Through consultations with our Advocacy Committee and Board, the question of whether or not digital media should be made part of NAFTA’s cultural exemptions emerged as the key issue.

NAFTA currently includes a cultural exemption which exempts the “cultural industries” (essentially, the music, film, television, books, magazines, newspaper and broadcast industries) from its provisions (i.e. various measures to prevent one country from discriminating against the goods and services of another, such as raising tariffs, restricting foreign investment, limiting public subsidies, etc). This exemption was intended to protect Canadian cultural industries from the United States, and has allowed the Canadian government to enact laws and policies that give preference to Canadian cultural goods and services without running afoul of the agreement.

Both the Minister of Global Affairs and the Minister of Canadian Heritage have publicly affirmed their commitment to maintaining the cultural exemption in a renegotiated NAFTA. However, there is some discussion around the contours of the exception, and whether it should be expanded to include “digital” goods, services and industries that did not exist when the agreement was first negotiated.

There are numerous arguments for and against including digital media in the cultural exemptions. On the one hand, expanding the cultural exception to “digital media” could restrict access to the US market, limit access to US investment, and add new barriers to accessing US talent, any of which could potentially be devastating for the Canadian digital media industries. On the other hand, not exempting the digital media from NAFTA makes the government support programs that have been critical to the industries’ growth vulnerable to challenge.

Given this, Interactive Ontario has argued for a more nuanced, hybrid approach which would allow digital media to preserve access to government support programs while benefiting from all other aspects of NAFTA. Our our letter, we have advocated for a specific inclusion of IDM along with other industries excepted from limits on government subsidies (i.e. the Exceptions from Most-Favoured-Nations Treatment).

Rather than extending the existing cultural exception to digital media, this approach would see digital media exempted from limits on government subsidies while preserving important access to export opportunities.

Read the full submission here.