US Issues 4th Warning Against Canada Over Bill C-11, Bill C-18, Digital Services Tax

The US has formally issued a 4th warning to Canada about Bill C-11, Bill C-18, and the Digital Services Tax. They say it unfairly targets US businesses.

Bill C-11, Bill C-18, and the Digital Services Tax are emerging as a top trade issue for the United States. US ambassadors to Canada have, on multiple occasions, accused Canada of violating the USMCA by moving forward with Bill C-11, Bill C-18, and the Digital Services Tax. They say that it unfairly target US businesses.

The first warning that we are aware of came in July of last year. It was a very soft warning that only indirectly referred to the legislation. The second warning came in December where the US explicitly mentions the bills in question and reminding Canada that they have issues with the forthcoming bills. Earlier this month, the US ambassador to Canada raised the issue a third time. That third warning turned up the heat by saying that the US is consulting with businesses that would be impacted by these bills about how it affects them and considering next steps.

That determination didn’t take long as US Senators, in a bi-partisan manner, issued their own letter calling on the USTR to “fully pursuing enforcement actions as necessary”. The letter also explicitly calls out Bill C-11, Bill C-18, and the Digital Services Tax. Some in Canada have said that it’s unclear how Bill C-11 and Bill C-18 violates CUSMA. Well, the CCIA, a large technology organization, has issued two separate white papers detailing both how Bill C-11 and Bill C-18 violates CUSMA in a very painstakingly detailed manner. So, there is no mystery here, only the prospect of billions in trade tariffs coming from the US.

All this time, the Canadian government has spent most of the time simply denying not only that the pieces of legislation violates Canada’s international trade obligations, but also denying that the US has even raised these concerns in the first place. The approach has long been to ignore the issue and hope it all goes away on its own. More recently, the government finally admitted that the US has raised these issues, but continued to rely on the laughable talking point that the pieces of legislation are in compliance with all of Canada’s international trade obligations. They pretty much left it at that.

Of course, trying to ignore the issue, so far, hasn’t really been working as it’s only causing the US to continually turn up the heat on Canada. Recently, the US ambassador has issued a 4th warning against Canada about all of this. From the USTR:

SAN DIEGO – Deputy United States Trade Representative Jayme White met today with Canada’s Deputy Minister for International Trade Rob Stewart at the Institute of the Americas located on the campus of the University of California San Diego ahead of the second USMCA Deputies meeting.

Ambassador White expressed the United States’ ongoing concerns with 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.

Ambassador White and Deputy Minister Stewart agreed to continue to collaborate on addressing these issues and other shared priorities that are central to the U.S.-Canadian trade relationship.

We looked around for any statement from Global Affairs in response to this, but it appears that they are continuing to be radio silent on the manner. This suggests that the government is continuing to try to ignore this looming issue.

At the moment, Bill C-11 is still at the third and final reading at the Senate while Bill C-18 has passed first reading in the Senate. Bill C-11 was pushed by supporters who seem to like to push the narrative that the internet is just another cable TV channel and are trying to have all social media revolve around the big broadcasters. Meanwhile, supporters of Bill C-18 falsely assume that linking is akin to stealing and copyright infringement. Neither bill really had a convincing premise from the get-go, but are pushed hard by big publishing and big broadcasting along with their respective relentless lobbying through teams of lobbyists in their effort to claim poverty.

While digital first creator scored a major victory when Section 4.2 was largely fixed, there are still complaints that digital first creators could still be disadvantaged thanks in part to the money being siphoned off from them and fed directly towards the big broadcasters. Bill C-18, meanwhile, still has all of its critical problems intact from a dubious House of Commons process including the fact that it would force all news links to require payment while, at the same time, bar smaller news sites like Freezenet from actually getting any financial support afterwards. This while compelling large platforms to pay foreign troll farms and disinformation campaigns as well.

Supporters of the free and open internet have always had an uphill battle, but this new push from the US could help tilt the power back into the favour of free speech supporters and smaller creators. It took a major effort from everyone just to win that single concession with Bill C-11, but the US is going to inherently be a much bigger voice on the issue. After all, they can leverage billions in trade tariffs. The average streamer doesn’t have that kind of power. So, we are now in this situation where Canadian creators find themselves cheering on the US against Canada because it seems to be the next best thing. After all, the Canadian government has been so reluctant to hear from average Canadians on these issues that they have gone to the extreme of openly attacking them on social media on top of it all.

At any rate, the US warnings are increasing and becoming much more blunt as well. This definitely signals that this issue isn’t going away any time soon. In fact, one can very easily make the argument that Canada will have to face the music on this one sooner or later. Whether it is finally communicating with the US and working out the trade issues or facing the retaliatory tariffs afterwards. That seems to be the choice Canada has right now. So far, the Canadian governments choice seems to be facing the billions in trade tariffs afterwards. The warnings may be easier to ignore, but the trade war would be considerably harder to ignore.

(Via @Mgeist)

Drew Wilson on Twitter: @icecube85 and Facebook.

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