WTO Rules Against Canada's Magazine Policy

Donovan Bailey might not seem the most likely witness on behalf of Canadian culture. But in a January issue of Sports Illustrated, the man dubbed the fastest in the world as winner of the Olympic 100-m dash found himself attacked for "whining" that he had been shut out of the balloting for the Associated Press athlete of the year - a title won by U.S. track star Michael Johnson. For Bailey, it was just another slight in what he called a long "line of disrespect" from the United States. But his experience underlined the fears of many in the country's arts and media communities, left reeling last week by the leaked interim report from a World Trade Organization panel in Geneva. If the panel confirms its tentative ruling against Ottawa's attempts to protect the country's periodical industry later this year, Canadians may face increasing difficulty in getting their stories out - and not only in magazines.

"What does Canada lose?" asked Catherine Keachie, president of the Canadian Magazine Publishers Association. "Canadian writing and a Canadian point of view. Should the government choose not to defend this policy, there's no question it will be a kind of death blow to the Canadian magazine industry." But trade experts also see the ruling as a precedent for U.S. challenges to the country's other beleaguered cultural industries, from book publishing to broadcasting. "There is a whole list of cultural concerns which we've never been able to make much headway with," said William Merkin, former deputy U.S. negotiator on the 1988 Free Trade Agreement. "So the United States will certainly jump at the opportunity to make Canada sweat on this one."

Heritage Minister Sheila Copps, commenting in Edmonton, vowed that the government would challenge the panel's final report, scheduled to come down in late February, opening the way to a lengthy appeal process. Said Copps: "We will not take this sitting down." And from Bangkok, International Trade Minister Art Eggleton insisted that "having homegrown news and information is what this is all about for us. There will always be efforts by the Americans to gain greater access to just about anything to do with culture. And we will continue the fight."

But that fight has become more complex. Washington argued the case, not under the provisions of the 1994 North American Free Trade Agreement - where Ottawa had won a cultural exemption - but under those of the three-year-old WTO, where it failed to wrest the same victory. During those talks, Canadian negotiators argued that by not signing a relevant clause, they had assured the country's immunity. But the WTO panel appeared to disagree. "If the Americans can step around the cultural exemption in NAFTA and go to the WTO," said Keith Kelly, director of the Canadian Conference of the Arts, "then it's open season."

In fact, if the panel ultimately confirms its veto of two measures aimed at preventing split runs - American magazines that recycle their editorial content in so-called Canadian editions, merely replacing the U.S. advertising - the federal government will face an unwelcome choice: either throw out the offending laws, thus opening the way to a flood of U.S. magazines with the clout, and lower costs, to steal the lion's share of advertising from Canadian periodicals, or face retaliation from Washington on another trade front. While Kelly called on Ottawa to come up with legislative alternatives, even Eggleton conceded the difficulty. "What we want to do is not in question," he told Maclean's, citing the possibility of promoting magazines instead of protecting them under law. "How we get there is always under review."

That prospect is sending shudders through the country's magazine publishers, whose wares now occupy a mere 20 per cent of the nation's newsstands. In fact, one of the three measures before the panel dates back to 1965, when the government of Lester Pearson set out to foster an indigenous industry. It was not until nearly three decades later that Sports Illustrated challenged an unforeseen loophole in the provision against split runs - transmitting its copy electronically across the border - and found itself slapped with an 80-per-cent excise tax in December, 1995. Although the magazine promptly shut down its Canadian operation, its proprietors, New York City-based Time Warner Inc., openly prodded Washington into taking Canada to the WTO court.

Now, despite that tentative victory, Toronto lawyer and former federal cabinet minister Ron Atkey, who serves as Time-Warner's lobbyist, protested that "it's an overstatement to say this is a terrible blow." Pointing to legislation providing postal subsidies to the country's periodicals - which the panel upheld - and a controversial 1976 bill barring Canadian advertisers in magazines with largely American content from deducting their costs, he hinted that there may be further U.S. cases to come. Said Atkey: "The playing field is far from level."

For Canadian readers, such challenges could have long-term effects on how they see themselves. As Maclean's Editor-in-chief Robert Lewis pointed out to those who questioned how the ruling could affect this magazine (a beneficiary of protective federal legislation): "There's a finite pool of advertising, and if foreign publications are going to take a larger chunk of it, I have less money to send reporters out to do Canadian stories."

Maclean's January 27, 1997

Author MARCI McDONALD