Ottawa’s negotiators rejected a last-minute demand from the Trump administration that Canada ditch requirements that U.S. streamers must promote Canadian film, TV and music, senior government source says.Giordano Ciampini/The Canadian Press
For the first time in a long, hard, stressful stretch of summer, members of Canada’s film and television industry are now overcome by a strange, unfamiliar sensation: hope. Maybe, just maybe, the federal government isn’t throwing the country’s multibillion-dollar cultural sector to the wolves of the White House after all.
And we can thank last week’s failed Canada-U.S. trade negotiations.
The U-turn in sentiment among the many Canadian film and TV producers, distributors, executives, performers, writers, directors and craftspeople takes some getting used to. After all, it was only two months ago that the Department of Canadian Heritage quashed the momentum of the long-in-gestation Online Streaming Act (Bill C-11), which was designed to level the playing field between foreign-owned streamers such as Netflix and Amazon and traditional domestic broadcasters.
By ordering the Canadian Radio-television and Telecommunications Commission to review its May policy on C-11, which would have tripled the contributions of streamers toward the production and promotion of homegrown film, TV and local news – regulations similar to, though not entirely commensurate with, laws in several European markets – Prime Minister Mark Carney seemed to capitulate toward Big Tech interests in the United States.
What was even more embarrassing was Ottawa’s justification at the time.
Collapse of trade talks could bring U.S. streamers back to table, film and TV sector says
No one in Carney’s government dared to admit that C-11 was a trade irritant for the White House, whose current occupant seems to conjure a new incurable irritant on a daily basis. Instead, Canadian Heritage said the costs imposed by C-11 “could ultimately fall on Canadian consumers through higher prices” – as if the entire business model of streaming isn’t based on gradually increasing subscription rates in markets around the world, whether there is local regulation in place or not.
No matter. Ottawa would just simply replace the base-rate contributions of streamers with an annual $600-million injection into the sector. This would arrive courtesy not of giant American corporations that seem to spend almost more time lobbying against C-11 than commissioning Canadian productions, but the Canadian taxpayer, who just a minute ago was under imminent economic threat of subscription hikes. Well, at least the stimulus wouldn’t be subject to any eventual change in government, right? Uh-huh.
As the prolific film producer Pierre Even (C.R.A.Z.Y., Cafe de Flore) put it this way this week, “We’ve always had the impression that culture was always the first sector that concessions came from, which never made sense. Lumber and cars are important, but there are lots of jobs in the cultural sector that need to be protected, too.”
Today, though, it appears that culture is no longer on the table as an easy bargaining chip. Indeed, going by some accounts of last week’s negotiations between Canadian and U.S. trade representatives, homegrown film and television may have represented the thickest of red lines for Carney.
Discussing why talks broke down an interview with CNBC on Monday, U.S. Trade Representative Jamieson Greer said that “what we don’t like is a situation where Canada forces American tech companies to take their earnings to give a percentage to their competitors,” all but name-checking C-11 as one of the deal-breakers.
“There are countries like Australia and Canada where they go to somebody like Netflix and say, ‘Okay, you make X money, you’re going to take five per cent of that and give it to Canadian content producers or Quebecois content producers and that’s what you have to do,’” Greer added. “We think that’s a discriminatory tax on American companies.”
Ottawa rejected last-minute U.S. demand to drop Cancon rules for streamers
What Greer left unsaid is what the Trump administration will not and possibly cannot comprehend, which is that without the baseline rules every other broadcaster in Canada has followed for decades, streamers will soon become the lone gatekeepers of whether Canadians have access to Canadian stories told by Canadian artists. The hard truth of the matter is that if Canadians roll over on C-11, we will have largely ceded cultural sovereignty to American decision-makers who mostly care about Canada mostly in terms of profit margins, not national identity.
Perhaps Greer was feeding CNBC audiences a red herring, attempting to distract Canadian voters who care more about auto manufacturing than the arts. But reporting by The Globe’s Marie Woolf over the weekend lines up with Greer’s soundbites.
According to a senior government source, Ottawa’s negotiators rejected a last-minute demand from the Trump administration that Canada ditch requirements that U.S. streamers must promote Canadian film, TV and music, including French-language content, to domestic users. This is a key tenet of not only C-11 but also Bill 109, a similar piece of Quebec legislation that was passed late last year by the province’s National Assembly.
“It was mostly to ensure that there is more content from the U.S. and less Canadian content available on these platforms,” the government source told The Globe. “This is a red line.”
Inside the industry, the reaction has been one of pleasant shock.
“It’s kind of crazy what’s happening. Obviously it seems very complicated, but honestly I was surprised and at the same time relieved to see that culture at the end of the day became something very important in this negotiation,” producer and film distributor Patrick Roy (Bon Cop Bad Cop, It’s Only the End of the World) said. “I think we’re all a bit reassured, even though who knows where these trade talks are going now.”
Why the sudden change of heart? About a week before U.S. President Donald Trump pledged to impose 50-per-cent tariffs on $28-billion worth of Canadian goods, a gentle yet tersely worded open letter was sent to the Prime Minister and Canadian Identity and Culture Minister Marc Miller.
Signed by dozens of leading film and television organizations – including the Canadian Media Producers Association and several major film festivals – the letter underlined the “significant uncertainty” Ottawa had introduced into the industry over its reversal on C-11, and urged the government to consider the downstream cultural-sovereignty effects of failing to regulate U.S. streamers.
Miller rejects claims Ottawa ‘has sold out Canadian culture’ over Online Streaming Act
It is unclear whether the missive was the tipping point for Canadian negotiators when presented with Washington’s 11th-hour trade demands, but it certainly couldn’t have hurt.
Of course, there are still many unanswered questions and potential roadblocks ahead. Not the least being any hard details as to what percentage of contributions, if any, Ottawa will ultimately pursue from the streamers. And about that annual $600-million stimulus: When will it be injected into the sector, and how will $467-million of the as-yet-unallocated pot be divided?
“Any new investment in Canadian culture, we welcome that. But we don’t think Canadian taxpayers should be the replacement for these large platforms that make a profit off of Canadians with their subscriptions,” said Warren P. Sonoda, president of the Directors Guild of Canada. “We’re waiting to see what happens. And last week’s events will definitely affect some timelines.”
U.S. streamers can also take retaliatory action as they see fit. While outfits such as Amazon and Paramount are highly unlikely to pull out of the Canadian market altogether, they can impose price hikes, or pull their many sponsorships of local industry confabs and development initiatives, or relocate the various shoots that they have set up across the country. There are more sticks than carrots.
But for now, those who produce, consume and above all believe in the power of Canadian culture – the cornerstone of what this trade war is essentially about, as the Prime Minister has intimated time and again, with both of his elbows way up – can breathe a brief sigh of relief.
Just keep an eye on those Disney+ bills.