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Trudeau says no NAFTA without cultural exemption — is it really that important?

‘No NAFTA is better than a bad NAFTA deal’: Prime Minister Justin Trudeau
WATCH: 'No NAFTA is better than a bad NAFTA deal,' Trudeau says

As North American Free Trade Agreement (NAFTA) talks between Canada and the U.S. move forward, Prime Minister Justin Trudeau is insisting that he will drop the deal if it doesn’t include a cultural exemption clause.

Trudeau said Tuesday that waiving the exemption for cultural industries would be tantamount to giving up Canadian sovereignty and identity. The exemption applies to publishing, broadcast and media industries, prohibiting them from being bought by American companies.

Here’s a closer look at what exactly it means, and why it’s such a sticking point for the Trudeau government.

What is the cultural exemption clause?

The cultural exemption clause excludes cultural institutions from being treated like other products and services, and is currently part of the existing NAFTA.

WATCH: Canada and the U.S. are still negotiating and trying to reach a NAFTA deal. But our country’s top negotiator, Foreign Affairs Minister Chrystia Freeland, may not have been helped by Prime Minister Justin Trudeau’s newest comments. Mercedes Stephenson reports from Washington.

Trudeau talks Trans Mountain with Alberta’s Notley
Trudeau talks Trans Mountain with Alberta’s Notley

It was also entrenched in the original Canada-U.S. free trade deal that preceded NAFTA.

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“Canadians are very sensitive about their cultural institutions because of the shadow of the United States,” University of Toronto politics professor Nelson Wiseman told Global News.

“Americans are prohibited from buying Canadian newspapers and magazines, radio stations, and television stations. Canadians can buy all of those in the United States.”

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Freeland says NAFTA talks atmosphere is constructive, both parties continue to work hard
Freeland says NAFTA talks atmosphere is constructive, both parties continue to work hard

What’s the threat?

Sources familiar with the Canadian bargaining position told The Canadian Press that the cultural exemption Canada has insisted on preserving since NAFTA talks reopened 13 months ago remains an 11th-hour sticking point.

“The idea of preserving it remains an unresolved issue between the two,” said one source, who requested anonymity.

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U.S. trade czar Robert Lighthizer has laid out his concerns about the exemption in the past, saying it is a barrier to trade.

READ MORE: Chrystia Freeland back in Washington for NAFTA talks with deadline looming

The U.S. trade official earlier this year said: “There’s a legitimate case for some cultural exceptions. But it’s not for this kind of thing. … The cultural exemption is very often just cultural protectionism.”

Walid Hejazi, an associate professor at the University of Toronto’s Rotman School of Management, explained the issue is more complicated than it seems, and that’s because Canadian telecoms own broadcasters.

And among U.S. demands for a renewed NAFTA was more access to the Canadian telecom market.

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Should Trudeau get directly involved in NAFTA negotiations?
Should Trudeau get directly involved in NAFTA negotiations?

“Who is controlling the broadcasters? They are all owned by the telecoms. So, this is really protection in the Canadian economy — not really about culture — but more about protection of the telecom and communication industry,” Hejazi said.

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“If you have a Canadian company or an American company broadcasting in Canada, it shouldn’t matter to us, because the same rules apply to them both.”

Wisemen added, though, that the importance of protecting culture can’t be minimized, because there’s no guarantee American companies in Canada could employ as many Canadians, or produce completely Canadian content.

READ MORE: U.S., Canada could reach NAFTA deal by Friday, Mexican economy minister says

Why it’s an important political move

Trudeau has tied cultural exemptions to protecting bilingualism in Canada, and similar sentiments have been echoed by Quebec Premier Philippe Couillard.

“It is inconceivable to Canadians that an American network might buy Canadian media affiliates, whether it’s newspapers or TV stations or TV networks,” Trudeau said Tuesday while in Vancouver.

“So we’ve made it very clear that defending that cultural exemption is something that is fundamental to Canadians.”

Hejazi says that’s largely a political move.

WATCH: Freeland says Canada and U.S. working hard to find ‘win-win compromises’ in NAFTA talks

Freeland says Canada and U.S. working hard to find ‘win-win compromises’ in NAFTA talks
Freeland says Canada and U.S. working hard to find ‘win-win compromises’ in NAFTA talks

“It’s about protecting Canadian broadcasters and telecom companies from foreign competition or acquisition,” he said. “By positioning it as defending Canadian culture, it’s more palatable.”

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The real sticking points with NAFTA talks remain agreeing on a dispute resolution mechanism and supply management, Hejazi said.