Calls Grow for US to Challenge Canada’s Online Streaming Act (Formerly Bill C-11)

Could the US challenge the Online Streaming Act? Calls are growing for the US to do exactly that.

Canada’s Online Streaming Act is many things: it’s a threat to online creators, it’s a gross violation of the Canadian Charter, it’s a bill whose premise was built on lies, it’s blatantly anti-competitive, and it’s a threat to technological innovation. There really is no upside to this bill at all.

Of course, one of the things that we’ve been reporting on about this bill is is the fact that it’s a blatant violation to Canada’s international trade obligations. Obviously, there has been a very strong case over why the now called Online Streaming Act is a violation of CUSMA (Canada US Mexico Agreement) or USMCA as others like to call it. Not only is there a strong legal case against the Act, the US government has been highly motivated to challenge this legislation. In fact, the US has warned Canada no less than four times about the legislation.

While these warnings against Canada kept being sent, Canada has largely decided to stick their fingers in their ears and ignore those warnings as they marched full steam ahead. In fact, when Global Affairs was asked directly about these trade violations by Senators during the Bill C-11 senate hearings, Global Affairs downplayed those fears and simply shrugged them off as little more than the US asking questions about the process. In other words, nothing to see here, please disperse. Of course, simply ignoring the US won’t necessarily make these issues go away on their own.

Now that Bill C-11 has passed and become the Online Streaming Act – and subsequently abolishing freedom of expression and relegating it to little more than a privilege in the process – the question is, are the American’s just going to let this whole thing slide? It sounds like the answer is “no”. Calls are growing for the US government to challenge the Online Streaming Act. From The Hill:

There’s only one thing that both sides agree on: Namely, that the Biden administration may challenge Bill C-11 at the United States-Mexico-Canada Agreement (USMCA). That’s what should happen. A case would rein in abuses of Bill C-11, and deter other countries from getting carried away with their own cultural protectionism.

Moving forward, there are two concerns: first, that the CRTC will get carried away implementing CanCon; and second, that the very premise of these guidelines is absurd in the digital age.

Canada can use the cultural industries exception, but doing so would entitle the U.S. to “take measures of equivalent commercial effect in response,” which means it could exact compensation for Canada’s wrongdoings.

This will be embarrassing for Canada. The cultural industries exception will be seen as not worth the paper it’s written on. This will cost Prime Minister Justin Trudeau politically, as he put a lot of emphasis on getting the exception copied into the USMCA, over the opposition of President Donald Trump. The only way Trudeau can get a reward from this “win” is to never use the exception.

Things will be different this time. The USMCA, unlike NAFTA, has exclusive jurisdiction to hear cases involving the cultural industries exception. Absent this provision, the U.S. would probably challenge Bill C-11 at the WTO, looking to get a ruling that might curtail local content quotas for streaming services in Australia and Europe, for example.

At USMCA, the U.S. could maximize the signaling effect of its case by adding claims under more chapters, and pumping up the numbers behind its calculation of “equivalent commercial effect.”

US senators have already called on the USTR to challenge the Online Streaming Act. The interest to not have their own industries weighed down by endless and unnecessary content regulations is quite high. Of course, the question in all of this is when would the US retaliate? That may be a ways away.

Canadian regulator, the CRTC, which has been tapped with the absurd task of regulating the internet, is currently undergoing consultations about how best to approach regulating the internet. The timeline laid out suggests that these consultations and implementation processes will push the timeline all the way to late 2024. Still, it seems what is being asked of the regulator by Canada’s cultural and corporate elite is to regulate user generated content to death so that their content gets pushed to the top of every result.

In response, the CRTC has signalled that it may demand that platforms like YouTube promote Cancon quotas globally. This means that the platforms may not have the option to simply create a Canadian variation of their front pages and tailor algorithms domestically while leaving the global results unchanged. That alone would suggest that this cultural protectionism effort already has a snowballs change in hell of working – potentially motivating platforms to just leave Canada altogether.

At any rate, things are quite murky in terms of timeline. Already, the fact that the CRTC has moved out ahead of the policy direction has raised a lot of eyebrows. It does suggest that the government wants the final say in how the laws should be carried out. Further, observers note that the consultations are actually running on a tight time table which suggests that they are not a serious effort on the governments part to solicit feedback from stakeholders. Observers suggest that the CRTC is effectively working in lockstep with the government which is far from the arms-length relationship it should have with the government.

Either way, with the consultation process moving ahead and the lack of policy direction, it does make it difficult for the US to pursue a challenge at this time. In all likelihood, the US will probably wait for the final form of the framework to be revealed before they start slapping massive trade sanctions on Canada. If anything, though, this gives voices in the US a chance to organize and build their case for why the Online Streaming Act is a massive trade violation. The good news for the Americans is the fact that much of the legwork has already been done in securing good reason to proceed here. All it takes now is building an overall consensus that this is the rout the US should go down (and it would be in the US’s best interest to go down this rout).

For Canadian online creators, the growing interest south of the border to challenge this will no doubt represent a ray of hope in this otherwise bleak debate. As I touched on in an earlier vlog post, passing Bill C-11 was the easy part for the government. Implementation only gets more difficult from here on out. The two hardest steps is evading the trade sanctions from the US and having the law survive the tide of legal challenges afterwards. My money is still on the legal challenges being the stage that finally kills this terrible law, though the trade wars it sparks will also do some much needed damage on this law as well. Canada will undergo a very long night as the Online Streaming Act goes through the motions, but when all hope seems lost on the other side, Canadians will look to the south when the sun rises for the much needed assist and look to the east for those court challenges.

Drew Wilson on Twitter: @icecube85 and Facebook.

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