Official Hansard
Mr. Speaker, October was a beautiful month at Green Gables, when the birches in the hollow turned as golden as sunshine and the maples behind the orchard were royal crimson and the wild cherry-trees along the lane put on the loveliest shades of dark red and bronzy green, while the fields sunned themselves in aftermaths. Anne reveled in the world of color about her. “Oh, Marilla,” she exclaimed one Saturday morning,... “I’m so glad I live in a world where there are Octobers...” Those who love Canadian content may recognize this memorable passage from the great Canadian story Anne of Green Gables, written by the great Canadian author Lucy Maud Montgomery. This passage highlights why the book has endured for so many years: Anne’s irrepressible spirit, capturing her vivid imagination that turns the ordinary autumn into something magical. Anne’s author, Lucy Maud Montgomery, in fact spent 15 years of her life in Leaskdale, Ontario, which is in my riding of York—Durham, about 15 minutes from where I live. She wrote the majority of her books while living in Leaskdale, and she raised her two surviving children there. Anne of Green Gables was not successful because Lucy Maud Montgomery was funded by a tax on foreign authors. Anne of Green Gables was not successful because a Liberal government forced Canadians to buy her book. It was successful because it was great writing, great content and great Canadian culture. The strength of Canadian culture should not rely on forcing foreign companies to subsidize Canadian content. The strength of Canadian culture should not rely on forcing foreign companies to force Canadians to watch or listen to government-mandated content, regardless of its quality. We are talking about the Online Streaming Act today and the increase in that tax on Canadians, the Netflix tax, from 5% of gross Canadian revenues to 15% of gross Canadian revenues, which will undoubtedly increase the costs for Canadians. There are many reasons to oppose this tax hike, but what I want to focus on today is that this tax hike will be a trade irritant with our friends in the United States and will impede our ability to get a good deal on our CUSMA renewal. Since its introduction, the Online Streaming Act has faced trade backlash from the United States, and rightly so. It requires foreign streaming services to contribute a percentage of their gross Canadian revenues to Canadian production funds as a condition of market access. Those payments were at 5% and have now increased to 15%. These rules are discriminatory for at least four reasons: First, they exclude Canadian streaming services from the same obligations, so foreign companies must pay and Canadian companies do not have to. Second, when foreign companies pay, they pay twice. That is because the royalties they pay to Canadian rights holders are included in the taxable revenue used to calculate their obligation. I know Liberals love taxes, but this is a tax on a tax. Third, the rules exclude foreign companies from benefiting from those content funds. Last, they require streaming providers to promote and prioritize Canadian content. This is often referred to as discoverability. I will pause on that for a moment. The government is dictating the content that these streaming service providers must show Canadians. They are telling them that regardless of whether a show is popular, of quality, good to watch, fun to watch or even if anyone wants to watch it, it must be shown to Canadians. The Liberal government will tell them what content is okay. All of this leaves us with an unfair and uneven playing field, whereby foreign companies are required to contribute but banned from benefiting. The cost to foreign companies is real. One estimate that was submitted before the CRTC by the Computer and Communications Industry Association in the United States said that at 5%, it cost its industry $2.2 billion U.S. This will grow between 2025 and 2030, at the higher CRTC rates, to over $7 billion U.S. I am not noting the cost so that we shed a tear for companies that are paying taxes but to note that there is a real cost to U.S. companies. We should not be surprised that these U.S. companies are outraged that they are being discriminated against and are calling on their government to take action. The Americans have responded in several ways. First, the Online Streaming Act has been identified in the USTR’s national trade estimates report every year since its passage. That report identifies trade irritants that the U.S. has with countries around the world. If we go to the section on Canada, we will find a subsection on the Online Streaming Act, which calls out this tax. This is not just some government report that sits on a shelf. USTR Jamieson Greer has repeatedly said in public that the national trade estimates report must be part of any CUSMA renegotiations. This means that the issue is squarely in play for the U.S. The government has often claimed that Canada is shielded from this or otherwise protected because of the so-called cultural exception in the CUSMA. The cultural exception exists, but it comes with a price. Let me unpack that a little more. The starting point is chapter 19 on digital trade in the CUSMA. It covers non-discrimination. It says, in the relevant part, “No Party shall accord less favorable treatment to a digital product created, produced, published, contracted for...or...made available on commercial terms in the territory of another Party”. We have to treat foreign digital products in the same way as we treat other foreign digital projects and products created in Canada. Lawyers will argue on whether there is discrimination or not, and we will leave that to them. I would say that I think the case is pretty strong. That takes us to the so-called cultural exemption, which is found in chapter 32. It says, in the relevant part, that the agreement, the CUSMA, “does not apply to a measure adopted or maintained by Canada with respect to a cultural industry”. Okay, that sounds good. However, that is not the whole story, because just two articles down, it says, “Notwithstanding any other provision of this Agreement, a Party may take a measure of equivalent commercial effect in response to an action by another Party that would have been inconsistent with this Agreement”. Taken together, this means that Canada can violate its non-discrimination obligations in the digital trade chapter for the cultural sector in Canada, as it is doing with the Online Streaming Act. However, that gives the U.S. the right to retaliate with “equivalent commercial effect”. This is why the estimates of the cost to U.S. industry are so important, because it tells us what the retaliation may be. It is also important to note that the retaliation provision is not limited to the cultural sector. This means that the United States could choose which products or services it wishes to retaliate against. The U.S. has done that repeatedly with other countries. We can take France as an example. The U.S. retaliated to the French digital services tax by targeting its wine, cheese and handbags. We have talked a lot in the House about vulnerable industries in Canada: steel, aluminum, lumber, automotive and seafood. We can imagine the United States taking retaliatory action, completely consistent with its obligations, in one of those industries. I just want to end on how this funding is being used, because we could argue about whether this is good or not, but what really puts the nail in the coffin for me is to see how this cultural funding is being used. It is often used to push radical ideologies on Canadians, families and children. Let us look at just a couple of the outrageous examples. Most recently, we heard about the example of the prank show Northland Tales, produced by the CBC and APTN, in which the state broadcaster used deceptive tactics to lure participants to a show and then sandbagged them to push their anti-historical, anti-Canadian narratives attacking Canadian figures and institutions such as John A. Macdonald, the founder of our country. Without Macdonald, there would be no Canada. There was also the RCMP, a historic institution in this country. Even members of Parliament were targeted. The member for North Island—Powell River was targeted. He is smarter than the average bear and was able to avoid that. We can see that this funding is not used to promote quality Canadian content, such as Anne of Green Gables. It is wasted on radical ideologies. However, there is a solution. The solution is that the government should use its powers to stop the CRTC from raising this tax from 5% of revenues to 15% of revenues. The government has the power. It has its majority. The question is whether it will do that. At the end of the day, Canadians want to go home, kick their feet up, crack a beer and watch Netflix without having it cost them an arm and a leg.
