WASHINGTON, D.C. — With the U.S. arguing that Canada’s digital policy is discriminatory and protectionist, and claiming they harm the business interests of other nations, Canadians may see it as a little bit ironic.
It’s a theme we’ve heard plenty about in reference to U.S. President Donald Trump’s trade war, but in this case, it’s the White House’s view of Canada’s Online News Act and Online Streaming Act.
The president claims these Canadian policies are unfairly protectionist and discriminate against U.S. tech firms and streaming giants. Meanwhile, the White House’s aggressive use of tariffs on everything from whipped cream canisters to automotive parts has disrupted trade worldwide with a level of protectionism not seen from the U.S. in nearly a century.
Trump wants both of these Canadian policies to follow the path of the now-defunct Digital Services Tax (DST), which he said had to go if the U.S.-Canada trade talks were to continue this summer. Prime Minister Mark Carney, in turn, directed Revenue Canada not to collect the tax, but that move did not seem to win him any favours.
“Don’t, don’t, don’t show your cards ahead of time,” said Mark Dalton, senior policy director of Technology and Innovation at R Street, a public policy think tank based in Washington, D.C., about Carney scrapping the DST. “If you cave to demands ahead of time, when you get to the negotiations, there will be more demands.”
The DST and the lifting of retaliatory tariffs were the latest concessions Carney’s team made, at least publicly, to the U.S., and while it’s unclear whether these led to Tuesday’s sitdown at the White House, one thing is certain: A Canada-U.S. trade deal has yet to be reached.
Both sides had a more detailed discussion than in the past, according to Dominic LeBlanc, the minister responsible for Canada-U.S. trade, who described Tuesday’s talks as “successful, positive, substantive.” He said he and his colleagues, along with their American counterparts, were directed “to continue the conversation and to quickly land deals that will bring, we think, greater certainty in (some) areas,” including steel, aluminum and energy. LeBlanc said the Section 232 tariffs in these sectors have been the most challenging for Canada.
Noticeably absent from Tuesday’s remarks were the 35 per cent tariffs on (non-CUSMA) Canadian exports, the Canada-U.S.-Mexico renegotiation preparations, and how the controversial digital policies might play into the broader trade talks.
Bill C-11, the Online Streaming Act, regulates streaming services like Netflix, Spotify, and Amazon Prime, pushing them to prioritize and contribute financially to Canadian programming. Bill C-18, the Online News Act, meanwhile, requires platforms like Google and Meta to compensate Canadian media for using links to their content. Google played ball and pays $100 million a year, but Meta didn’t and opted instead to block Canadian news content on Facebook and Instagram.
Trump, the tariff man, sees both
as protectionist, but why?
The Republican view
The U.S. administration opposes C-11 and C-18 because of their economic impact on U.S. tech firms, seeing them as discriminatory and protectionist trade barriers, said Daniel Cochrane, senior research associate for the Center for Technology and the Human Person at The Heritage Foundation
While the Online News Act has the good intention of trying to compensate content creators for what they do online, said Cochrane, “the implementation has been pretty problematic.” He referred to how it concentrates payments in large Canadian media organizations, which raises concerns about negotiation transparency and fairness for small outlets.
There is economic concern in terms of how the policies affect U.S. companies, he said, but there’s also a broader free speech concern.
Dalton, the senior policy director at R Street, described the policies as though Canada is “looking to sort of shore up legacy industries that aren’t competitive in the market by extracting fees and taxes.”
“The country that is paying those or having to pay into those through their private industry is obviously not gonna be in favour of that,” Dalton added, noting that the Trump administration “would go after anything that looked like protectionism, regardless of the potential irony in that approach.”
Digital policies as bargaining chips
Trade experts think both C-11 and C-18 will be targeted in the upcoming CUSMA trade talks, with the renegotiation set to begin next summer.
Dalton, for one, believes the digital policies will be part of the conversation but that they may play a minor role. “I don’t think they’re going to be major sticking points,” he said, noting how non-digital assets are more important for trade.
But there are too many digital legal matters in CUSMA to have them not play a strong role in talks, said Mitch Stoltz, IP litigation director at the Electronic Frontier Foundation. Issues like copyright law and laws circumventing access controls on media are in CUSMA and other various trade agreements, Stoltz explained.
“At the behest of U.S. media and entertainment companies that wanted them in there,” he said, “I could see a renewed conflict over that.”
Cochrane believes these policies will very much remain in Trump’s crosshairs.
“The president is asking for a pretty unilateral walkback of the laws,” he said.
From a conservative point of view, Dalton, Cochrane and Stoltz argue for greater decentralization and competition in the tech sector. So rather than taking Canada’s more centralized and regulatory approach, they prefer a more hands-off one — as does Trump.
The prime minister seemed open to revisiting both policies, but Heritage Minister Steven Guilbeault’s office said recently that Carney’s government had “no intention” of repealing either act. Was it a bluff? Does Carney hope to use both policies as leverage in upcoming talks?
If so, it may prove problematic.
Ottawa’s hands are tied
Carney may not have much wiggle room to accommodate the White House when it comes to C-11 and C-18.
While Carney was able to change gears on the DST, the Canadian government is unlikely to alter or repeal the Online News Act and Online Streaming Act because they have deep domestic cultural importance, said Graeme Thompson, senior analyst at Eurasia Group’s global macro practice.
Both policies have a cultural focus, which is politically sensitive. “Canada has for a long time had protections for cultural industries — so-called Canadian content — and that is an especially acute issue in Quebec, where the cultural industry is really vibrant,” said Thompson.
As a result, both the Online News Act and Online Streaming Act will be a lot harder to get rid of because of the political consequences that would follow, especially in Quebec, he explained.
“I think it will be harder for the government to alter those pieces of legislation significantly enough to placate the White House,” Thompson said.
And this could be a problem in trade talks moving forward because Trump is unlikely to care about Carney’s domestic political restraints.
“Ottawa has given much of what they’re able to easily give to the Trump administration, and what’s left are things that are much more challenging politically,” Thompson said. “But the Trump administration wants some of that, and I think that’s partly where the impasse lies.”
National Post
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