The US Trade Bear, Red in Tooth and Claw

May 26, 2023

In the week following the CRTC announcement of a public consultation to determine how foreign streamers and Big Tech will contribute to Canadian programming under Bill C-11, a Canadian-educated academic at Georgetown University gave us a flash of the US trade bear’s teeth.

If the CRTC actually implements C-11 in any manner not satisfactory to American media companies, Marc L. Busch recommends the US government file the most aggressive trade complaint possible and “pump up the numbers behind its calculation of ‘equivalent commercial effect.’” Decoded, that means ‘exaggerate damages to US companies so as to justify the most extreme trade retaliations.’

Back to that, later in this post.

Busch is the sort of commentator who combines a free-market outlook with aggressive American trade policy, which is nice work if you can get it. He also tips his policy hand on where he stands on cultural regulation early in his column by offering that “the very premise of [Canadian content] guidelines is absurd in the digital age.” 

Born in Wisconsin, Busch was educated at two state-funded Canadian universities and was briefly on the public payroll at Queen’s University. And so he has opinions on things Canadian (including who should win the next federal election).

One of them is about the television series ‘The Handmaid’s Tale.’ He offers this as exhibit A in his case for the absurdity of Canadian content guidelines for funding eligibility. 

He’s not alone in pointing to the show based on Canadian author Margaret Atwood’s 1985 novel. The same connection has been made by Canadian IATSE Vice President John Lewis and Conservative Senator Leo Housakos in mocking the rules that certify CanCon shows based on Canadian ownership, cast and crew rather than identifiable Canadian themes. 

The debate over a ‘Canadian passport’ versus a ‘theme’ test is a legitimate discussion that will take place before the CRTC in a few months. Heritage Minister Pablo Rodriguez may chime in with a Policy Direction on that point in the coming weeks.

It’s just that using ‘Handmaid’s Tale’ as cannon fodder for attacking the current rules is a dud.

The ongoing TV series and a movie made in 1990 are both true to Atwood’s plot in this respect: the story takes place in an identifiably American dystopia, a theocratic fascist state based in New England. Even in the narratively prolonged TV series, Canada is just a place for escape and refuge (which doesn’t occur until the fourth of five seasons).

Atwood did not write the TV screenplay. The producer, director, writer, and lead actors are not Canadian. The same thing with the 1990 movie except that Atwood co-wrote the script with Harold Pinter. 

So in Handmaid example, there are neither Canadian themes nor Canadian ownership or creative leads. The series was shot in Canada, like 645 other US shows, with Canadian crews. By that standard, the X-Files is CanCon.

It’s not that you can’t dig up better examples of American-made movies shot in Canada that are thematically Canadian, starring a Canadian cast, but lacking Canadian ownership of the project. Netflix’s Jusqu’au Déclin (The Decline) is a good example. 

It’s all grist for the mill in the argument over whether the current ‘Canadian passport’ system for certifying CanCon needs changing. But despite a handful of examples of uncertified ‘thematically Canadian’ movies, no one has ever conducted academic-standard research as to whether such exceptions are so prevalent as to undermine the policy basis for the current rule. 

The MediaPolicy view is, may the best policy argument win.

But back to Professor Busch and his trade bear teeth and claws.

The gravamen of a trade complaint against C-11 is that if the US streamers get only obligations — like writing a cheque to CanCon film funds to make movies that as an American company they can’t buy without forfeiting the opportunity for full copyright—- they will have a credible complaint that C-11 violates the National Treatment ‘non-discrimination’ rule in the CUSMA trade agreement.

Busch’s innovation on this well-known trade argument is to intimidate by larding in every other available allegation, so as to magnify potential damages and therefore maximum retaliation. 

On that point he cites the CUSMA chapter 14.10 rule against ‘performance measures.’ Essentially a rule against ‘Buy Canada’ or ‘Buy America’ laws, the chapter has been cited by Michael Geist and the Big Tech lobby association CCIA. Their argument is that Canada is allowed to require Canadian companies to meet local content or purchasing obligations, but not American companies. 

Here’s the CUSMA text:

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 or of a non-Party in its territory, impose or enforce any requirement, or enforce any commitment or undertaking:

…
(b) to achieve a given level or percentage of domestic content;
(c) to purchase, use, or accord a preference to a good produced or a service supplied in its territory, or to purchase a good or a service from a person in its territory.

Taking the chapter to its hypothetical limit in the case of C-11’s cultural regulation, that would mean American companies are exempted from discoverability rules (s.9.1(1)(e) of the legislation) to promote Canadian shows and music, the use of Canadian talent or crews to make Canadian content (s.3(1)(f.1)), or even the requirement to spend an fixed amount on Canadian programming, all of which apply to Canadian broadcasters. 

Whether chapter 14.10 applies to those C-11 obligations, and whether it effectively overrides the Chapter 14.5 National Treatment rule to treat domestic and foreign companies in an equitable manner, is difficult to predict.

Based on arguments like these, Busch telegraphs the retaliation plan by reminding us of the 1999 ‘split-run magazine’ cross-border trade dispute, won by the Americans. 

In that trade fight, the US got its way by cynically over-calculating potential damages suffered by US ‘Canadian edition’ magazines in order to threaten hundreds of millions of dollars in retaliation against Canadian steel, wood and plastics. The threats were duly amplified by the targeted Canadian industries and the Conservatives.  Judging from the final peace deal, the threats were quite effective.

What Busch wants in his column is to teach Canada a lesson, so as to “rein in [the] abuses of Bill C-11, and deter other countries from getting carried away with their own cultural protectionism.”

No doubt Hollywood and Big Tech will appreciate Busch’s advocacy. The utility of this kind of well timed threat-by-proxy is to remind the Canadian government, industry, citizens and especially the CRTC that the difference between trade war and peace is whether the regulatory price is right for US companies.

The task of Canadian leaders is to figure out a price that is just short of the US companies’ ability to convince the Biden administration to do their bidding. 

***

A footnote. 

Despite the comments above on Handmaid’s Tale, all due respect to Margaret Atwood. She is the sort of cultural icon who gives no quarter and asks for none. 

As far as I can tell, she has not advanced the case for the TV series based on her book to be eligible for CanCon funding. 

And she also has to endure the ignominy of being cast unwillingly as a character in Pierre Poilievre’s campaign videos, the repentant cultural nationalist. Somehow I can’t see her caring.

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