The US is, once again, reminding Canada that it has concerns with Bill C-11 and Bill C-18.
Back in July, the United States, through its ambassador to Canada, Katherine Tai, expressed concern about Canada’s Bill C-11. At the time, observers pointed out that CUSMA could potentially play a role in putting a stop to this bill. CUSMA, of course, allows countries to issue retaliatory tariffs in kind should another country begin penalizing digital services that operate within their borders. It’s precisely those provisions that would, in theory, prevent legislation such as Bill C-11 from ever coming to fruition.
In September, when this whole hearing saga began, Global Affairs told Senators that their sharpening of their pitchforks over the legislation, as well as Bill C-18, was merely a sign that they were interested and just want to be informed about what’s going on. From there, they just blew off the Americans and said that this potential trade war brewing was nothing to be concerned with.
Now, we are learning that the US has, once again, re-iterated their concerns about both Bill C-11 and Bill C-18. According to the USTR, the concerns have, once again, been raised and appears to be unchanged from before:
Ambassador Tai expressed concern about Canada’s proposed unilateral digital service tax and pending legislation in the Canadian Parliament that could impact digital streaming services and online news sharing and discriminate against U.S. businesses.
The two agreed to continue to collaborate on addressing these and other issues.
To add further context to this, one of, no doubt, multiple sections that this could be in reference to is Section 19.4 in the CUSMA trade agreement. The text of Article in that trade agreement says this:
Article 19.4: Non-Discriminatory Treatment of Digital Products
1. 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.
This article applies to both Bill C-11 and Bill C-18. Supporters of Bill C-11 long have stated that they are interested in forcing platforms to “pay their fair share”. Well, if you are forcing platforms to pay into a fund, then that could potentially violate at least this article and who knows how many other articles in the trade agreement.
As for Bill C-18, well, the CCIA has published a white paper pointing to no less than 6 articles that the proposed bill violates. Those articles are Articles 14.4 and 14.5 (Investment), 15.3 and 15.4 (Cross-border Services), 14.10, and 19.4. That is quite the gauntlet of articles to try to avoid violating. Again, the more money the Canadian government attempts to extract from American platforms, the more the US can issue retaliatory tariffs in kind.
What is significant in all of this is the fact that the concerns have remained unchanged after all of these months. Obviously, the American government is watching these debates closely. The fact that they have expressed concern on multiple occasions and the fact that there are clear articles that could be violate signals that the threat of retaliatory tariffs are very real in all of this. The most the Canadian government can hope for is that these are idle threats that will lead nowhere. That is asking a lot because there is financial incentive to trigger such a trade battle in the first place – a battle that Canada would have, at best, an incredibly difficult time fighting against.
It’s also worth noting that the Canadian government hasn’t really slowed down at all with these two bills. They are still shoulder to the wheel trying to pass these two bills as quickly as possible. So, the government is willing to ignore these warnings and pretend that they don’t really exist. How is that not a very dangerous game to play with any country, let alone the United States who obviously shares a border with Canada?
(Via @Morghan_Fortier_BA_CEO)
Drew Wilson on Twitter: @icecube85 and Facebook.
