Canadian publishers wary of trade pact

Folio: The Magazine for Magazine Management, April 1, 1992 by Cathleen Cole

The North American Free Trade Agreement talks involving the United States, Canada and Mexico could reach an agreement by early next year - and Canadian magazine publishers are nervous about it.

The agreement would remove tariffs and other trade barriers between the countries to create an open market of 360 million consumers. Sounds like a healthy economic plan, right? Not to the Canadian magazine industry. They fear that wiping the tariff slate clean may wipe out their industry. Specifically, they are concerned about erosion of the 1976 Canadian law, Bill C-58, protecting the indigenous media industry.

The bill changed the Canadian tax law to deny Canadian companies that advertise in American magazines the deduction they would have received had they placed that ad in a Canadian magazine. It also defined what constitutes a Canadian magazine: It must be 75 percent Canadian-owned; the chairman and 75 percent of the board of directors must be Canadian citizens; and the contents must be edited, set in type and printed in Canada. Further, it may not be published under license, and the content must be substantially different from a non-Canadian periodical.

The only relaxation of C-58 came as a result of the 1988 Canada-U.S. Free Trade Agreement, which removed the requirement for Canadian typesetting and printing.

'Profoundly negative effects'

Last September, the Toronto-based Canadian Magazine Publishers Association (CMPA) published a report on the proposed agreement, stating, in part, that, "It is the position of the Canadian Magazine Publishers Association that the bill has been pared to the minimum requirements of continued effectiveness. Further erosion of the definition of Canadian magazines, or the abolition of C-58 entirely, would have profoundly negative effects on the Canadian magazine industry."

According to the CMPA's report, "The Canadian magazine industry remains in a developmental stage; publishers have not reached the maturity and powerful financial position of their American counterparts. The dismantling of these protections would result in handling American publications an enormous advantage over Canadian magazines."

But Rose Marie Zummo-Bratland, a magazine-industry analyst for the U.S. Department of Commerce, says that the 16 years since Bill C-58 was passed "should certainly be adequate time to come up to par to compete. If they are still in a developmental stage, there's something wrong."

To the Canadians, the issue is not just economics. Their cultural identity is at stake. The CMPA report states that "Without a healthy press through which to communicate that seemingly amorphous |Canadianness,' we would ultimately cease to be Canadian."

Michael Pashby, senior vice president of circulation marketing for Magazine Publishers of America, agrees that to the Canadians, this is a matter of culture. But he says he believes Canadians should stick with one issue - either argue from an economic standpoint or from a cultural standpoint. If Canadian firms like Telemedia Communications (USA), which is owned by Toronto-based Telemedia Publishing and publishes Harrowsmith Country Life and Eating Well, can operate freely here, then Bill C-58 is "one-way protectionism," he says.

But Catherine Keachie, executive director of the CMPA, responds that, "Our trade deficit goes entirely the other way. How much penetration does the U.S. want? Our newsstands are almost entirely dominated by American magazines."

Keachie sums up the Canadian view in support of maintaining C-58: "There are various difficulties having a live magazine industry when we live next door to the largest producer of beautiful, glossy, intelligent magazines in English in the world."