Mark Carney World Economic Forum 2013 by Author is licensed under Creative Commons Attribution-Share Alike 2.0
The Canadian Radio-Television and Telecommunications Commission (CRTC) has effectively ruled that successful U.S. businesses do not contribute enough by merely offering services Canadians want––they must now support failing Canadian programming that would not survive without subsidies.
On May 21, the CRTC announced a new ruling requiring American entertainment companies to direct even more of their spending in Canada to domestic television networks. The basis for this ruling is Bill C-11, also known as the “Online Streaming Act,” which passed in 2023 under then-Prime Minister Justin Trudeau. The original bill targeted all streaming companies with at least $25 million in Canadian gross revenue (not profit), requiring them to direct 5% of that toward supporting Canadian programs, such as news, movies, and television.
The ruling released last week, however, increased the Canadian Programming Expenditures requirement to a 5% levy plus a 10% expenditure quota. The Commission specifies that 30% of the expenditures go towards “enhanced partnerships” in which a Canadian must own a majority of the copyright. French-language programs and the Canada Media Fund each receive an additional 30% of the expenditure payments. This will make Canada one of the most expensive countries in which to offer streaming services, rivaling even France’s 20% expenditure requirement.
The CRTC would be foolish to assume that any of this exorbitant extra cost will be absorbed by the streaming companies. Rather, this “Netflix tax,” will inevitably get passed onto consumers in both Canada and the U.S., meaning that people will have to pay significantly more just to enjoy their favorite movies and TV shows.
Bill C-11 has already drawn criticism from the Motion Picture Association (MPA) Canada, which represents hugely successful American firms including Disney, Universal, Netflix, Paramount, Amazon, Sony, and Warner Brothers. In a statement following the decision, the MPA slammed the bill as “unprecedented, unnecessary, and discriminatory” obligations on U.S. streaming companies. To these companies, the ruling is a message that Canada is not friendly to their business and that they should invest elsewhere.
The U.S. House of Representatives’ Ways and Means Committee has seen continuing bipartisan opposition to C-11’s effective barriers to digital trade and unfair targeting of U.S. businesses. On the Committee is Rep. Lloyd Smucker of Pennsylvania, who introduced legislation in March to launch investigations into Canada’s harmful digital trade practices. The U.S. Ambassador to Canada, Pete Hoekstra, noted how the ruling comes at an especially bad time given the upcoming review of the U.S.-Canada-Mexico Trade Agreement in which the U.S. has already identified the Online Streaming Act as a point of contention.
On a similar note, Canada’s Conservative opposition leader, Pierre Poilievre, pointed out damage of any potential U.S. retaliation to the ruling given the anger it incited in U.S. officials. Apparently, the Canadian government did not learn its lesson from last year, when Liberal Prime Minister Mark Carney rescinded the idea of a Digital Services Tax, another discriminatory measure targeting American companies, after warnings from President Trump. If the U.S. decides to increase tariffs in response to C-11, Canada will be hit with more than pricier streaming services.
The CRTC’s decision to target American streaming platforms is not only unfair but will hurt consumers by raising streaming prices. The U.S. must take decisive and immediate action to deter the Commission’s encroachment.
