Canada Won’t Deal on Media in NAFTA Talks, Says Justin Trudeau

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President Donald Trump (left) and Canadian Prime Minister Justin Trudeau

The Trump administration wants Canada to weaken protections for its culturally-sensitive entertainment industries until now exempted from the NAFTA agreement.

As crunch talks between the U.S. and Canada on a new NAFTA deal restart, Canadian Prime Minister Justin Trudeau has said no to demands from American lawmakers to weaken cultural protections for local media assets prized by Hollywood and Wall Street investors.

"It is inconceivable to Canadians that an American network might buy Canadian media affiliates, whether it’s newspapers or TV stations or TV networks,” Trudeau said during a press conference. His comments came as U.S. negotiators, who have gone back to the bargaining table in Washington, pressed their Canadian counterparts to allow U.S. media giants to acquire first-time majority stakes in local TV, newspaper and radio assets now exempt from the current NAFTA deal on cultural protection grounds.

"So we’ve made it very clear that defending that cultural exemption is something that is fundamental to Canadians," Trudeau added as U.S. negotiators urge that policies and laws that protect Canadian cultural industries from competition with U.S. entertainment players be weakened.

The Coalition for the Diversity of Cultural Expressions, which includes ACTRA, Canada's actors union, and the Directors Guild of Canada, backed Trudeau as they urged Ottawa to maintain the cultural industry exemption during the NAFTA talks. "Relinquishing the cultural exemption in NAFTA would have catastrophic effects on cultural ecosystems, many of which are particularly disrupted by the digital distribution of content," the Canadian industry consortium said in a statement.

U.S. Trade Representative Robert Lighthizer, who is negotiating this week with Canadian Foreign Minister Chrystia Freeland in D.C., insists there's a case for weakening the cultural exemption as it "is very often just cultural protectionism."

But international trade lawyer Clifford Sosnow, a partner with Ottawa-based Fasken Martineau, argues Trudeau won't need to die on a hill to defend the cultural industry exemption in NAFTA as it has limited legal protections for Canadian media companies. "The cultural industry exemption is fairly narrow," Sosnow told The Hollywood Reporter as it doesn't deal with copyright issues or ownership restrictions on Canadian assets, and was reluctantly grandfathered into the original 1995 NAFTA agreement by the U.S. because they know Canada rarely invokes the measure.

"So getting rid of the cultural exemption will not help American investors wanting to purchase Canadian cultural industries," he said. Canada and the U.S. need to reach a deal on a new NAFTA agreement by Oct. 1 to join the separate bilateral deal the Trump administration earlier signed with Mexico.

Reynolds Mastin, president and CEO of the Canadian Media Producers Association, representing Canadian film and TV producers, told THR that both countries enjoy a long-standing partnership that works for media sectors on either side of the U.S.-Canadian border.

"We are pleased that the Canadian government continues to identify the cultural exemption as a key priority and we believe it is in the interest of both our countries that the exemption be maintained in the establishment of an updated trade agreement," Mastin argued.

But Keith Mahar, a public interest advocate with One Media Law, is backing the American negotiating stance as he argues Canada has unfairly exploited the cultural industries exemption in NAFTA to protect private media interests at home.

"Canadians have been required, without their knowledge, to subsidize private companies to produce television programming, including television programs without any cultural benefit to Canada that have competed unfairly against American companies in the U.S. and international markets," Mahar argued in an Aug. 30 letter sent to U.S. Trade Representative Robert Lighthizer and obtained by THR.

As the NAFTA negotiations reach an eleventh hour, Fasken Martineau's Sosnow says the U.S.’ biggest trade partner, Canada, may have few legal reasons to retain the cultural exemption. But politically, he doesn't see Trudeau being backed into a corner.

"There's a distinction between night and day, and politically speaking, what prime minister is going to go and say, 'I caved on the cultural industry exemption'?" Sosnow said.