposing Cancon to new markets.

There is also the question of subsidies provided to producers of Cancon. Under current definitions, the US studios are not eligible to access funds earmarked to produce Cancon (even though they are required to contribute to these funds). This could be dealt with giving foreign studios “contribution credit” for self-financed Cancon productions. It’s worth noting the studios are already offered generous subsidies–euphemistically referred to as tax credits–to undertake non-Canadian production in Canada, and no-one complains about that, except Donald Trump. Trump has been rattling the chains over so-called “runaway production” and has threatened to impose tariffs on movies made outside the US.

While I think many of the concerns of the foreign streamers could be addressed through a more flexible definition of Canadian content, I am not confident the CRTC will see it this way given the policy instructions it received from the government at the time the legislation was proclaimed. Can it comply with this guidance while not painting itself into a CUSMA corner? The Commission is directed to take international commitments into account, although there is no specific reference to CUSMA, only the 2005 UNESCO Convention on Cultural Diversity.

From my perspective it is not realistic for US streamers to expect a free ride (and they probably don’t) but Canada and the CRTC need to avoid being too greedy. They should also be flexible in defining Cancon, focussing more on the promotion of Canadian stories, music and talent and less on maintenance of an industrial policy that relies on protectionism for a favoured few. A policy that calls on foreign streamers to invest in Canadian creativity, given the revenues that they generate in Canada, is not unreasonable; denying them the ability to take a direct ownership stake in the products to which they contribute funding would be short-sighted. The policy straitjacket that exists with respect to Cancon sets up a search for draconian solutions, like the CCIA’s threats. In short, remove the Cancon handcuffs and keep the required contributions reasonable. Give credit for funds expended on content that meets Canadian artistic and cultural criteria. I think this would help blunt the frontal attack from US audiovisual streamers. Music is more complicated. Meanwhile, Canada needs to be careful not to negate any trade obligations it has taken on and avoid being forced into the Article 32.6 “cultural exemption” corner. 

But wait, I have an idea! If all else fails, there is also CUSMA Article 32.2 (b). “Nothing in this agreement shall be construed to…. preclude a Party from applying measures that it considers necessary for the fulfilment of its obligations with respect to …the protection of its own essential security interests.” If Donald Trump considers that importing kitchen cabinets from Canada threatens the national security of the United States perhaps it is not such a stretch to conclude that the preservation of Canadian culture (whatever that is) is just as essential to Canada’s national security, justifying any measures one chooses to employ. Is this a serious option? You decide.

© Hugh Stephens, 2025.  All Rights Reserved.

In writing this opinion piece, I have drawn on my background both as a former Canadian government official who has had some dealings with international trade issues over the years, as well as past experience as an executive with one of the US companies which, at the time, controlled a major Hollywood studio. (Time Warner). However, whatever “solutions” I have proposed to address US industry concerns regarding Cancon are mine alone. I hope they are a useful contribution to the debate, but I want to be clear that I do not speak for the CCIA or the streamers.

US Retaliation Against the Online Streaming Act: How Real is the Threat?   

Illustration of the Canadian flag overlaid with yellow caution tape labeled 'TARIFFS', featuring American flags, symbolizing trade tensions between Canada and the USA.

Image: Shutterstock

As CRTC hearings on implementation of the Online Streaming Act (formerly Bill C-11) grind slowly forward as part of the Commission’s deliberations as to how foreign audiovisual and audio (music) streaming services may be required to meet Canadian content (Cancon) and discoverability requirements, while determining the extent of their financial contribution to various funds supporting Canadian content, affected US industry players are not sitting on their hands. As you would expect, they are deploying a range of tactics to fight back using their industry associations, the Motion Picture Association (MPA)-Canada, representing Netflix, Disney, Sony, Paramount, Universal, Amazon Prime and Warner Bros. Discovery, and the Computer & Communications Industry Association (CCIA), representing among others Amazon, Apple, Google and Meta, as their vehicles of choice.

MPA-Canada is currently appealing to the Federal Court the CRTC decision that its members must contribute 1.5% of annual revenues to the Independent Local News Fund, arguing that the studios do not produce news and should not be required to contribute to a line of business in which they are not active. Apple, Spotify and Amazon are also appealing the full 5% payment on the grounds it is a tax the CRTC is not mandated to apply. The 1.5% contribution to news is part of the CRTC’s initial decision that the streamers should, as a “downpayment”, contribute 5% of revenues to fund Canadian production.  The MPA has also undertaken a lobbying campaign to point out how much its members already contribute to production in Canada, (CAD$6.7 billion in 2023, more than the CBC, Canadian Media Fund and Telefilm Canada combined) even though much of that content does not count as CanCon under current rules.

To this “positive” argument, the CCIA by contrast has added a more hard line, “negative” approach, releasing a study that calculates the amount the CRTC’s compulsory contributions will purportedly cost the US industry. Assuming the levy stays at 5% of revenues (by no means an assured outcome as Canadian broadcasters are urging the CRTC to impose contributions of 20 to 30%, similar to the obligations they face), CCIA estimates this will cost US streamers between $2.19 billion and $6.96 billion (all figures USD) by 2030. The estimate of losses is bundled with CCIA’s claim that the financial obligations constitute a violation of the CUSMA (known as the USMCA in the US) because it creates a preferential regime for Canadian content “thereby discriminating against content classified as American or from a third country”. In the eyes of the CCIA, actions under the Online Streaming Act violate the principle of “national treatment” in which Party A agrees to treat the products and services of Party B “no less favourably” than its own products and services. In support of this claim, CCIA cites the Investment and Digital Trade Chapters of CUSMA/USMCA, Chapters 14 and 19 respectively. According to CCIA, the Online Streaming Act’s “inconsistency with core trade obligations is beyond dispute”. Given this “indisputable” fact, CCIA states that “if challenged, Canada can be expected to invoke its cultural industries exception (Article 32.6) as a basis for justifying the inevitable discrimination….”

Article 32.6 is part of the General Exceptions Chapter of the CUSMA/USMCA. It states, in part, “This Agreement does not apply to a measure adopted or maintained by Canada with respect to a cultural industry…” The production, distribution, sale, or exhibition of film or video recordings as well as audio or video music recordings are included in the definition of a cultural industry. As I have written elsewhere (NAFTA and the Cultural Exception) Article 32.6, while in theory exempting defined cultural industries from the obligations of the Agreement (the NAFTA provision was essentially rolled over into the CUSMA), has a sting in its tail. If Canada applies any discriminatory measures that violate the agreement using the cultural exclusion as the pretext, the US is fully within its rights to retaliate with measures of “equivalent commercial effect”, in any sector. The CCIA’s $2.19 billion or $6.95 billion numbers need to be viewed in this context.

The first question, therefore, is would Canada need to resort to Article 32.6 to justify measures taken under the Online Streaming Act? I argued in an earlier paper I wrote for the School of Public Policy at the University of Calgary that given the current structure of the obligations, Article 32.6 would not be in play because the measures in question are not inconsistent with CUSMA, given the Agreement’s precise wording. You can read the detailed arguments in the paper, but essentially my position is that neither the Chapter 14 Investment reference nor the Chapter 19 Digital Trade provision cited by CCIA are relevant because content streaming is covered by a separate part of the Agreement, Chapter 15, Cross-border Trade in Services. The terms of the Online Streaming Act, as applied by the CRTC provide “national treatment” to foreign streaming services. In fact, they impose lesser requirements on foreign streamers with respect to carriage of Cancon than they do on Canadian streamers.

But this interpretation is only my personal view. I have no idea is this is the interpretation of the trade policy gurus at Global Affairs Canada (I haven’t spoken to them and even if I did, they would be unlikely to tell me what their position would be on a hypothetical trade case) and is almost certainly not the interpretation favoured by officials in the Office of the US Trade Representative (USTR). And certainly not by CCIA. CCIA’s position is that a show or track streamed in Canada is a digital product, (even though it describes its members as providing “streaming services”). The Agreement is clear that there should be no discrimination against digital products of the other Party i.e. they should be accorded “national treatment”, although domestic products can be subsidized. On the other hand, if streamed content is not considered a digital product (nor an investment, which according to CUSMA cannot be subject to “performance requirements” as a condition of allowing the investment) but rather a cross-border service, the conditions applicable to delivery of the service are what counts. National treatment needs to apply to service delivery, and insofar as the Online Streaming Act is concerned, it does.

Whether streamed content is a digital product or a cross-border service clearly matters. If the US brought a CUSMA trade complaint against Canada–and if the CCIA view were to prevail–Canada would either have to change the way it treats US digital products carried by streaming services or defend its actions on the basis of the cultural exception, Article 32.6. If it did the latter, it would be opening itself to trade retaliation by the US, at an equivalent commercial level. In my experience and judgement, Canada would be most unlikely to resort to the exception to justify its actions precisely because of the consequences. The US would retaliate not just against the cultural sector, but in other areas that would set one industry or part of the country against another. To avoid this, the government would instead find some other way to comply with the Agreement by modifying the offending provision (as little as possible but as much as necessary), but doing so in a way, if possible, that still met all or most of its policy objectives.

It is also just possible, however, that Canada would be prepared to absorb the retaliation, calculated by CCIA to be between $400 and $500 million annually if the CRTC mandated contribution remains at 5% of revenues. This sounds like a big number but the random way the Trump Administration has been imposing tariffs on a range of Canadian products such as steel and aluminum (50%), lumber (45%), and autos (25%), industries where Canadian exports total tens of billions of dollars annually, makes $400 million in possible retaliation seem relatively minor. In effect, Trump’s erratic punitive behaviour has normalized trade retaliation–and devalued its effectiveness as a threat. But whatever response the Canadian government took, the first step would be to determine whether Canada was in fact in violation of the Agreement. If one Party considers that “an actual or proposed measure of another Party is or would be inconsistent with an obligation of this Agreement”, it can resort to the dispute settlement process. In the first instance, this involves consultation and if no resolution is reached, sometimes the constitution of a panel to decide the issue. (CUSMA/Article 31).

The CCIA itself cannot charge Canada with non-compliance, although it can raise the spectre of retaliation as it is doing. Only the US Government can bring a complaint, and at this stage it is not clear if it would be willing to do so. Given the range of trade disputes between the two countries, including unilateral tariffs on Canadian exports imposed by the Trump Administration on the basis of specious claims that Canada is a major source of fentanyl exports to the US (last year 0.2% of all fentanyl seized at the US border came from Canada; over 90% was from Mexico), or equally questionable grounds that exports of Canadian products ranging from aluminum to kitchen cabinets pose a national security threat to the US, the bilateral trade relationship hardly needs more issues. It will depend on the extent to which the streamers in the US have the ear of the Trump Administration. Given Trump’s insistence that Canada drop its planned Digital Sales Tax if it wanted to keep the current bilateral trade talks going , it is certainly within the realm of possibility that USTR would take up the CCIA’s case.

There is one other wrinkle to the cultural exception clause. Even if Canada does not justify its actions on the basis of Article 32.6, potentially the US could unilaterally declare it considers Canadian measures to fall under that provision and move to initiate retaliatory measures. If it did so, Canada would then be entitled to demand a panel to determine whether Article 32.6 is applicable, and if so, whether the retaliation met the “equivalent commercial effect” test. However, the key issue would still be to determine whether Canada had violated its commitments under the Agreement. If there is no violation of CUSMA’s terms, the cultural exception is moot. If all this has your head spinning, welcome to the green eyeshade world of trade practitioners.

CCIA, in pushing back against the provisions of the Online Streaming Act, has resorted to the threat of trade retaliation as one more tool in its policy toolbox. That is to be expected. With this in mind, the CRTC will be carefully reviewing how much leeway it has in trade policy terms and needs to keep Canada’s CUSMA commitments in mind when implementing policy. In a following blog posting I will outline what I think Canada and the CRTC need to consider.

© Hugh Stephens 2025. All Rights Reserved.  

Copyright, Cultural Issues and Canada’s General Election, 2025

Image: Shutterstock (AI generated)

As we complete the first few days in what is the shortest election campaign in Canadian history, the minimum 37 days required by law, where do the copyright and cultural industries stand with respect to electoral platforms and public consciousness? Given the overwhelming focus on dealing with economic and even potential political disruption coming from south of the border, along with traditional bread and butter issues like the cost of living, especially food and housing, one could be tempted to say that cultural and copyright issues are largely invisible. Party platforms have not yet been released (and are probably still being worked on) and by the time they are made public, the election will be well underway. So while there still may be a couple of small references to copyright issues in party platforms (as occurred in the 2021 election, none of which led to any substantive legislation), they will simply be part of a laundry list of possible actions in many disparate areas. However, that has not stopped the cultural sector from outlining its policy proposals, which have been laid out articulately by the Coalition for the Diversity of Cultural Expressions (CDCE), an umbrella group that represents more than 350,000 creators and artists, and more than 3,000 cultural enterprises. Despite the fact that copyright issues are not at or even near the top of the agenda, there is a strong undercurrent of Canadian nationalism in this election that will inevitably have an influence on policies in the cultural sector.

In 2021 the governing Trudeau Liberals included a promise to “protect Canadian artists, creators and copyright holders by making changes to the Copyright Act including amending the Act to allow resale rights for artists”. They were re-elected but did nothing. The Conservatives for their part undertook “recognize and correct the adverse economic impact for creators and publishers from the uncompensated use of their works…”. They weren’t elected so the commitment was meaningless. This time proposed changes to copyright legislation are unlikely to move the needle for any party although the issue of the unauthorized use of copyrighted content to train AI still needs to be resolved, since AI will become a front-burner issue for any party elected. The CDCE’s paper addresses this issue, among others, in its 9 recommendations. Broken down into 4 buckets, the CDCE’s proposals address (1) International Trade and Cultural Sovereignty (2) Broadcasting and CBC/Radio Canada (3) Copyright and (4) Artificial Intelligence and Culture.

The CDCE proposal under “International Trade” is to insist that the cultural exemption clause be retained if the CUSMA/USMCA is renegotiated, and that cultural activities, goods and services be excluded from all future agreements. The cultural exemption clause, (Article 32.6 of the CUSMA) is based on a similar exemption in NAFTA and the original US-Canada bilateral trade agreement of 1989 but is more of a political fig-leaf than a real protection since if the provision is invoked, the US can retaliate with equivalent effect in any trade sector. However, it provided comfort to the cultural sector at a time when free trade with the US was seen to make Canada vulnerable culturally. Thirty plus years of bilateral, and now trilateral, trade proved that fear to be unfounded—until now—and the cultural exemption has never been used. During the period from 1989 to the present, even through the ups and downs of Trump 1.0, the fundamentals of the initial bilateral Free Trade Agreement, then NAFTA, and now the CUSMA/USMCA were basically respected by all parties. Under Trump 2.0 this has all been called into question. If the Trump Administration is going to disavow the basic elements of the CUSMA, having a cultural exemption clause becomes less than meaningless.

On April 2, the US will unveil its “reciprocal tariff” regime. It has arrogated to itself the right to include, in addition to tariffs imposed by other countries, self identified non-tariff measures in its calculations. Among these may be various cultural support measures imposed by Canada on foreign entities operating in Canada requiring them to make financial contributions to Canadian content. If that happens, the US will be violating yet again the provisions of the CUSMA/USMCA as it has already done with regard to the imposition of tariffs on some products on the specious grounds of fentanyl trafficking from Canada to the US, (less than 20kg in all of 2024). However, given the surge in Canadian nationalism as a result of the tariff threats but more particularly the verbal diarrhea coming daily from President Trump about Canada becoming the 51st state, it is unlikely that any Canadian government would throw Canada’s cultural identity under the bus for the sake of preserving tariff-free access to the US market for some commodities. Thus, seeing Canada sacrifice cultural support measures that may annoy some US businesses operating in Canada (like online streaming content providers) in return for a degree of tariff relief is an unlikely outcome in the present circumstances.

This surge of nationalism relates to the second of the CDCE’s “demands”, protecting the CBC and the Canadian broadcasting environment. Ever since Pierre Poilievre became leader of the opposition Conservative Party, one of the Party’s mantras has been “defund the CBC”. There is no question that the CBC business model is in need of reform, particularly its English language entertainment television service which captures a very small market share, but CBC radio, CBC news broadcasts and CBC’s French language service, Radio-Canada, remain highly relevant, as this CBC explainer attempts to show. Given the need to protect national identity in the face of the Trumpian onslaught, and the recent rediscovery that perhaps Canada is not so “broken” after all, if ever there was a need for this national institution, it is now.

The third basket of issues raised in the CDCE position paper relates to copyright concerns, which get very little traction among the general electorate but are important to the creative and cultural community. Once again, the CDCE reminds parties of the lack of an Artists Resale Right in Canada (noting previous promises to establish this measure), as well as some other longstanding issues like fair remuneration for writers and publishers for the use of their works in the education sector and extending the private copying regime to electronic devices. This would impose a small levy (about $3) paid by manufacturers and embedded in the cost of a smartphone to compensate for unregulated widespread copying of music on these devices, with the funds flowing back to music creators.

The final bucket deals with Artificial Intelligence (AI) and copyrighted content. At the present time there are some 40 lawsuits in the US pitting rightsholders against AI developers, and even a couple of cases in Canada. Canada has been slow off the mark in addressing this issue; at the moment there is no Text and Data Mining exception in Canadian copyright law and both rightsholders and AI developers are not clear on the ground rules. The CDCE is asking that a legislative framework be adopted that includes the key principles of (1) Authorization (by the rightsholder) (2) Remuneration (payment for use of copyrighted content) and (3) Transparency (the establishment of disclosure rules as to what training data is used in AI systems and ensuring that all AI-generated content is clearly identified). These are reasonable asks but there is no guarantee they will be respected.

In the US, AI developers are pushing the Trump Administration to give them a pass on respecting author’s copyright, notwithstanding the cases before the courts, using the argument that the US will lose the AI race to China if US developers cannot help themselves freely to the content of others. OpenAI (which is being sued by the New York Times) and Google argued in submissions to the US government that giving them unfettered access to data, including content owned by others, is essential for national security. Described by blogger David Newhoff as “tech bro bombast”, OpenAI’s attempt to wrap itself in the national security blanket is a cynical ploy to get around the inconvenient fact that it and other AI developers are hijacking the creative work of authors, artists, and musicians without permission or compensation while creating outputs that in a number of cases can compete with or even displace the original works that contributed to their training. A similar situation is developing in the UK where the creative community is pushing back against the original copyright carte blanche that the UK government seemed inclined to give to the tech community, in the name of AI competitiveness. Canadian governments are not beyond succumbing to the siren calls of the AI community and it is timely to establish some guiding principles, of which Authorization, Remuneration and Transparency are a good place to start.

However, while AI and copyright are not going to become election issues, national identity, which is closely intertwined with cultural sovereignty, surely is. Indirectly, copyright will be important as it is one of the foundation stones of cultural sovereignty, an issue that would have played second fiddle to economic issues like food inflation, carbon pricing, cost of housing, fuel and utility costs etc until Donald Trump started spouting his annexationist nonsense.

Frankly, had Trump really wanted to absorb Canada (eventually) he should have brought Canada inside the US economic tent and made the country even more reliant on the US market, by providing it with an exception to his attempts to take on the world trading system. Instead, he has woken Canadians from a restful, dependent slumber brought on by three decades of relatively uncontroversial free trade and economic integration and made them realize that they have no one to depend on but themselves. In doing so, he has revitalized a sense of nationalism that will play out in this election. Who can best defend Canadian interests has become the litmus test for Canadian voters, leading to a remarkable resurgence for the Liberal Party under new leader Mark Carney after the political corpse of Justin Trudeau was removed from the electoral scene. This may or may not change during the course of this short campaign. One thing is certain; while copyright issues per se will not get much profile, cultural identity issues will certainly be in the spotlight. This is a shift in emphasis that in the long run is likely to benefit the creative sector.

© Hugh Stephens, 2025. All Rights Reserved.

Donald Trump’s Tariff Threats: Their Potential Impact on Canada’s Cultural Industries

Image: Shutterstock.com

With a general election in Canada now set for April 28, attention will be focussed south of the border to see what Donald Trump says and does next. Apart from his tiresome and insulting trope about Canada becoming the 51st US state, how best to deal with the economic fallout from the imposition of unilateral US tariffs on Canadian exports to the US will be the big election issue. Indeed, the drumbeat of tariff threats emanating from self-proclaimed “Tariff Man” is becoming overwhelming, both in terms of tariffs already applied, but also regarding potential future tariffs. As we have already seen, the uncertainty and almost daily changes, (government by tweet), are roiling markets and undermining investor confidence. With respect to Canada there have been repeated threats of what is to come while some tariffs, such as those on steel and aluminum that were applied globally, are already in force. Then there are the threatened 25% tariffs on all Canadian (and Mexican) imports, except for energy products which will be taxed at a 10% level, imposing additional costs on US consumers. (The example of potash, an essential product needed by American farmers is an interesting case study. It is basically only available from Canada, unless you import it from Russia, Belarus or China. The US does produce a small amount but 85% of US potash consumption comes from Canada. So much for President Trump’s mantra that Canada has nothing the US needs. When US farmers squealed loudly, the duties on potash were suddenly lowered from 25% to 10% and then suspended completely under an exemption for all products covered by CUSMA).

The 25% tariffs designed to hinder the export of automobiles and car parts (amongst other products) manufactured in Canada from being shipped to the US —a measure which incidentally contravenes the terms of the US-Canada-Mexico Agreement (USMCA/CUSMA)—are temporarily on suspension given the representations made by US auto manufacturers who had to explain to the White House how integrated North American supply chains work, but any products not covered by USMCA/CUSMA are still subject to the 25% tariff. The pretext for this violation of a ratified trilateral trade agreement is supposedly the “national emergency” created by the flow of fentanyl and illegal immigrants from Mexico and Canada. The only problem with this rationale is that, in the case of Canada,  there is a greater flow of illegals from the US to Canada than vice versa, and the seizures of fentanyl at the northern border by US officials in 2024 totalled less than 20 kilos, less than one percent of the amount seized on the southern border. Thirteen grams (that’s less than half an ounce) were seized in January. This year, US border officials have caught more people smuggling eggs from Canada into the US (where the price of eggs has shot up owing to avian influenza in US poultry flocks) than fentanyl. But the facts appear irrelevant to the Trump Administration; what is important is to create a pretext to violate the USMCA.

That pretext was used to trigger the International Emergency Economic Powers Act (IEEPA). This legislation allows the President “to deal with any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States”. It was first enacted in 1977 and is designed to deal with acts of terrorism or other threats to the security of the United States. It confers wide, albeit temporary, powers on the Executive Branch and has been used in situations like the Iran hostage crisis in 1979, the Soviet invasion of Afghanistan and to deal with various identified terrorist groups. Using it to punish Canada because under 20 kg (43 lbs). of fentanyl were seized in the course of a year at the Canada-US border is clearly an abuse of the intent of the Act. Notwithstanding, that is what Trump used to impose USMCA noncompliant tariffs on Canada.

The temporary suspension of the 25% tariffs on Canadian (and Mexican) imports will apparently end on April 2, when Trump plans to impose reciprocal tariffs on a global basis. How these will be calculated is anyone’s guess. The President has indicated that in addition to whatever tariff irritant he can find, he might also include other measures in US calculations that in his view discriminate against US goods and services. Thus, while most US products enter Canada tariff free (with the notable and unfortunate exception of most dairy products, which are subject to Canada’s outdated supply management system), Trump could take aim at other policies he doesn’t like. For example, while many US banks operate in Canada, none of them are full-service retail banks allowed to take deposits (but nor are they required to have the same capital requirements). Then there is the fact that Canada, like the EU, imposes a value-added tax (VAT) on most products (basic foodstuffs being the primary exception), called the GST (Goods and Services Tax). This is another potential target even though it is applied without discrimination to US, Canadian or products from any other country. Likewise, longstanding measures that provide protection and subsidies for Canadian cultural industries, like broadcasting (AV and music) content quotas or more recent mandatory financial contributions to Canadian content funds, along with funding obligations to support local journalism, could potentially become targets.

Would Google try to reopen the commitments it finally made to support Canadian journalism in order to avoid designation under the Online News Act? Will the mandatory “contributions” to Canadian content creation that the CRTC has imposed on foreign streamers become an issue? A prominent US trade association, the Computer and Communications Industry Association (CCIA), went so far as to claim that ”the CRTC’s structure of mandatory contributions contravenes Canada’s commitments to the United States under CUSMA”. While I think that claim is doubtful, if the Trump Administration regards the CUSMA as just a piece of paper to be ignored at will, US industries should think twice about using it as a lever against Canada. In any event, in my view the best approach is to continue to stress the value of cooperation and mutual benefit, as Canada has been trying to do by explaining to the Trump Administration why tariffs are self-defeating. In terms of AV production, the contribution that US content producers make to the Canadian production industry is significant even if there are disagreements about the extent to which US production in Canada helps or hinders creation and distribution of Canadian content.

It is important to note that all countries impose investment or trade restrictions of one sort or another, and the US is no exception. These restrictions are weighed in terms of the balance of reciprocal benefits when trade agreements are negotiated, including the current USMCA/CUSMA signed by Trump himself in his first term. But if you are not inclined to respect the commitments you have made, and intend to ignore carefully negotiated and signed treaties, then any domestic measure can become a target. Uncertainty as to what could happen next is a major concern. Two Canadian cultural industries that are keeping their heads down and hoping for the best are art dealers and book publishing.

Earlier this month, the Globe and Mail reported that art dealers and galleries are facing slowdowns in the face of the uncertainty brought about by the Trump tariff threats. Books, art and other informational materials were granted an exemption when Trump first imposed the tariffs on Canada, using the excuse of fentanyl trafficking. Buried within the legislation used to suspend USMCA/CUSMA obligations, (the IEEPA referred to in paragraph 3 above) is a provision that creates certain exceptions, amongst which is “any information or informational materials, including but not limited to, publications, films, posters, phonograph records, photographs, microfilms, microfiche, tapes, compact disks, CD ROMs, artworks, and news wire feeds”, unless controlled by some other authority. (Section 1702 (b)(3)). While US Customs noted the exception when publishing its Notice of Implementation, the on-again/off-again tariff implementation has created anxiety and uncertainty, not least of which is the possibility that any random Customs officer can hold up a shipment based on an individual (mis)interpretation of the regulations. Compounding the issue is the announcement by Canada of 25% retaliatory tariffs that include, among other things (the targets of the retaliation are wide covering everything from toilet paper to drones), “Paintings, drawings and pastels, executed entirely by hand”.

Book publishers are also exempted under the IEEPA and are keeping their heads down, as noted by another article in the Globe. Many Canadian publishers do not ship much to the US but some do, including companies that are exclusively printers rather than full service publishers. In the case of Friesens Corp, a printer in Manitoba, the bulk of their business is from US customers. However, now a new threat has risen for Canada’s independent book sellers. Books have been included on Canada’s retaliation list, and if books from the US are subjected to a 25% retaliatory tariff, the cost will be passed on to bookstores, and ultimately consumers. Independent bookstores already work on very thin margins and an additional charge will likely affect sales. Harm to Canadian business and consumers is the flipside of punishing US exporters, just as harm to US consumers will result from US tariffs on imports. Surely it would be best to leave a cultural product like books out of the trade war.

What happens next with regard to tariffs on exports to the US, from Canada or elsewhere, seems to depend on Donald Trump’s mood of the day. The expected announcement of “reciprocal tariffs” on April 2 will create further uncertainty and likely retaliation, further feeding the spiralling trade war. The fact that import tariffs are levied on the importer and are largely passed on to consumers seems not to have registered with the Trump Administration. They can certainly raise revenues, but if the end goal is to impede imports so that all production is reshored to the US, then presumably the revenue windfall (largely ultimately paid for by US consumers) will ultimately disappear. To depend on tariff revenues to fund more tax cuts in the US is ultimately a self-defeating strategy. In the meantime, the US economy will have suffered the impact of increased prices on all imported goods.

The Trump tariffs have had the effect of causing maximum disruption and chaos, and if that was the goal, then Donald Trump has succeeded. In the meantime, Canadians have until April 28 to figure out which political party and leader is best equipped to help navigate the treacherous waters ahead. Whatever happens, copyright and cultural industries are unlikely to escape getting wet.

© Hugh Stephens, 2025. All Rights Reserved.

This post has been updated to include reference to potential Canadian retaliatory tariffs on US book imports and the impact this will have on independent bookshops in Canada.