US Warns Canada a Third Time About Trade Tensions Surrounding Bill C-11

The US has raised their concerns with Bill C-11 a third time. This as the leaders meet in Mexico.

Leaders from Canada, the US, and Mexico are meeting in trilateral talks. The media is dubbing it the “Three Amigos” summit as all three work out various trade issues. Media reports in Canada brought up some of those issues such as issues surrounding NEXUS cards. One thing that did come out of this are pledges to strengthen the ties between all three countries when it comes to security surrounding semiconductors. From Al Jazeera:

The White House has announced a series of pledges made with Mexico and Canada ahead of the “Three Amigos” summit, and cooperation on bolstering the supply of semiconductors, a market currently dominated by Asia, topped the list.

The announcement on Tuesday came hours before US President Joe Biden, Mexican President Andres Manuel Lopez Obrador and Canadian Prime Minister Justin Trudeau were to meet for the 10th North American Leaders Summit in Mexico City. It also included a new agreement on addressing climate change, an updated strategy for dealing with drug smuggling and modest new measures aimed at stemming the region’s worsening migrant crisis.

Hours before Tuesday’s summit, Biden met one-on-one with Trudeau. On Monday, Biden and Lopez Obrador held talks, in which they discussed strengthening economic ties, fighting the illegal drug trade and reducing migration, the White House said.

“This is a relationship which is a fraternal relationship of friendship between our two peoples,” Lopez Obrador said ahead of the meeting on Monday, striking a warm tone despite the left-wing leader’s generally cool approach to Mexico’s northern neighbours since taking office in 2018.

Generally speaking, the messages we are seeing is that, although there are certainly friction points between the three countries, the summit was warm and welcoming for all three leaders. They all stressed that they have close working ties with each other.

One thing that is less talked about in the Canadian media in general, of course, is the trade issues surrounding Bill C-11. For the most part, the Canadian media has been one of the Canadian governments only allies when it comes to pushing Bill C-11. For the media outlets, they see Bill C-11 as being beneficial to their business interests. So, the story often gets downplayed wherever possible, in part, because there really is no viable defence to the legislation in the first place. That hasn’t stopped the truth from getting out about the legislation as you no doubt could tell by the constant coverage here on Freezenet.

One of the huge problems with the legislation is the fact that the US far from happy about the legislation. In fact, back in July, the US, expressed concerns about Bill C-11. Those concerns were repeated in December when the US added Bill C-18 to the list of their trade concerns. Top of mind for the US is how both bills discriminate against US businesses and how it obviously violates CUSMA.

Canada, until recently, has been trying to pretend that the issue doesn’t exist. They have repeatedly left off these points in their communications, pretending that the problem doesn’t exist. When Canadian Senators asked Global Affairs about these issues that keep cropping up, Global Affairs played down the concerns, saying that the US simply expressed interest in understanding the process and that such inquiries were normal, nothing to see here, move along. Of course, trying to ignore the issue and hope it all goes away doesn’t really work all that often and this issue is no exception.

Recently, a report says that the US has now raised the issue about Bill C-11 a third time. From National News Watch:

The United States Embassy in Ottawa says it has concerns that the federal Liberals’ controversial online streaming act could discriminate against American companies.

In a statement to The Canadian Press, an embassy spokeswoman said U.S. officials are holding consultations with businesses about how Bill C-11 could affect their operations.

“We have … concerns it could impact digital streaming services and discriminate against U.S. businesses,” Molly Sanchez Crowe said in the statement.

Marc Froese, a political science professor at Burman University in Alberta, said it’s possible a dispute could be launched against Canada.

“Is it inevitable? No,” he said in an interview Tuesday.

He pointed to a cross-border dispute Canada faced 25 years ago over “split-run” magazines, or American magazines that were sold in Canada with the same content but with Canadian advertising. The percentage of Canadian ads they could include had already been strictly limited since the ’60s, and in 1994, the government added a hefty excise tax to the equation.

Ottawa saw the policy as a way to prevent cultural swamping by the Americans, Froese said.

But the U.S. disputed the policy via the World Trade Organization and threatened retaliation under the then-North American Free Trade Agreement, or NAFTA.

“We played hardball. The Americans sued us,” Froese said. “And we lost.”

So, the issue is definitely being noticed by international trade observers and some are admitting that trade retaliation could ensue. Further, it appears that the US is looking at options and are working with US businesses to figure out what the next course of action is. The Canadian government has been going shoulder to the wheel with this legislation and getting officials to even acknowledge that the US has concerns over the bill has been like pulling teeth. This isn’t even touching the idea that Canada might work with the US to figure out how to amend the legislation to satisfy the concerns the US has with the bill.

At the very least, based on what we are seeing so far, it appears that we could be heading down the road to trade disputes with the US thanks to Bill C-11. Could those disputes delay enforcement of the legislation? We don’t necessarily know at this stage as this is going into territory we have little experience in. Still, if the US does end up escalating the issue, we may very well get a better understanding about what happens when the US challenges a Canadian law that seemingly violates Canada’s international trade obligations.

(Via @Alex_Panetta)

Drew Wilson on Twitter: @icecube85 and Facebook.

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