U.S. raises trade concerns with Canada over online-streaming bill

OTTAWA — Washington has raised concerns about the trade implications of Ottawa’s online-streaming bill, prompting a legal expert to warn that Canada could face hundreds of millions of dollars of retaliatory tariffs if it becomes law.

U.S. Trade Representative Katherine Tai expressed disquiet about the proposed legislation, known as Bill C-11, during talks earlier this month with International Trade Minister Mary Ng at the Canada-United States-Mexico Agreement (CUSMA) Free Trade Commission ministerial meeting.

The online-streaming bill, which has passed the House of Commons and is now in the Senate, would force American-owned platforms, including YouTube, Netflix and Amazon’s Prime Video, to promote Canadian TV, movies, videos or music, and help fund Canadian content.

Last month, federal Heritage Minister Pablo Rodriguez claimed the online-streaming bill, if passed, would generate at least $1 billion a year for Canada’s creative sector, including Indigenous programs.

Ottawa’s public record of the meeting on July 8 with Ng did not mention that her American counterpart raised concerns about the bill

But the U.S. government’s record of the meeting says “Ambassador Tai expressed concern about … pending legislation in the Canadian Parliament that could impact digital streaming services.”

Alice Hansen, a spokeswoman for Ng, said Wednesday: “Ambassador Tai raised Bill C-11, and Minister Ng reiterated that this bill does not institute discriminatory treatment and is in line with Canada’s trade obligations.”

Michael Geist, the University of Ottawa’s Canada Research Chair in internet law, accused the Canadian government of ignoring the “trade risks” linked to its online-streaming bill.

“It is clear the U.S. is paying attention,” Geist said.

“By raising concerns before the bill even passes, there is an unmistakable signal that Canada could face hundreds of millions of dollars of retaliatory tariffs as a consequence of legislation that already faces widespread opposition from Canadian digital-first creators,” he said.

Toronto-based trade lawyer Lawrence Herman, founder of Herman and Associates, said though Washington is raising concerns about the bill’s effect on American firms and applying pressure on Ottawa, the U.S. is “a long way from retaliation.”

“As the American government generally does, they will threaten all kinds of retaliatory measures,” he said. “I don’t think they would have a strong case unless they can show that the policies are discriminatory or targeted.

“In Canada’s case, they want streaming services to pay their fair share for access to the Canadian market. My assessment is (the bill) is not discriminatory.”

Bill C-11 has been sharply opposed by digital-first creators and Conservative MPs who claim it would allow a future government to regulate people posting videos on YouTube — a charge the government denies.

YouTube, in its submission to the Commons heritage committee, argued the bill would impose international trade barriers to the “exchange of cultural exports” on digital platforms, including by Canadian creators, and set a “harmful” global precedent.

The government this month launched a consultation on the development of a model digital trade agreement.

It said such a model agreement would help Canada address emerging technology issues and build on existing free trade agreements, including CUSMA, the North American free trade agreement known as USMCA on the other side of the border.

Digital issues are also on the table in ongoing talks with the U.K. on a free-trade deal.

The Office of the U.S. Trade Representative had not yet responded to a request for comment on Wednesday.

This report by The Canadian Press was first published July 28, 2022.

Marie Woolf, The Canadian Press