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Culture pulled into NAFTA fight as debate heats up over Canadian content protection

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The NAFTA spotlight has fallen on Canada’s protection of cultural industries at an awkward time for the sector, which is in a protracted debate over how to revamp broadcasting and telecom rules to deal with massive disruption from the internet.

Over the past decade, traditional broadcasters have grappled with declining advertising revenue and fewer television subscribers as consumers have increasingly flocked to online streaming platforms such as U.S.-based Netflix, YouTube and Spotify for television and music.

But while federal rules require broadcasters to dedicate a percentage of revenue to fund Canadian content, online content providers have so far been exempt, leaving existing sources of funding at risk.

The broadcast regulator is still tinkering with the requirements on broadcasters. Last week, at the behest of the federal government, it increased the minimum amount broadcasters must spend on programs of national interest.

That move came after the government kicked off a review of the telecommunications, broadcasting and radiocommunication acts in June, with the aim of modernizing the legislation to support Canadian content for the online era.

Any player that profits from the system must contribute to it, former Canadian Heritage Minister Mélanie Joly said at the time. The claim suggests plans to strengthen protections for cultural industries by pulling more players into the system, a move that’s at odds with the free movement of content over the internet.

It’s also a move that directly affects American online streaming platforms that operate outside the traditional broadcast regime.

All digital media undertakings, including Netflix, were exempt from these Canadian broadcasting rules in 1999. Yet if Netflix was considered a broadcaster, it would be the largest television provider in the country, with more than six million subscribers.

There is precedent for subjecting foreign platforms to increased regulation: In the EU, lawmakers are poised to vote on regulations that would force players to dedicate 30 per cent of their libraries to locally made content.

“Governments are realizing, maybe we can bring Netflix into the national fold,” said University of Calgary communication professor Gregory Taylor.

“After a decade of trying to figure out streaming, they’re thinking maybe we can make this as part of the system.”

Others argue that Canada should ditch prescriptive rules and focus instead on promoting content and attracting foreign investment. Indeed, foreign investment in Canadian film and television increased in 2016-2017, according to the Canadian Media Producers Association. Netflix has promised to invest $500 million in Canadian production over the next five years.

Even more demand that internet and wireless service providers help foot the bill for Canadian content since many people watch TV online or on their smartphones. This is, unsurprisingly, not popular among internet providers.

In this environment, it’s no surprise to industry players that Prime Minister Justin Trudeau insisted an updated NAFTA include an exemption for cultural industries — it’s the clause that makes these regulations possible in the first place.

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