Mr. Speaker, I am delighted to rise in the House today in support of Bill C-55. I would encourage all of my colleagues in the House of Commons to support this bill unanimously.
Bill C-55 sustains an important cultural objective that has been in place for three decades: to ensure the availability of information, stories and images in the magazine sector that reflect and inform Canadian society. Bill C-55 delivers on this objective by preventing unfair competition in our advertising services market which, if left unchecked, would put the Canadian publishers that provide Canadian stories to Canadian readers out of business.
If U.S. publishers could enter our advertising market, which they have not had access to for over three decades, they would dump advertising services. This is because they would have virtually no costs in that market, would achieve profit margins of up to 80% and would therefore heavily discount advertising rates in order to capture market share.
Canadian manufacturers of goods, including those in sectors that have been identified as potential targets of U.S. retaliation, have remedies available to them to prevent dumping. Canadian steel producers for example regularly exercise their rights under trade agreements by bringing anti-dumping cases. Magazine publishers do not have that option because so far there are no dumping rules for services. But Canada does have rights under our trade agreements to take measures in support of cultural industries and to regulate access to our advertising market in the magazine sector, the only available means to prevent unfair competition.
In February at a luncheon of the Broadcast Executive Society, Michael McCabe, president and chief executive officer of the Canadian Association of Broadcasters, called for support of the foreign publishers advertising services act. Mr. McCabe's comments about the current U.S. assault of this bill merits repeating. Mr. McCabe stated as follows:
The current American assault on the Minister of Canadian Heritage's efforts to sustain a Canadian magazine industry is just the leading edge of a broader assault to come. That's why it's so important.
We have to be able to maintain in this country a set of cultural policies that ensure that we can tell our own stories to our own people, and to others. The American proposition that it's just business and there should be a level playing field is a myth—and a dangerous myth—given their size and market power. We, and other small countries, have to insist on the freedom to make the policies we need, to support our own cultural existence.
Magazines are just the beginning. We can't fail at this. If we do, it will damage not only our businesses, but our country.
The U.S. claims that Bill C-55 is protectionist and precludes its cultural products from entering Canadian markets. That is not the case at all. In fact, foreign competition dominates the Canadian cultural market. According to the report of the Cultural Industries Sectoral Advisory Group on International Trade which was released on February 17, 1999, foreign firms and products account for the following: 45% of book sales in Canada; 81% of English language consumer magazines on Canadian newsstands and over 63% of magazine circulation revenue; 79%, or over $910 million, of the retail sales of tapes, CDs, concerts, merchandise and sheet music; 85%, or $165 million, of the revenues from film distribution in Canada; and between 94% and 97% of screen time in Canadian theatres.
While Canada believes its citizens should have access to foreign cultural goods, the government also recognizes that we need space for our own voice. Our culture is an integral part of who we are. Sharing stories and ideas and creating a better understanding among people in Canada is an effective way to build a healthy multicultural society. The government as steward of our national identity has a duty to promote cultural activities that help build a sense of community.
Cultural products are not simply commodities that can be packaged and sold. Cultural goods and services are different from the goods and services of other industries and should be treated differently.
However, Canada is not alone in its efforts to promote culture and cultural industries. Like Canada, many countries provide direct support for their cultural industries.
For example, the European Union's media II program provides grants and loans to promote the development of film production projects aimed at the European market.
The United Kingdom provides subsidies for a wide range of artistic activities through the arts councils which are funded by lotteries, while the British Film Institute provides direct grants for film production and exhibitions.
France's Centre National de la Cinématographie uses special cinema taxes to support film production. Any producer of fiction, animation, cultural shows or documentaries whose programs have been broadcast by French television automatically receives a grant from the country's film and television industry support fund.
The Swedish Film Institute uses a tax on cinema tickets and video rentals as well as state funds to make film production grants.
Interestingly enough, the United States directly supports everything from literature to drama through the National Endowment for the Arts.
We are at a critical juncture in the history of magazine publishing in Canada as we face the choice between caving in to American pressure tactics or maintaining our right to continue the longstanding policy of ensuring that Canadians can choose to read their own magazines as well as other magazines from around the world.
Magazine publishing has never been an easy business in Canada even without the unfair competition of split-run editions of American magazines. The scale of our market, the competition for readers from American magazines, and the negative impact on our advertising revenues of the spillover advertising that Canadians see in American magazines have all meant that Canadian publishers will survive only if they produce quality magazines that Canadians want to read and at the same time operate at peak efficiency.
Canadian magazine publishers have called on this government to provide an environment of fair competition, a level playing field so they can continue to have the incentive to invest. Fair competition cannot exist when our split-run competitors have costs less than half of ours and no Canadian content.
Bill C-55 is the only measure that has been identified that is effective in preventing unfair split-run competition and also is consistent with our trade agreements. Bill C-55 does not violate the NAFTA or any other international trade obligation. It has never been challenged before the WTO or any other dispute settlement body. Bill C-55 is entirely consistent with our trade obligations.
Bill C-55 regulates foreign access to the Canadian magazine advertising services market. It is a services measure. It does not apply to or affect imports of magazines. As a services measure, it falls under the GATS. Canada did not offer and the U.S. did not obtain or pay for access to our advertising services market in the negotiation of the GATS. Canada therefore has no obligations and the U.S. has no rights vis-à-vis access to the market.
U.S. threats of retaliation under NAFTA show that it does not have a legal case to make. If it did, it would use the WTO rules, where it started the dispute in the first place, to challenge Bill C-55. Moreover, under NAFTA the United States cannot forum shop. The provision for retaliation under the cultural exemption applies only if the measure would violate an obligation in the FTA, if not for the exemption. No such obligation exists. The level of retaliation the U.S. has threatened is equally illegitimate. The fact that Canada's previous magazine measures were ruled inconsistent with the GATT does not mean the new measure would also be ruled inconsistent. Bill C-55 is completely different from the previous measures.
I would like to conclude with a quote from a recent bulletin of the Canadian Conference of the Arts which reviewed the importance of Bill C-55. “We give the last word to President Bill Clinton: We must enforce our trade laws when imports unlawfully flood our nation”.