The CRTC headquarters at the Terrasses de la Chaudière complex in Gatineau, Quebec. (SimonP/CC BY-SA 3.0)
A decision by the Canadian broadcast regulator to triple the levy imposed on streaming companies, including American giants, comes at a time when trade negotiations between Ottawa and Washington appear stonewalled.
The U.S. embassy and American tech giants are already crying foul and Ottawa is now on the back foot.
The new regulations, which the Canadian Radio-television and Telecommunications Commission (CRTC) announced on May 21, aim to compel online broadcasters earning more than $25 million annually in Canada to direct 15 percent of their those revenues toward Canadian and indigenous content.
The contribution of traditional broadcasters, meanwhile, is being lowered from between 30 and 45 percent to 25 percent, with the CRTC saying contributions for Canadian and indigenous content will total $2 billion.
The CRTC is carrying out the implementation of the Online Streaming Act (Bill C-11) of 2023, and had slapped a 5 percent levy on large online streamers in 2024. U.S. giants like Netflix, Apple, and Paramount challenged the initial rules in federal court.
It didn’t take long for U.S. companies to push back on the broadcasting regulator’s decision to increase the sums requested from online streamers.
The Motion Picture Association, which represents Netflix, Paramount, Amazon, Disney, and others, is calling the new CRTC financial obligations “unprecedented, unnecessary, and discriminatory.” The group also said it violates Canada’s obligations under the Canada-United States-Mexico Agreement (CUSMA) on free trade, while raising costs for customers and chasing away investments.
U.S. Ambassador Pete Hoekstra also issued a statement saying the CRTC decision is “making a bad situation worse.” Hoekstra said the CRTC is “targeting and taxing U.S. companies, putting up new, discriminatory trade barriers, and worsening the investment climate for American businesses.”
The Online Streaming Act and associated regulations had previously been identified as a trade barrier by the U.S. Trade Representative in annual reports.
Canada making an already identified trade irritant three times larger is unlikely to help untie current knots in trade negotiations between Ottawa and Washington.
Talks with the United States ahead of the July CUSMA review have progressed slowly compared to U.S. discussions with the pact’s other partner, Mexico. Prime Minister Mark Carney recently said he was comfortable with starting robust negotiations or simply waiting longer.
The CRTC decision also comes at a time of increased friction between Canada and the United States.
Washington earlier this week decided to pause its participation in the Permanent Joint Board on Defense, a bilateral forum to discuss defence priorities, saying that Canada is not living up to its defence commitments. Carney downplayed the development and said Canada is rebuilding its military with large investments.
Review
Culture Minister Marc Miller, responsible for overseeing the broadcasting system, said his government is reviewing the CRTC decision.
“As we carefully assess its impacts, it will always be paramount to ensure that Canadians continue to see themselves reflected on screen, hear Canadian voices, and celebrate what makes this country unique,” he said in a May 21 X post.
The Online Streaming Act is a product of the previous Liberal government, and Carney in his first year axed some of its flagship policies. It remains to be seen if there will be appetite for dismantling systems meant to boost Canadian identity and culture after the Liberals were in part propelled to power by anti-American sentiment.
Michael Geist, a law professor and Canada Research Chair in internet and e-commerce, called Miller’s reaction to the CRTC ruling “very muted.”
“The government must know the Online Streaming Act is a mess: trade challenge from the US, opposition from stakeholders, a high-cost market, and increased consumer costs,” he said in a May 22 X post.
In a separate social media comment, Geist said Washington will view the new ruling as a “provocation” and will increase pressure for the Online Streaming Act to be scrapped entirely. He also said he expects new court challenges by U.S. companies.
Peter Menzies, a former CRTC vice chair of telecommunications and current Macdonald-Laurier Institute senior fellow, noted that U.S. “irritation” with Canadian digital rules predate the Trump administration and predicted the new ruling will make things worse.
Menzies told The Epoch Times the Canadian government is likely to ask the CRTC to revise its decision to avoid “inflaming” trade negotiations with the United States.
“Assuming those negotiations conclude, it’s very likely there will either not be an Online Streaming Act or one that is considerably different,” he said.
Menzies said the CRTC decision aiming to boost Canadian content “formalizes the outsourcing of its Canadian cultural funding to the United States and further entrenches Canada’s economic dependence upon it.”
Scott Shortliffe, the CRTC’s vice-president of broadcasting, told reporters on May 21 his organization is only applying Canadian law and did not consider trade negotiations.
“Because we’re an arm’s length quasi-judicial tribunal, we are not in touch with the government about the status of trade negotiations,” he said, adding he believes the affected companies will follow the rules.
“Whether they choose to challenge them through any of the measures that are available in Canadian law is, of course, totally up to them,” Shortliffe said.
U.S. opposition to the Online Streaming Act could be formalized in law if a bill introduced in the House of Representatives in March is adopted.
Rep. Lloyd Smucker is sponsoring the Protecting American Streaming and Innovation Act to launch a trade investigation into the Online Streaming Act and take retaliatory measures against Canada if it is found to discriminate against American businesses. The bill has yet to advance in the review process.
The Canadian Press contributed to this report.