Proceedings of the Standing Senate Committee on
Transport and
Communications
Issue 32 - Evidence
OTTAWA, Monday, May 31, 1999
The Standing Senate Committee on Transport and Communications, to which was referred Bill C-55, respecting advertising services supplied by foreign periodical publishers, met this day at 4:10 p.m. to give consideration to the bill.
Senator Marie-P. Poulin (Chairman) in the Chair.
[English]
The Chairman: Colleagues, we have held approximately a dozen meetings of the Standing Senate Committee on Transport and Communications to hear stakeholders and witnesses talk about Bill C-55, respecting advertising services supplied by foreign periodical publishers.
Today, we once again have the honour to receive our Minister of Heritage, Ms Copps, who will speak to us before we proceed to our clause-by-clause consideration of the bill.
I know Minister Copps has a lot to tell us.
Honourable Sheila Copps, Minister of Canadian Heritage: Honourable senators, thank you for this opportunity to appear before you again. I hope I do not abuse your hospitality.
[Translation]
I also appreciate the way you proceeded with your consideration of Bill C-55 during the difficult and productive negotiations.
To have a good understanding of what we have achieved in this periodical issue, you must be aware of what we started with. In 1960, Mr. O'Leary was chairing the commission that established the foundations of the federal policy on periodicals. So, indeed, the issue is not only three years old.
[English]
Mr. O'Leary was Canada's most eminent newspaper editor at the time. He was an editor when newspaper editors were proud to stand up for Canadian culture and not afraid to take an editorial line that was different from that of their corporate owners, something that I am sorry to say is not the case today. Mr. O'Leary became a distinguished Conservative senator who understood, as do the senators on this committee, that you can be a Conservative and a passionate defender of Canadian culture at the same time. It is unfortunate that this lesson has been lost on some of today's editorialists.
In 1965, Canada moved to stop the importation of split-run magazines. In short, the governments of Prime Ministers Diefenbaker, Pearson, Trudeau, Clark, Turner, Mulroney, Campbell, and Chrétien all followed the same magazine policy.
Three years ago, the United States challenged our policy before the World Trade Organization. Canada lost that decision, and we were left with three choices: We could ignore the WTO decision; we could accept the WTO decision and do nothing; or third, we could accept the WTO decision and become as creative as possible in seeking new avenues to protect our magazine industry, to promote Canadian stories, and to advance Canadian culture.
We chose the third course -- the only sensible course. To comply with the WTO, we removed a customs tariff item, ended the excise tax, restructured the postal program, and harmonized commercial postal rates. We also introduced magazine legislation known as Bill C-55.
From day one, the United States fought this bill tooth and nail. They wanted to have 100 per cent access to Canadian advertising in all American magazines on the Canadian market. They wanted 100 per cent access to all the income tax exemptions currently available to Canadian magazines. They demanded that Canada pass no law whatsoever and threatened $3 billion in retaliation.
Yes, it has been a long and difficult struggle. Undoubtedly, it will always be a long and difficult struggle in culture and trade negotiations with the United States.
The United States wanted 100 per cent of the pie. They are getting 12 per cent in the first year, 15 per cent in the second year, and 18 per cent in the third year, as per the amendments that I have tabled with you. If they go beyond that, they must establish a magazine in Canada and introduce majority Canadian content, thus making a substantial commitment to Canadian culture.
The Senate is being asked to consider these changes to the magazine bill, and it is my hope that you will report these changes favourably back to the House of Commons.
I should like to mention two other parts of this week's package. First, from now on, all foreign investments in all areas of Canada's cultural field will be approved through the Department of Canadian Heritage. I believe this is an important recognizition of what Senator Gratton O'Leary understood: Culture is not an industry like any other industry.
The second point deals with the establishment of a potential Canadian magazine fund to assist the Canadian magazine industry. At the direction of the Prime Minister, I am working with Canadian magazine publishers to devise support which will help to alleviate the pressure of allowing a small percentage of foreign magazines to have access to Canadian advertising dollars. There have been discussions around what form that approach might take, but no decision has been made. The truth is that we are still working in collaboration with the industry on the most effective program to support Canadian content.
[Translation]
Every time I appeared in front of the Senate committee and in each of my speeches on the issue, I have stated that Canada wants to encourage competition and not domination. Canada wants to ensure there is shelf space for Canadian stories in our newsstands. I have also said that the government was open to any solution that could help us reach our mutual goals. We have found a compromise solution and we will reach our goals.
I want to underline the fact that, for the first time, the United States recognize the right of a country to require a majority original or cultural content in its trade negotiations. It is also the first time they accept that we limit access to publicity revenues by their magazine industry.
[English]
As former Conservative cabinet minister Ron Atkey said:
This is a significant achievement.... The US has never agreed in any cultural field to any new content requirements.... It sets a precedent.
To quote the Washington Post:
For the first time, the United States was forced to accept the principle that, even in a free trade environment, foreign countries could take steps to limit access to their markets by American firms in an effort to protect the viability of local culture -- in this case a Canadian magazine industry could provide an outlet for Canadian writers to tell Canadian stories and deal with Canadian themes.
I am glad to see that the Washington Post understands.
This magazine deal is not nirvana; it does not provide Paradise on Earth. However, it is the first piece of legislation which will recognize, in a bilateral trading agreement with the United States, the right of a country to treat culture differently from other areas of trade. We believe this is an important step forward.
[Translation]
It has resulted in a reinforcement of a number of crucial principles linked to the Canadian content. It has also provided Canada with the necessary tools to protect and develop its periodical industry. This seemed almost impossible when the World Trade Organization made its determination two years ago. So, it is quite a significant achievement for Canada. We have gained legislations and regulations as well as support from various sources that agree with the policy objectives established 39 years ago.
[English]
With that, senators, I am open to your remarks and questions, some of which, I am sure, will be very lively.
The Chairman: I think you have guessed right. This bill has generated a great deal of public debate, and given this committee an opportunity to listen to different stakeholders. We thank you for your presentation.
Senator Lynch-Staunton: Madam Chairman, does the committee have copies of the amendments tabled by the minister?
The Chairman: Yes. The clerk will distribute the amendments.
Senator Lynch-Staunton: Surely that is the subject-matter that we are gathered here to discuss.
Minister, I will stick to the subject matter before us, and on what it is based, which I gather is an agreement between the United States and Canada. Has that agreement been signed? Is there a signed agreement as such, where the two parties agree on the interpretation and acceptance of the amendments to Bill C-55 and the pledge of the United States not to challenge Bill C-55, as amended, under WTO, NAFTA, and some American legislation? Do we have a document?
Ms Copps: Yes.
Senator Lynch-Staunton: Can you table that document with us?
Ms Copps: That document will be available when it is signed. It has not been signed yet. The document makes specific provisions for the regulatory acceptance of Bill C-55, as amended.
Senator Lynch-Staunton: Who will be signing the document?
Ms Copps: It will be signed by officials of the Canadian and U.S. governments, hopefully in the next few days.
Senator Lynch-Staunton: What force of law does this agreement have? What kind of agreement is this?
Ms Copps: It is a treaty.
Senator Lynch-Staunton: Treaties are usually signed by heads of government, are they not, or any official they care to designate?
Ms Copps: I suspect that the details of the signing will be undergone this week.
Senator Forrestall: A treaty? What do we have this for?
Ms Copps: Given that the legislation is moving forward through the Senate and the House of Commons, the agreement which was reached between Canada and the United States will be subject to the same provisions of any other treaty.
Senator Lynch-Staunton: Usually treaties are signed first and the enabling legislation follows.
Ms Copps: This is a unique process.
Senator Lynch-Staunton: I gather you are asking us to accept enabling legislation before we see the treaty.
Ms Copps: I am asking you to accept the amendments to Bill C-55.
Senator Lynch-Staunton: Will you guide us through the amendments?
Ms Copps: There are three amendments.
Senator Lynch-Staunton: As you are the sponsor, surely you can explain them to us and tell us what the impact of them will be on Bill C-55.
Ms Copps: I am not the sponsor in the Senate.
Senator Lynch-Staunton: However, you told us you tabled the amendments.
Ms Copps: Yes, I have just given you the amendments and I will be happy to walk you through them, however, I am not the sponsor of the amendments in the Senate.
Senator Lynch-Staunton: We will not quibble about who is the sponsor and who is not. You are the person who proposed them and you are the supporter of these amendments. Can you guide us through them and help us understand how they affect Bill C-55?
The Chairman: Madam Minister, without going to clause by clause, could you provide an explanation on the amendments, as Senator Lynch-Staunton is suggesting?
Senator Lynch-Staunton: I am not asking for clause by clause, I am asking for an explanation of the meaning of the amendments.
Ms Copps: There are three basic amendments; one is on the de minimis exemption, and that means U.S. companies will be permitted to come into Canada after a one-year period at a level of 12 per cent, 15 per cent and, subsequently, at a level of 18 per cent advertising of their total publications with no limitations.
The second amendment deals with the fact that they will be permitted to access, under the Investment Canada Act, minority ownership in Canadian magazines.
The third is that, for an American company to come into Canada and establish a magazine, it must be majority Canadian content.
In a nutshell, those are the three amendments.
Senator Lynch-Staunton: Where is the amendment about the majority Canadian content?
Ms Copps: It comes under "definitions," clause 2.
Senator Lynch-Staunton: No, we are talking about the amendments here.
Ms Copps: Yes. Clause 2 is to be amended by:
(a) replacing line 28 on page 1 with the following:
"ing in value more than half of the total value"
(b) replacing lines 2 and 3 on page 2 with the following:
"(f) a non-profit corporation in which more than half of its members..."
That deals with the issue of majority.
(c) replacing line 25 on page 2 with the following:
"officer and more than half of whose direc..."
(d) replacing line 33 replaced on page 2 with the following:
"indirectly, in the aggregate more than half"
Senator Lynch-Staunton: That is the definition of Canadian ownership.
Ms Copps: Canadian ownership under the investment clause. I told you that there were three basic elements to the amendments. One deals with the issue of Canadian ownership under the Investment Canada Act.
Senator Lynch-Staunton: That is the first amendment I have before me, which reduces the minimum Canadian content from 75 per cent ownership to more than 50 per cent.
Ms Copps: To a majority, right.
Senator Lynch-Staunton: To more than 50 per cent. That is a substantial change to what you originally proposed.
Ms Copps: Yes.
Senator Lynch-Staunton: The second one amends the regulations, I believe, which you allow yourself. It is a minor change in wording, except you add a paragraph (d). Is that correct?
Ms Copps: Right.
Senator Lynch-Staunton: That gives the minister, or the Governor in Council, the right to define the expressions, "revenues generated by the supply of advertising services..." Is that another substantial change to the original proposal?
Ms Copps: Yes.
Senator Lynch-Staunton: The third amendment would add two clauses, I understand, 21.1 and 21.2. You mentioned the proposed clause 21.1 which would be the phasing in of the 12 per cent, 15 per cent and 18 per cent over a three-year period. Clause 21.2 would deal with the Investment Canada Act. Can you be more explicit on the impact of that amendment?
Ms Copps: Instead of an American company being allowed to set up and establish a magazine in Canada with no Canadian content, if they want to establish a magazine in Canada, it must have majority Canadian content.
Senator Lynch-Staunton: Who will decide what is Canadian content? How is that defined?
Ms Copps: It is defined under section 19 the Income Tax Act and has been for many years.
Senator Lynch-Staunton: As I understand it from a number of witnesses who appeared before us, Canadian content, as defined by the Income Tax Act, does not necessarily need to be Canadian by itself. It must be originally created and shown in a Canadian publication, except an article written by a foreigner with pictures illustrated by another foreigner on a foreign topic. As long as it is original in Canada then it qualifies as Canadian content.
Ms Copps: Original and not published anywhere else ever.
Senator Lynch-Staunton: That is right.
Ms Copps: Yes.
Senator Lynch-Staunton: Therefore, "content" is the important word, not so much "Canadian." The subject-matter need not be Canadian. The content, under the act, may be defined as Canadian but the subject-matter need not be Canadian.
Ms Copps: The definition has worked rather well for the purposes of the Income Tax Act.
Senator Lynch-Staunton: Yes, but not necessarily to achieve your goal, which I share, of having Canadian stories told by Canadians for Canadians.
Ms Copps: Realistically, senator, if you have an original content exclusive to the Canadian market, and only available to that edition, it is unlikely that it will be a derivative of some other origin.
Senator Lynch-Staunton: When can we have, and why do we not have today, the cost of all this? You did tell us that you have been directed by the Prime Minister to define some form of financial relief to Canadian publishers who, by that mandate, the government admits will be penalized by these amendments. Can you give us an indication about how much money is involved here? How much money is the government willing to commit to make up for the loss of revenues which these amendments will generate?
Ms Copps: First of all, it is not the amendments that will generate the loss. The loss was originally generated when the WTO ruled that the legislation that we had in place did not comply with international trade obligations.
The proposed legislation before us now, Bill C-55 as amended, is an attempt to fill a vacuum where, at the moment, there is absolutely no protection. I am asking you to consider Bill C-55, as amended, precisely because, as a package, it will be a good sight better than what we have now, which is absolutely nothing.
I am not asking you to comment on any kind of financial assistance which may be decided by the cabinet at a later date because that is not part of the bill that is before you.
Senator Lynch-Staunton: No, it is not, unfortunately, part of the proposed legislation that is before us, however, it is a component we cannot ignore. We have read in the newspapers that that could be up to $100 million per year. Surely you can reassure us that that figure is outlandish.
On the one hand, the Canadian publishers, minister, were strongly supportive of Bill C-55. Now, we read that they are most distressed by this and are willing to accept some form of subsidies, which is not exactly the way one should reassure the Canadian industry that they can stay alive. The Canadian advertisers, on the other hand, who told us they would challenge Bill C-55 before the courts, are now elated. We have two completely different approaches to the same subject matter.
It will cost Canadian taxpayers a great deal of money. Can you estimate how much money it will cost us, year by year, to subsidize the Canadian industry to protect it from foreign competition which, at the moment, is now allowed?
Ms Copps: You are assuming that the assistance will take the form of a subsidy.
Senator Lynch-Staunton: "Subsidy," "tax relief" or "tax credit," call it what you want. It will cost money.
Ms Copps: We are working with the industry. At a future date, the industry will be making a presentation to cabinet.
Senator Lynch-Staunton: Do you not have to introduce legislation to deal with any proposal?
Ms Copps: That is not a subject of Bill C-55.
Senator Lynch-Staunton: Yes, it is. It is essential to Bill C-55. If we pass Bill C-55 with your amendments, it will mean that we are giving the government the ability to spend an unknown amount of money on the subsidization of the Canadian industry. The least Parliament deserves to know is the cost of that subsidy, tax relief or tax credit.
Ms Copps: Madam Chair, at present, I can only speak to the amendments before the Senate. The amendments before the Senate deal with the undertakings that we made in an international treaty.
The follow-through to that, which will assist the Canadian magazine industry in meeting the new realities, which will be challenging, will be the subject of a future cabinet decision.
The Chairman: Your comment, Madam Minister, is accepted because the compensation package is not within the scope of this bill.
Senator Lynch-Staunton: No, however, if you will allow me, Madam Chairman, in her presentation, the minister did mention a magazine fund. She is the one who raised the topic.
Ms Copps: I was prescient, senator. I probably expected you to bring it up.
Senator Lynch-Staunton: Then I am allowed to raise it in reply to your presentation on the topic. I would like to know the cost. What does a magazine fund entail?
Ms Copps: As I explained, senator, that at the moment we are working in a collaborative way with the industry.
A number of potential solutions are on the table. We have not come to a conclusion. It would be remiss of me to bring to you a package that has not been agreed to by either industry or cabinet.
Senator Lynch-Staunton: May I suggest that you should not have brought these amendments forward either. I do not know why you wish to rush this bill through. In effect, this is a brand new bill. You have agreed that the amendments change the intent of the bill substantially.
Ms Copps: We wish to have this legislation in place because, since last year, since the striking down of the original excise measures by the WTO, the Canadian industry has no protection whatsoever. If the legislation is not passed, then there will be unfettered access.
If you believe, as I do, that we should have some limitations on access, I would hope that you would support the legislation.
Senator Lynch-Staunton: I would support the legislation, but I cannot because of the way you are presenting it. I have no idea what the dollar cost will be.
Your answer, as you said in House, is that there is no cost to Canadian culture. I think there is. You should have a complete package before us. You are presenting this to us in a piecemeal fashion. Unfortunately, you are making a good bill -- which could have been made better -- worse with these amendments.
Senator Forrestall: I appreciate the difficulty in which you find yourself with respect to whether or not this is a bill that might require a preamble, because it does involve money. We will let that stand for the moment.
When it is agreed upon, who will be the principal recipient of the subsidy? Will it be the advertiser, the publisher?
Ms Copps: Senator, at the moment, no package is under consideration, precisely because we need to do more collaborative work with the industry. Frankly, it may not take the form of a subsidy. It may be another instrument, such as those used in other areas of culture. For example, we run the gamut from direct assistance through mechanisms like the Canada Council, to a credit system for television production. We could use many different instruments.
Senator Spivak: Minister, I am puzzled that the magazine industry stands naked before an assault by the Americans, because I was always under the impression that we had a cultural exemption clause. Gordon Ritchie assured us that the retaliation by the Americans could only proceed illegally.
The criticism of this deal is that it does not take into account the higher numbers of ad pages and greater frequency of U.S. magazines in setting the new 18 per cent advertising limits for Canadian editions of U.S. periodicals.
For example, it has been said that 13 U.S. women's service magazines sell a total of 19,000 pages of ads, 18 per cent of which will now be open for purchase by Canadian advertisers in Canadian editions which would be 3,400 pages. Canada's major seven women's publications sell 4,800. Therefore, Americans can sell 3,400 pages in a market of 4,800, which is 63 per cent, not 18 per cent. That is a body blow to them. How do you answer that criticism?
Ms Copps: First, you must look at circulation issues of, say, Time magazine relative to Maclean's magazine. Time magazine, on average, might have 12 full ad pages per issue. Therefore, under the exemption, with 12 pages of ads under the legislation they will be able to bring in 12 per cent of 12 pages in the first year; 15 per cent of 12 pages in the second year; and 18 per cent of 12 pages in the third year. If you use the figure of 18 per cent of 12 pages, obviously, at that point, you are under 3 pages for Time, and you must assess that against the readership of Maclean's and whether your advertising will be more targeted. I am using the Time U.S. edition as an example.
Let us look at a consumer magazine. If, for example, someone decided to advertise in Vogue, they would have to be able to make up the subscription numbers in a fairly broadly-based market in Canada, because your catchment group is spread over six time zones with six different distribution issues, and you also have an English language catchment of 22 million to 23 million. That does not compare favourably for the establishment of that kind of a magazine uniquely in Canada. The question you must ask yourself is: How many publishers will take advantage of that? In the next year we will be able to make a better assessment of how many will actually be in the market.
The day after we came to an agreement on Bill C-55, a number of U.S. magazine publishers were quoted as saying they were going to do a study to see if, in the future, they might decide to come.
We will be watching the issue very closely in the short and the long term. However, I do not think anybody can stand up today and say that, as a result of this agreement, we will lose a certain amount of revenue.
We recognize that there will be some losses. That is why we are talking about adjustment. However, I cannot tell you today, as a result of this agreement, that we will lose X number of pages of X magazines. It depends on a broad number of market factors.
Senator Spivak: However, if they choose to exercise that 18 per cent, it translates into 63 per cent of this small market; is that accurate or not?
Ms Copps: It is hypothetical at this point and highly unrealistic. I do not think you would see those 18 women's magazines setting up shop in Canada, because they would be chasing a small amount of ad revenue. As you said, depending on the figures, we are talking about $100 million to $200 million. Is it worth it for 18 major U.S. women's magazines to set up shop in Canada in order to chase that revenue?
Senator Spivak: Obviously the United States has learned how to get their way. With all due respect, minister, I do not think it is a victory for Canada to say that the U.S. has recognized that it should have a small amount of shelf space for its own magazines. Nevertheless, they have learned to threaten, to bully and to divide economic sectors. They have had their way.
I want to ask you about foreign ownership. What can we expect to be the response of the Canadian government -- and this slippery slope argument was raised during our hearings -- if the Americans ask for access to purchase absolute ownership or majority control of existing TV stations, telecommunication organizations and magazines? How does setting a precedent by this agreement affect the ownership question?
Ms Copps: Take a look at broadcasting. The U.S. ownership limitations on foreign purchase are more than double what they are in Canada, so they would be hard pressed to make that argument.
Senator Spivak: That does not prevent them. They will take whatever they can get. What have we established as a precedent in giving them a larger degree of foreign ownership?
Ms Copps: The fact that the ownership limitations are similar to what we have in broadcasting is a recognition that partnered capital will make it more attractive for Canadian magazines to build their own markets. The minority ownership requirement, which is consistent with what we do in broadcasting, was broadly supported by the magazine industry.
Senator Spivak: I should like to move back to the issue of legality. Gordon Ritchie told us about retaliation, and I assume that the threat of retaliation made us amend this bill. If there had been no threat of retaliation, there would have been no problem with Bill C-55. He told us that, first, the Americans could not retaliate legally without going back to the WTO, and, second, the retaliation would be no where near billions of dollars, that it would be equal to the size of the magazine market. Even though that is water under the bridge, for future reference and my own clarification, what is your comment on that issue? With respect to the proposed retaliation, was it legal or illegal? In my mind, if it were illegal, we would not have to give them anything. They would just bulldoze us and do whatever they want anyway. The size of that retaliation is a question I would like to have settled.
Ms Copps: I think that Mr. Ritchie was dead right. As well, I am not sure that I agree with the suggestion that Bill C-55, unamended, was the best possible solution. One of the things we discussed at the time we went through this process was the prospect of passing Bill C-55, unamended. This committee spent a fair bit of time looking at the legal ramifications. I advised you that we had good legal advice that we were on solid ground. However, any time you take a piece of legislation before an international body, you cannot be assured of the outcome. If you can have an agreement that there will not be a pursuit in an international body, that is something worth going for.
From the beginning of this process I said that, if the Americans put something on the table specifically related to a recognition of the uniqueness of culture and content, we would look for an agreement. The fact that we have an agreement gives us the certainty of knowing that we will not, in the future, be dragged before international tribunals.
With respect to a cultural exemption in the original NAFTA, the definitions of what constituted damage were not clear. We were entering uncharted waters. We may have been able to navigate them, but I think certainty is better.
Senator Spivak: That is a very interesting point. You are saying that the agreement, when it is signed, will mean that they cannot go to a tribunal again. Suppose this does not work out the way you think it will. Suppose there is heavy damage to certain segments, such as trade magazines, for example, and you wish to bring forward further amendments or other legislation. Does this treaty mean that the Americans cannot come back and threaten us?
Ms Copps: The treaty deals with what is in Bill C-55, and the treaty states that the Americans will not take us either to the NAFTA, the WTO or take action under section 301.
Senator Spivak: On these provisions, but in the future they could. Is that the story?
Ms Copps: The agreement deals with the provisions that we are recommending in Bill C-55, period. It would be very difficult to get an ironclad agreement of no action with respect to future legislation.
Senator Spivak: I thought that is what we had with the cultural exemption. I guess I was being naive.
Ms Copps: I have spent a lot of time on this issue precisely because there was no cultural exemption in the WTO.
You spoke earlier about having no clothes. We were left with no defences after the WTO decision, and a number of people said "Do nothing and let the marketplace decide." At that point we decided to pursue a unique and different approach and that is what this is. The approach we have taken in the Senate is a unique one. As one who believes that the Senate plays a valuable role, you have helped to make history in the recognition of the importance of Canadian content.
I do not want to overstate the legislation, but I do know that never before in history has the American government agreed that a foreign law that permits discrimination on the basis of content is unappealable to their tribunals, domestically and internationally. It happened because the Prime Minister felt strongly enough that he took this issue all the way to the President of the United States.
Senator Lynch-Staunton: Again, the word "treaty" comes up. Under the Constitution of the United States, a treaty must be approved by the U.S. Senate. Have you any idea whether arrangements have been made for this treaty to be approved by the U.S. Senate? "Treaty" is a strong word.
Ms Copps: I am not responsible for the Senate of Canada or for the Senate of the United States. Perhaps my legal advisor can tell you the process for signing these agreements.
Mr. Jeff Richstone, Legal Counsel, Heritage Canada: Honourable senators, I will be speaking on the U.S. Constitution. I speak "sous toute réserve de doit" in the sense that I am not an expert in U.S. constitutional law. I understand that certain powers are assigned to the U.S. trade representative under the Trade Act of the United States. There would be an exchange of letters. The ambassador or the U.S. trade representative would act under delegated authority to sign the exchange of letters on the U.S. side.
You would not have the Senate requirement on treaties, as you mentioned, Senator Lynch-Staunton.
Senator Lynch-Staunton: It is not a treaty, then?
Mr. Richstone: "Treaty" is not a rigid word in international law.
Senator Lynch-Staunton: It is in the U.S. Constitution.
Mr. Richstone: We are embarking on a debate on the U.S. Constitution.
Senator Lynch-Staunton: We are not.
Mr. Richstone: There are delegated powers, as I understand U.S. legislation, to allow ambassadors or a U.S. trade representative to sign an exchange of letters. Whether that exchange of letters is a treaty for the purpose of U.S. constitutional law is one question. It is certainly a treaty in terms of the trade legislation and in terms of the exchange of letters going on between our two countries.
Senator Lynch-Staunton: I will not quibble with you, because I did before and we did not get very far. However, I did receive a letter clarifying whether violating the bill would be considered a crime or not.
You are saying that the agreement itself would not need approval by the United States Congress. Let us not play with words. This is an agreement signed by ambassadors or representatives of each government that would not need the ratification of the United States Congress. Is that correct?
Mr. Richstone: This is what I understand from the U.S. side, yes.
Senator Lynch-Staunton: They do not need a Bill C-55, like we do.
Mr. Richstone: They do not have to pass legislation, like we do. Theirs is just an exchange of letters, and the exchange of letters binds the two governments.
Senator Lynch-Staunton: So it is not a treaty.
Mr. Richstone: It is a treaty because it is a binding international limit.
Senator Lynch-Staunton: I would suggest that you look at the definition of "treaty" in your legal texts.
Senator Kinsella: Will this agreement be subject to the Vienna Convention on Treaties?
Mr. Richstone: I understand that it would be subject to the Vienna Convention on Treaties because it is a binding international instrument. It is signed with the authority of an executive order. Yes.
Senator Forrestall: Is it dated? Does it have a beginning and an end? There is a possibility that Canadian tax dollars will go to pay U.S. corporations. Does this agreement, in whatever form it is -- written in concrete, scribbled on wood, described on paper, or in someone's mind -- have a beginning and a defined-by-date end? I do not think we can use the term: "sunset clause." That is strictly a Canadian phrase. Does it have a beginning and an end?
Ms Copps: There will not be any moneys given to American companies under this bill.
Senator Lynch-Staunton: How do you know? You have not signed it yet.
Senator Forrestall: Does the treaty have a beginning and an end?
Ms Copps: All you have before you, Madam Chairman, is Bill C-55. As I stated in my opening remarks and in continuing questions, if a discussion goes on amongst the magazine industry and the cabinet, that package will be announced. You must decide whether you want to support an amended Bill C-55 in its current form, irrespective of any other measures. You are not being asked now to vote on other measures that may come forward as a result of a cabinet decision. You are being asked to vote on Bill C-55 as amended.
Senator Forrestall: You did not answer my question as to whether it has a beginning or an end.
Ms Copps: It has a beginning, and it remains in force until or unless terminated. There is a standard termination clause, as there is in every agreement.
Senator Lynch-Staunton: Where is it? When is it?
Senator Forrestall: The Treaty of Utrecht did not have one.
Senator Lynch-Staunton: This is not a treaty.
Senator Fitzpatrick: It has been obvious that the Canadian government's objective is to promote and develop cultural industries. Minister, is it your view that, as a result of these discussions on this bill, the U.S. has now recognized that this is not only an objective and a principle of the Canadian government but that it is not inconsistent with free trade, now that we have arrived at this treaty and are proceeding with this bill?
Ms Copps: Yes, that is my belief, and that is why I think the recognition by the United States government of a legitimate exemption for Canadian content is an historic recognition.
Senator Kinsella: Mr. Minister, it was my position that you were on the right track with Bill C-55, and I congratulate you for the work that you did on this difficult subject matter.
One of the issues that concerned me was whether Bill C-55, as presently drafted, would be consistent with our Charter obligations, particularly as they refer to freedom of expression. Those views were canvassed at our last meeting. On balance, I have come down on the side that the bill, as drafted, would be consistent with the Charter guarantees.
However, when I now read the bill with these amendments, I have some concerns, and I will mention two of them.
Would you help us understand the intent of the amendment to clauses 20 and 21 of the bill?
The amendment to clause 21 is effectively the essence of the bill as amended, it seems to me, particularly where it says that the new relationship will be determined in terms of the revenues that are generated by the supply of advertising services directed at the Canadian market. The mechanism to determine the percentage will be established by the amendment to clause 20. Am I right so far?
Ms Copps: Yes.
Senator Kinsella:We find clause 20 on page 10 of the bill, and clause 21 is on page 11.
Previously, when we were considering Bill C-55, particularly the issue of the right of a Canadian to freedom of expression, the constitutional experts told us that, on balance, the limitation on that right provided for by section 1 of the Charter would meet muster, and therefore, the bill would not be found to be in violation of the Charter obligation.
Is it your understanding that the regulation that will establish the mechanism whereby the limitation is to be exercised is not as strong as a statutory provision that provides for the limitation on the freedom of expression? Bill C-55, as originally drafted, contained the mechanism or the process by which the bill would unfold. Here, regulation will provide that limitation.
Let me try to give an example. If a given American magazine seeks to direct itself to the Canadian marketplace and seeks to sell advertisements in the Canadian marketplace, and if I wish to place an advertisement as a Canadian manufacturer in that magazine but the mechanism established by regulation has determined that, for the June edition, they have their 18 per cent, then, I would be denied my right of expression because, for that month, it would be over the 18 per cent.
Would you care to comment?
Ms Copps: You are asking specifically whether this would constitute a greater infringement on the Charter than the previous proposed legislation. I will turn that question over to our lawyer.
Mr. Richstone: The argument could be quite the reverse, that in fact the prohibition which was in Bill C-55 prior to this motion was a blanket prohibition. This motion adds another exception -- up to 18 per cent. It is relaxing the force of the prohibition up to a certain percentage in a certain given period. The percentage changes every 18 months. In fact, if the court ultimately determines that there is an infringement, it would be a subject for debate. This provision relaxes that infringement by permitting up to a certain percentage.
An argument could be raised that this does not infringe the Charter of Rights, or infringes it less than the blanket prohibition. In fact, what we are doing is the opposite. We are relaxing the force of the prohibition. It may be found to be more Charter consistent.
Senator Kinsella: What if one is not there when the ceiling is met?
Mr. Richstone: It allows for a certain margin per issue. The freedom of expression, which could be infringed, according to some, would be infringed less.
In many cases, the Charter consistency would be enhanced. One could make that argument.
Senator Kinsella: I am glad I asked that question. We should have some constitutional experts come and help us with that.
Clause 3 is the essence of the bill, as I recall from when we first had it before us. In part, that clause reads:
No foreign publisher shall supply advertising services directed at the Canadian market...
The proposed amendment, clause 21.1, states that the act will not apply to a foreign publisher who supplies advertising services. We deny the application and then we allow it in the same bill. It is a bit of a contradiction. Perhaps that could be explained. Are there many statutes that provide such contradictory propositions?
Ms Copps: I would posit that the legislation stands, except for the exemption. We have asked you to consider an exemption.
[Translation]
Senator Joyal: The representatives for the Canadian publishers have said publicly while the discussions were going on with the U.S. trade representatives, that they were ready to accept an access of up to 10 per cent to the Canadian advertising market by foreign magazines. In fact, does the compromise not have an impact of 8 per cent and can it vary significantly between magazines? There must be magazines that are less affected by a foreign presence than others.
According to some witnesses who spoke about the structure of the magazine market in Canada, some magazines are more vulnerable to market variations and are less able to absorb the impact of a greater presence, even if there is only a 1 per cent or 2 per cent difference. In the discussions that maybe you will be having with the Canadian magazine representatives, should you not go for a more flexible approach in order to take into account the varying degrees of impact from the application of the agreement you have described today?
Ms. Copps: Yes. This is precisely why we want to improve communications with the industry. Some magazines are partly or wholly dependent on advertising sales while others do not depend on subscription fees because they are free, such as The Canadian Mining Association.
These magazines might be more affected because they do not have the same flexibility as those who have 50 per cent or 60 per cent of their readership pay subscription fees. Magazines such as Chatelaine or Flair, that depend on subscription revenues, have a bit more flexibility. We also want to make sure that the instrument we will decide upon can uphold the Canadian content criteria.
[English]
Ms Copps: When I was speaking at the press connfernce I mentioned Canadian Bride, the magazine that the National Post claimed did not exist. I specifically mention that magazine because it is a Canadian magazine which has a Canadian office, but it is a Canadian magazine which is published largely out of the United States.
You will find Canadian magazines that have very little Canadian content are in the minority. We want to ensure that the instrument on which we collaborate will be an instrument that helps to create new, original content, and not simply an instrument to build somebody's bottom line. We must take our time and make sure it is the right mix. That is what we are trying to do.
[Translation]
Senator Joyal: Out of the 8 per cent provided for in the agreement -- I am talking about the costs that the publishers were ready to accept, that is up to 10 per cent -- the government is ready to consider several actions to reduce the impact that the implementation of this agreement with the Americans might have. In your own terms, could these actions take many forms such as direct subsidies, tax relief or other tax benefits that could be granted under the Canadian tax laws?
Ms Copps: Yes.
Senator Joyal: If the amendments you have tabled carry in the Senate, won't you have two instruments as Minister of Canadian Heritage?
You will have on the one hand the safeguards in the bill as amended and, on the other hand, a second tool that the government had not felt the need for up to now.
Given all of the adjustments that have to be made, even without taking into account ongoing negotiations with the Americans, you cannot conclude that, once the whole process is over, all of the industry will be getting more help, whatever the amounts that will be discussed during the parliamentary process.
Ms. Copps: When we responded to the first determination made by the WTO to get rid of the excise tax, we had four options. The first one was to not do anything. The second one was to recognize advertising services as we have done in Bill C-55. Our third option was specifically centred on creating a Canadian content. That is why we had done a lot of work on the content issue. For example, I know that Canadian Bride is a magazine that has very little Canadian content. The fourth option was about plain and simple subsidies.
Bill C-55 as amended is proposing a possible combination of those last three options. We have set quite a long time frame for the implementation of the exemptions which represent 12 per cent after 18 months plus another 6 per cent for the following 18 months. That is a 36-month transition period. We will therefore have the possibility to see exactly how things are going.
The legislation cannot be suitable for every magazine. Certain trade and consumer magazines and a few others will be more vulnerable. We have to find a very specific instrument to help without giving needless support.
[English]
Senator Fitzpatrick: I take it that this consultation period with the industry would be over an extended period of time. At this point, we do not know whether a subsidy or any other relief will be required. That decision will depend upon the development or the prosperity of these magazines in the meantime. Has no time been set for this process?
Ms Copps: No time has been set, but the cabinet recognizes the need for adjustment. When we look at the numbers, and the three-year phase-in for the exemption, it is clear that there will be some challenges. The cabinet has agreed to entertain a proposal around those challenges. However, the nature of that proposal has not yet been determined. It certainly will not be left out there for a year or two. This will be resolved in the short-term, rather quickly.
The Chairman: Thank you, Madam Minister. You have appeared before this committee three times. You have given all the committee members every opportunity to ask all the questions we wanted to ask about Bill C-55. You have graciously agreed to keep us informed as we hear from different stakeholders. We thank you very much.
Ms Copps: I wish to thank you, too. I know that, as a process, it has been a first. Unlike certain members of the House of Commons, I am among those who believe that the Senate can also be a part of firsts.
The Chairman: The committee was determined to do what it set out to do. Thank you very much, Madam Minister.
Honourable senators, we now come to item 2 of our agenda.
Senator Kinsella: Madam Chairman, as Senator Rompkey said, when we were at a certain stage, at a previous meeting and about to go into clause by clause, he moved that we hear from Minister Marchi. Then we heard from Minister Copps.
It seems to me that the circumstances of the bill have changed as a result of the proposed amendments. The minister has effectively said as much.
Minister Copps has done a fine job under the circumstances. Many of us believe that Canadian culture must be protected, and we need to be creative in doing so.
I would appreciate hearing from at least one or two constitutional lawyers. I believe that this bill changes the dynamic. Opinion is divided as to the issue of whether or not this bill will be struck down by the courts because it is not consistent with the Charter right of freedom of expression.
Second, on the substantive issue, it would take us only a day or so to hear from the constituencies that are immediately affected, the publishers' and the advertisers' associations. In fairness to ourselves, we should have the benefit of their assessment of these amendments.
I do not wish to be seen as stalling the process at all. It is known that I thought that the bill should have been passed without amendment. I would propose that we not proceed with clause-by-clause consideration of the bill, but that we try to have the clerk contact the Canadian Magazine Publishers Association and the Association of Canadian Advertisers, to see if we can get them here in the next day or so. We might also appreciate input from Professors Monahan and Cameron.
In terms of the time line, we could get this all done before the end of this week. It could then be reported back to the Senate. The good assessment would make things proceed more quickly in the chamber. The bill would get to the House of Commons in time for them to deal with it.
The Chairman: Senator Kinsella, is that a motion?
Senator Kinsella: If you wish. We would prefer to attempt to line up a meeting with those witnesses before proceeding with clause by clause.
Senator Joyal: The point that Senator Kinsella is raising about the Constitution has always been a preoccupation of mine, too. Professors Monahan and Cameron presented us with an extensive analysis of the bill. One of the key arguments was linked to the fact that the bill included a total ban, which placed section 1 of the Charter at stake. Was that reasonable?
This bill contains a proposal that does not totally ban access to the market. I suggested to the witness that the bill should exempt magazines with limited circulation. That would have caused minimum impact and it would have avoided the principle of a total ban, and this in turn would have secured the position of the bill. Now, however, we have a proposal that will open access to a point, in a reasonable way. The question of constitutionality is not as pointed as it was before.
Senator Kinsella also suggested that we hear from a representative of the advertising or publication industry. The government suggested the possibility, as the minister said, that there might be a fund to offset the disadvantages, inconveniences or impact of the status with the United States. If there is fear in either the publishing industry or the advertising industry that there might be a negative impact, their concerns will be taken into account in the course of the implementation of the bill. These issues will be discussed and negotiations will be conducted, to a point, as the minister said.
We will be hearing from witnesses about potential situations that must be addressed at some point in the future. At this point, Senator Kinsella's concerns would be better addressed if we permitted the process to take place. Let the bill be adopted and then let the parties to it continue their discussions and representations.
The original bill proposed a total ban. However, in the course of the discussions with the United States, the representative of the advertising industry stated that they were able to lift the amount to 10 per cent. In their mind, flexibility was already built into the dynamic of the situation. With that in mind, we are in a position to act without hurting them.
Without having any alternative to discuss the impact, I would have the same preoccupation that you have. I would also have a fair conviction that those amendments would definitely hurt the industry, first and foremost. However, since there is a built-in government commitment to return with some initiative after discussions and a fair representation, I feel that we have their system, which seems to be reasonable. That is why I feel that we should now move on.
Senator Spivak: With all due respect to Senator Joyal, who has a formidable intellect, nevertheless, he is not the same as the publishers. It is clearly understood that the government wants this bill, and as quickly as possible. The point, however, is that this is a major bill, not a slight, trivial bill. It sets a precedent. I just received the amendments. Frankly, the process involved here is not the same as the committee process, where you are dealing with the bill and then you go through it and you receive the amendments. New amendments are being brought on by a process of which we were not a part. In 10 minutes, I have not really grasped them all yet.
This is a major bill. Since it is absolutely impossible for it to be stalled or not to pass, then as part of parliamentary process it is necessary that we invite at least the publishers here. They have made a lot of noise in the press. We should also hear from the advertisers.
I am not so concerned about the constitutional issue as I am about the existence of the Canadian publishing industry. I do not think that is a major concession. I would urge senators to think about it. Otherwise, it is a form of closure. This is a very important bill. I do not think that is a necessity at this point, namely, to shove the bill through.
The Chairman: Senator Spivak, the Leader of the Government in the Senate received a copy of the amendments on Friday and graciously offered them to the Leader of the Opposition's office. These amendments were received by Senator Lynch-Staunton's office on Friday.
Senator Lynch-Staunton: The minister mentioned that we were part of a "first." I do not think that it is a first with which I, for one, care to be a part. I am concerned that we are being asked to pass amendments based on an unsigned agreement between the United States and Canada. We have not seen the final agreement and sometimes it is a long way from the verbal agreement to the signed agreement.
First, I should like some assurance that these amendments are a natural outflow of that agreement. I also think that the agreement should be before us.
Second, as the minister said, the establishment of the magazine fund will arise from that agreement. Whatever nature it takes will entail a cost to taxpayers of an unknown amount.
With the amendments, we are being asked, in effect, to pass a form of money bill because this bill will entail an unknown cost to taxpayers. Legally, it is probably not a money bill. De facto, however, it will become one with the amendments.
Frankly, I do not think it is the role of the Senate to engage public funds -- that is, a body that is unelected and not engaged to any constituency as such. This bill should be returned to the House of Commons. The minister should defend it and explain it there. The elected members should then decide on the amounts of money that they, as elected representatives, feel they are willing to commit. The reformed bill should then be sent back to the Senate.
We have things upside down. This is a first with which we should not be involved. There is money attached to this. It is not the Senate's role to initiate money bills. I am sure the legalists will tell me that it is not a money bill, but it is a bill that implicates the spending of untold amounts of money. For those two reasons, we should not move to clause-by-clause consideration of the bill. In the meantime, we should follow Senator Kinsella's recommendation and invite the publishers who originally favoured Bill C-55 but are adamantly opposed to what has taken place to speak before our committee. We should also invite the advertisers, who were willing to challenge the bill in the courts but are now satisfied. We have an amended bill that is completely different from the original one. We are talking about a new piece of legislation and it should be treated as such.
The Chairman: Are there any other comments on the motion by Senator Kinsella?
Senator Forrestall: I remain, Madam Chairman, somewhat at a loss in deciding whether or not at least one of these amendments is a substantive amendment.
In the absence of any satisfaction as to why at least one of these amendments is not a substantive amendment, I would have to share Senator Kinsella's view that we should hear a little more about it.
I must plead some ignorance. I am not sure how matters of this nature are dealt with in the Senate. However, in the other place you cannot make a substantive amendment to a bill that has been approved in principle. It is my understanding that we have approved this bill in principle. I was surprised that the minister did not deal with the correctness of the amendments from that point of view.
If any senators are unsure as to whether this constitutes a substantive amendment, we should correct that before we go to the next step.
Senator Kinsella: I wish to make it perfectly clear that this side is not interested in simply delaying the committee work. As house leader for our side, I can say that we would not oppose a motion in the Senate that this committee sit Wednesday afternoon, even though the Senate will be in session, or indeed on any other day this week, including Friday morning.
I thank Senator Joyal for his observations on the issue of substantive amendments. With regard to the Charter issue, I am concerned about how the bill would read with the amendments to clauses 20 and 21. Clause 20 says that the Governor in Council may make regulations for determining who may exercise the right of freedom of expression. Bill C-55 stipulates that no foreign publisher may supply advertising services directed at the Canadian market to a Canadian advertiser.
In my judgment, this is much worse. The amended bill would not meet the test of section 1 of the Charter of "where prescribed by law." The amended bill would allow the minister to deny someone the right to exercise freedom of expression.
I may be wrong, but that is the specific technical issue that makes it quite different.
The Chairman: Is there further discussion on the motion by Senator Kinsella?
Senator Joyal: I should like to comment on the point made by Senator Forrestall with regard to whether we are affecting the principle of the bill by debating these proposed amendments. I do not think that we are negating the objective of the bill. The purpose of the bill was to regulate access of foreign magazines to the Canadian market. It will still do that. The proposed amendments would impose some limits, but they would not change the bill's objective.
The House of Commons has amended the bill without affecting its principle and I do not believe that we are violating the bill's principle, either. I asked myself that question and discussed it with colleagues. I read Beauchesne on this. Beauchesne says that the committee may so change the provisions of a bill that when it is reported to the house it is in substance a bill other than that which was referred. A committee may negate every clause and substitute new clauses if relevant to the bill as read a second time.
In other words, the capacity of a committee is very broad. Therefore, I do not think that in moving these amendments we are going beyond our capacity as a committee. Although I think that Senator Forrestall's point is valid, my personal conclusion is that the amendments we are proposing do not change the principle of the bill.
I recognize the validity of the argument of Senator Lynch-Staunton on the fund. If the amendments, which we will be discussing later, included a specific amendment dealing with the fund, I would share the opinion that we would be doing something which should originate in the House of Commons. However, we have the commitment of the minister to seek authority through Supplementary Estimates to move on that. That is not what we are contemplating. We have a general government commitment on that, but not in a form that we must deal with it as such today.
Once we have done our legislative work, it will be up to the publications and advertising industry to press the government for it. Perhaps the committee could adopt a resolution to express our wish to the government, as the Senate has the capacity to do.
Senator Fitzpatrick: For some time we have experienced uncertainty in the industry. The possibility of public funds being allocated to this will arise out of discussions with the industry and will be considered by cabinet. I do not see how we can address that over the next couple of days, or that we would be doing a service to the industry by doing so. I do not see the purpose in delaying clause-by-clause consideration of the bill.
The Chairman: This discussion has shown that every member of this committee entered into this consultation with an open mind. With your approval, I will read the motion. Senator Kinsella moved:
That the committee hear forthwith from the Canadian Magazine Publishers Association, the Association of Canadian Advertisers, and constitutional experts, if they are available.
Will all those in favour of the motion please say "yea."
Some Hon. Senators: Yea.
The Chairman: Will all those opposed to the motion please say "nay."
Some Hon. Senators: Nay.
The Chairman: In my opinion, the "nays" have it.
Honourable senators, is it agreed that the committee now move to the clause-by-clause consideration of Bill C-55?
Some Hon. Senators: Agreed.
The Chairman: Shall the title stand?
Some Hon. Senators: Agreed.
Senator Lynch-Staunton: Madam Chairman, the clause-by-clause study will be done without witnesses. We think that is the wrong procedure. I hope the minutes will show that we are not part of the procedure. When it comes to the amendments, do not ask us for a vote. Just carry on and we will make our point on another occasion.
The Chairman: I understand, Senator Lynch-Staunton. However, we will conduct a clause-by-clause study of the bill.
Senator Lynch-Staunton: Of course. However, do not ask us for yeas, nays, or whatever.
The Chairman: I will not coach anyone, as the vice-chair has reminded me, and I will simply use the appropriate term "carried."
Shall the title stand postponed?
Some Hon. Senators: Agreed.
The Chairman: Carried.
Shall clause 1 stand postponed?
Some Hon. Senators: Agreed.
The Chairman: Carried.
Shall clause 2 carry?
Senator Joyal: On clause 2, as my friends have copies of the proposed amendments in their hands, I move:
That Bill C-55, in clause 2, be amended by
(a) replacing line 28 on page 1 with the following:
"ing in value more than half of the total value"
(b) replacing lines 2 and 3 on page 2 with the following:
"(f) a non-profit organization in which more than half of its members are persons"
(c) replacing line 25 on page 2 with the following:
"officer and more than half of whose direc-"
(d) replacing line 33 on page 2 with the following:
"indirectly, in the aggregate more than half"
(e) replacing line 35 on page 2 with the following:
"shares representing more than half of the"
(f) replacing lines 40 and 41 on page 2 with the following:
"ly, interests representing in value more than half of the total value of the assets."
And in French:
[Français]
Que le projet de loi C-55, à l'article 2 soit modifié
a) par substitution, à la ligne 22, page 2, de ce qui suit:
"valeur plus de 50 pour cent de la valeur"
b) par substitution, à la ligne 28, page 2, de ce qui suit:
"moins la majorité des membres sont des"
c) par substitution, aux lignes 21 et 22, page 3, de ce qui suit:
"agissant comme tel et au moins la motion des administrateurs ou autres ca-"
d) par substitution, aux lignes 29 à 32, page 3, de ce qui suit:
"indirect, d'au moins la majorité des actions avec droit de vote émises et en circulation représentant au moins la majorité des votes, à l'exception de celles"
e) par substitution, à la ligne 36, page 3, de ce qui suit:
"ou indirecte, de plus de 50 pour cent de la"
[English]
The Chairman: Is there discussion on the amendment?
I do not see anyone who wants to open a discussion on the amendment.
It is moved by the Honourable Senator Joyal --
Senator Stewart: Do we need to hear it again, Madam Chairman?
Senator Joyal: Dispense.
The Chairman: It is agreed that we dispense.
All those in favour of the amendment?
Some Hon. Senators: Agreed.
The Chairman: In my opinion, the "yeas" have it.
Shall clause 3 carry?
Some Hon. Senators: Agreed.
The Chairman: Carried.
Shall clause 4 carry?
Some Hon. Senators: Agreed.
The Chairman: Carried.
Shall clause 5 carry?
Some Hon. Senators: Agreed.
The Chairman: Carried.
Shall clause 6 carry?
Some Hon. Senators: Agreed.
The Chairman: Carried.
Shall clause 7 carry?
Some Hon. Senators: Agreed.
The Chairman: Carried.
Shall clause 8 carry?
Some Hon. Senators: Agreed.
The Chairman: Carried.
Shall clause 9 carry?
Some Hon. Senators: Agreed.
The Chairman: Carried.
Shall clause 10 carry?
Some Hon. Senators: Agreed.
The Chairman: Carried.
Shall clause 11 carry?
Some Hon. Senators: Agreed.
The Chairman: Carried.
Shall clause 12 carry?
Some Hon. Senators: Agreed.
The Chairman: Carried.
Shall clause 13 carry?
Some Hon. Senators: Agreed.
The Chairman: Carried.
Shall clause 14 carry?
Some Hon. Senators: Agreed.
The Chairman: Carried.
Shall clause 15 carry?
Some Hon. Senators: Agreed.
The Chairman: Carried.
Shall clause 16 carry?
Some Hon. Senators: Agreed.
The Chairman: Carried.
Shall clause 17 carry?
Some Hon. Senators: Agreed.
The Chairman: Carried.
Shall clause 18 carry?
Some Hon. Senators: Agreed.
The Chairman: Carried.
Shall clause 19 carry?
Some Hon. Senators: Agreed.
The Chairman: Carried.
Shall clause 20 carry?
Some Hon. Senators: Agreed.
The Chairman: Carried.
Some Hon. Senators: No.
The Chairman: I am sorry. I take that back.
Senator Joyal, I did not see your arm. I am sorry.
On clause 20?
Senator Joyal: No, Madam Chair, I would like to move that clause 20 in Bill C-55 --
Senator Kinsella: Point of order.
The Chairman: Point of order, Senator Kinsella.
Senator Kinsella: Honourable senators, the record will clearly show that the Chair said that clause 20 will carry. Have the reporter read it back. It is carried. To negate that decision, you need a two-thirds vote in this committee.
Now what will you do? We will not hear from witnesses. We will not hear from experts. Now we will not follow the Rules of the Senate of Canada.
The Chairman: There is a practice, I believe --
Senator Joyal.
Senator Joyal: Madam Chairman, I had my hand up.
The Chairman: Yes, I am the one who did not see Senator Joyal.
Senator Kinsella: Where is that in the rules?
The Chairman: It is my mistake as Chair not to have seen the hand of Senator Joyal.
Senator Kinsella: That is not what the rules say.
The Chairman: I should like to take a few minutes to consult the rules.
Senator Kinsella: Clause 20 of the bill was adopted by this committee and was so declared by the Chair.
There is a procedure to change that vote.
Senator Joyal: The vote was not taken, Madam Chairman, as such. You asked for the question. Some members said, "Agreed." I raised my hand to speak on it before you said, "Carried."
The Chairman: I think the argument is on the point of order.
Senator Joyal: As I understood what happened, Madam Chairman, you asked if the question was carried. Some members said, "Agreed." However, I raised my hand and I looked at you to speak on it. You pronounced another "Carried" without giving me the authorization to speak on it.
Senator Lynch-Staunton: Play back the tape.
Senator Joyal: That is the way I heard it.
The Chairman: Colleagues, we have two different opinions here. We have one colleague who has brought forward a point of order. We have other colleagues who are saying that they did not hear the Chair saying, "Carried," as it was carried. I have also followed Senator Lynch-Staunton's suggestion that we do not ask for a formal vote, which we usually do --
Senator Lynch-Staunton: I never said that.
The Chairman: -- and which would have prevented that.
Senator Lynch-Staunton: I never said that. I said that this side would not participate in the clause-by-clause study of the bill. It does not mean that we will not participate in a public procedure, in other words.
The Chairman: I accept Senator Lynch-Staunton's suggestion that we therefore proceed in a more informal fashion.
Senator Lynch-Staunton: I never said that. I am sorry, I never said how to proceed. I said that this side would not participate in the clause-by-clause study because we feel it is premature. I did not say change it and do it the way you were doing it.
Follow the rules. Senator Kinsella is quite right. If you play the tape, you will hear yourself say, "Carried."
Senator Kinsella: There are rules of the committee and of the chamber that apply to this situation. Either you try to see whether you have two-thirds of the vote to change that decision or, at report stage, Senator Joyal can rise and move the amendment then.
Let us not make a charade of the exercise. We are not hearing from witnesses.
The Chairman: Colleagues, I suggest we suspend for five minutes. I would like to review the ruling with the clerk.
I suggest we return at six o'clock.
The committee recessed.
Upon resuming at 6:15 p.m.
The Chairman: Colleagues, there seems to have been some slight confusion with respect to clause 20. I think I have had a very senior moment. If you ask me what I said, I honestly do not remember. In all fairness, we will consider the clause carried.
Senator Kinsella, on your point of order, we have done some research, and I must tell you that you have had me reading Beauchesne for the last four weeks. I have never learned so much on points of procedure.
You raised a point of order on the requirements of a two-thirds majority to reconsider a motion in the committee, and I am advised by the clerk that rule 96(1) of the Rules of the Senate of Canada stipulates that all questions in front of a committee require a majority vote. Therefore, colleagues, we will move on.
Shall clause 21 carry?
Hon. Senators: Agreed.
The Chairman: Carried.
If there are no amendments to clause 21, shall it carry?
Hon. Senators: Agreed.
The Chairman: Carried.
Shall clause 22 carry?
Hon. Senators: Agreed.
The Chairman: Carried.
Are there any new clauses?
Senator Joyal: I have two new clauses to propose. The first is clause 20.1. I would ask the clerk to circulate copies to my colleagues.
Madam Chair, I move:
That Bill C-55 be amended by adding, after line 40 on page 10, the following:
20.1 "The Governor in Council may make regulations defining, for the purpose of section 21.1, the expressions "revenue generated by the supply of advertising services directed at the Canadian market" and "revenues generated by the total supply of advertising services"."
The French version of the amendment reads as follows:
[Français]
Que le projet de loi C-55 soit modifié par adjonction, après la ligne 37, page 10, de ce qui suit:
20.1 «Le gouverneur en conseil peut prendre des règlements pour définir, pour l'application de l'article 21.1, les termes «revenus qui proviennent des services publicitaires destinés au marché canadien» et «revenus publicitaires totaux».
[English]
The Chairman: Is there any discussion, colleagues, on clause 20.1?
Senator Kinsella: That is a nice try on the part of the clerk, but I think that is completely out of order.
The Chairman: Why?
Senator Kinsella: We have adopted clauses 20 and 21.
The next item after that is to return to deal with those matters that have been stood. You are trying to amend clause 20 and clause 21 when those clauses have been carried by this committee. You have an opportunity to deal with that, and it is called report stage. You cannot come back and try to circumvent the clause-by-clause process.
Senator Joyal: On that point, raised by Senator Kinsella, I should like to refer him to Beauchesne's, paragraph 690, under the heading, "Order In Which Bill Is Considered." It states:
Unless the committee otherwise orders, the text of a bill is considered in the following order:
(1) Clauses.
(2) New Clauses.
(3) Schedules.
(4) New Schedules.
(5) Preamble (if any).
(6) Title.
There is no doubt that the committee, in its capacity, must go through clauses, new clauses, schedules, new schedules, preamble and title. Before going to "Title," the committee is entitled to go to "New Clauses."
Senator Kinsella: The committee has adopted clause-by-clause consideration of the bill. That is what "clause by clause" means. We have come to the clause and we have called clause 20. A decision was then made on clause 20. You cannot come back and amend a clause that has been carried in clause-by-clause consideration of a bill.
The Chairman: I had not understood this as an amendment. I understood from Senator Joyal that he made a motion for a new clause, and that he has read and distributed this new clause, as paragraph 690 permits him to do so.
Senator Joyal: Exactly.
The Chairman: It is clause 20.1 believe that you have it in front of you.
Is clause 20.1 carried?
Some Hon. Senators: Carried.
Senator Lynch-Staunton: Are you on a point of order? I am not talking about the procedure now -- in fact, I am glad I am not part of it -- but I should like to know from Senator Joyal what changes this makes to the amendment that the minister brought to us?
Senator Joyal: It singles out the capacity of the Governor in Council, in the very specific context of the revenue generated by the supply to make it a specific heading and item in the overall objective that the minister had in mind.
Senator Spivak: It is by regulation.
Senator Joyal: That is what the minister said; I do not disagree with you. However, that does not change what the minister said. As Senator Spivak said, it does not change the power that was vested, as the minister intended, in the Governor in Council to make regulations. It singles out that specific power in relation to the advertising services that are directed at the Canadian market. That is the objective of the new clause instead of embodying it into clause 20, as it stood before in the original bill.
Senator Spivak: It is a greater power.
Senator Lynch-Staunton: You are removing from the Governor in Council the right to establish criteria and returning to the wording of regulation respecting criteria. That is a major change.
Senator Joyal: Clause 20 would remain exactly as it is printed in the bill.
Senator Lynch-Staunton: You would then add clause 20.1.
Senator Joyal: We have a new clause 20.1.
Senator Lynch-Staunton: You appreciate that you are making a major change from the minister's suggestion?
Senator Joyal: It is a change, because it insists that the Governor in Council would have a new role that was not contemplated in the original clause 20. It would be oriented in the definition of "revenue generated." In the definition of "revenue generated," the Governor in Council would have the power to define that.
Senator Lynch-Staunton: If you read paragraph (c), the minister's paragraph (c) and yours are not the same.
Senator Joyal: There is a slight distinction between this paragraph and what she had originally suggested, yes.
Senator Lynch-Staunton: It is substantial to the effect that they wanted to change the wording. However, I wanted to discuss the amendment, not the procedure. Like the whole trip of this bill, it is extraordinarily strange.
The Chairman: Are there additional new clauses?
Senator Joyal: Yes, I have an additional new clause.
Senator Kinsella: Will you rule on the point of order that you mentioned?
The Chairman: I did not hear your point of order, Senator Kinsella.
Senator Kinsella: I rule on the point of order that what Senator Joyal is attempting to do is out of order. It is out of order because clauses 20 and 20.1 have been adopted by this committee. Senator Joyal read us a citation from Beauchesne. Beauchesne is a compendium of interesting observations that apply in the House of Commons from time to time. In the Senate of Canada and its committees, find me just one practice where we have done this kind of thing and I will be prepared to reflect upon that.
The Chairman: Senator Kinsella, I think you are raising a very important point. However, as I said earlier, because of all the discussions we have had here in the last few weeks, I have paid a lot of attention to both the Rules of the Senate of Canada and to Beauchesne, on which rest many rules of the Senate. Knowing that we were to do clause by clause today, I had read it attentively because the clerk brought it to my attention.
I am ruling that we are going in order and I am very comfortable with section 690 of Beauchesne. I repeat what section 690 states:
Unless the committee otherwise orders, the text of a bill is considered in the following order:
(1) Clauses.
(2) New Clauses.
(3) Schedules.
(4) New Schedules.
(5) Preamble (if any)
(6) Title.
Are there any other new clauses?
Senator Joyal: Yes. I should like to propose two new clauses to the bill. They would be numbered clauses 21.1 and 21.2. I move:
That Bill C-55 be amended by adding after line 9 on page 11, the following:
Exceptions -- percentage of permitted advertising revenue
21.1 This Act does not apply to a foreign publisher who supplies advertising services directed at the Canadian market by means of an issue of a periodical, if the revenues generated by the supply of advertising services directed at the Canadian market represent, in comparison to the revenues generated by the total supply of advertising services, by means of any of those issues
(a) during the period of 18 months beginning on the day on which this Act comes into force, not more than 12 per cent;
(b) during the period of 18 months immediately following the period referred to in paragraph (a), not more than 15 per cent;
(c) after the period referred to in paragraph (b), not more than 18 per cent.
Exception -- paragraph 15 (a) Investment Canada Act
21.2(1) This Act does not apply to a foreign publisher who, after the coming into force of this Act, makes an investment in periodical publishing that has been prescribed under paragraph 15(a) of the Investment Canada Act as a specific type of business activity related to Canada's cultural heritage or national identify and that has been reviewed under Part IV of that Act by the Minister responsible for it and for which that Minister is satisfied or is deemed to have been satisfied that the investment is likely to be of net benefit to Canada.
When no exception
(2) Subsection (1) does not apply in relation to a foreign publisher referred to in that subsection who is subject to an order made under paragraph 40(2)(e) or (f) of the Investment Canada Act.
Exception tied to investment
(3) This Act applies to a foreign publisher referred to in subsection (1), other than in relation to the foreign publisher's investment referred to in that subsection.
[English]
That Bill C-55 be amended by adding after line 9 on page 11, the following:
"Exceptions -- percentage of permitted advertising revenue
21.1 This Act does not apply to a foreign publisher who supplies advertising services directed at the Canadian market by means of an issue of a periodical, if the revenues generated by the supply of advertising services directed at the Canadian market represent, in comparison to the revenues generated by the total supply of advertising services, by means of any of those issues:
(a) during the period of 18 months beginning on the day on which this Act comes into force, not more than 12 per cent;
(b) during the period of 18 months immediately following the period referred to in paragraph (a), not more than 15 per cent;
(c) after the period referred to in paragraph (b), not more than 18 per cent.
Exception -- paragraph 15 (a) Investment Canada Act
21.2(1) This Act does not apply to a foreign publisher who, after the coming into force of this Act, makes an investment in periodical publishing that has been prescribed under paragraph 15(a) of the Investment Canada Act as a specific type of business activity related to Canada's cultural heritage or national identify and that has been reviewed under Part IV of that Act by the Minister responsible for it and for which that Minister is satisfied or is deemed to have been satisfied that the investment is likely to be of net benefit to Canada.
When no exception
(2) Subsection (1) does not apply in relation to a foreign publisher referred to in that subsection who is subject to an order made under paragraph 40(2)(e) or (f) of the Investment Canada Act.
Exception tied to investment
(3) This Act applies to a foreign publisher referred to in subsection (1), other than in relation to the foreign publisher's investment referred to in that subsection."
[Translation]
Senator Murray: I take it these are government amendments.
Senator Joyal: Yes.
Senator Murray: This is perhaps a technical point, but what is the meaning of the phrase "for which that Minister is satisfied or is deemed to have been satisfied that the investment is likely to be of net benefit to Canada," which is rendered, in the French version --
d'un avis -- réel ou présumé -- du ministre chargé de l'application de la même loi...
Why is "deemed to have been satisfied" in there?
Senator Joyal: That is the wording from the Investment Canada Act. The minister is deemed to be satisfied when certain elements are included in the proposal.
Senator Murray: It is therefore automatic.
Senator Joyal: No, it is not automatic, but it is presumed that the minister has agreed if those elements are tabled with the minister.
Senator Murray: What would the elements be in respect of clause 21.2(1)?
Senator Joyal: The objective of the Investment Canada Act is to ensure that when an investment is made in a "strategic sector" the minister responsible for the act, who in this context will be the Minister of Canadian Heritage --
Senator Murray: No, no. I believe it is the Minister of Industry.
Senator Joyal: I must remind Senator Murray of the statement made by Minister Copps in her opening remarks this afternoon. She said that she will be the minister responsible for commenting on the implications of those decisions to ensure that they benefit the particular sector of the industry that we are discussing.
That does not change. It is not an amendment to the Investment Canada Act. It gives additional capacity to the Minister of Heritage to make her points known, as the minister said in her opening remarks this afternoon.
The Chairman: Shall the new clauses 21.1 and 21.2 as read by Senator Joyal carry?
Some Hon. Senators: Agreed.
The Chairman: Carried.
Shall the Title carry?
Some Hon. Senators: Agreed.
The Chairman: Carried.
Shall I report this bill to the Senate?
Some Hon. Senators: Agreed.
Senator Lynch-Staunton: I presume, Madam Chairman, that in your report there will be a narrative. Considering the nature of this bill and the significance of the amendments, the chamber deserves an explanation of them.
The Chairman: Yes. I will do that in my speech tomorrow.
Senator Lynch-Staunton: I am talking about the report.
The Chairman: I am to table the report this evening and speak to it tomorrow.
Senator Lynch-Staunton: I do not know from where you get your instructions, but I am asking, if the committee is in agreement, that the report include a narrative because the amendments that have been approved by the other side significantly change the bill, which was given second reading. I believe that the full chamber deserves a narrative in the report explaining the impact of these amendments on the bill. The Senate sent to this committee a bill with certain features, and these amendments have changed them considerably. These are not technical amendments or amendments to improve or modify. These are significant amendments that change the nature of the bill, and the full Senate should be aware of what this committee has done.
At the same time, we would like to add to that report a minority report. We are not pleased with the way things have gone. We hope that the report will show that we abstained from clause-by-clause study. We would like to include in the narrative, which I hope the report will contain, a short narrative of our own, which we can have prepared by late tonight or tomorrow, so that the Senate will be fully apprised of exactly what is being returned to it, which is considerably different than what was sent to committee.
The Chairman: As I was saying, it was my intention to present a short report this evening and to speak to it tomorrow. Are you proposing that I include a narrative of what happened at this meeting and in the last few weeks in my report this evening?
Senator Lynch-Staunton: With all due respect, it is not your report but the committee's report.
I believe that the amendments require some explanation in the committee's report, because they significantly change the original bill. The chamber deserves that in order that senators can reflect on the report, which you will table this evening. When you give your explanation tomorrow, senators will have better knowledge of what you have introduced.
The Chairman: Senator Lynch-Staunton has recommended that the report include a narrative by the chair.
Senator Lynch-Staunton: By the committee.
The Chairman: It is a report of the chair in the name of the committee.
Senator Joyal: Do I understand Senator Lynch-Staunton to say that he will entrust to you the responsibility of giving an explanation of the amendments? I distinguish between that and abstention from clause-by-clause study.
Senator Lynch-Staunton: For the sake of the Senate, when a bill is reported with amendments I believe that there must be written reasons for them. It is a committee report.
The Chairman: There are two issues on the table. One is whether there should be a narrative added to the report. The second is when such a narrative would be offered to the Senate chamber. Would it be this evening or tomorrow?
Is that fair, Senator Lynch-Staunton?
Senator Lynch-Staunton: Your side will write the narrative. We would like to include in such a narrative our view of the amendments.
Senator Joyal: I recall an occasion when a colleague asked to be recorded as abstaining. The Speaker stated that such abstention should not be reported. I was surprised.
Senator Lynch-Staunton: That is because it was not pertinent to the subject matter of the bill. That is what the Speaker said.
Senator Joyal: I interpreted that to mean that a committee cannot report abstentions. Committees have options in reporting bills. It is up to senators who want their views to be noted to stand and say why they abstained, why they opposed the amendments, or why they believe the report should be qualified. That is how I interpret the rules pertaining to committee reports.
At that time, I wished to record the fact that I had abstained from that report, but the Speaker said that that was improper.
Therefore, I suggest that at this point in time we must conform to what certainly is the practice regarding the way that reports are framed.
Senator Lynch-Staunton: The Speaker would never rule against a report from a committee that included observations from committee members, either as a whole or as individuals. In the case you mentioned, it was a question of his ruling that the inclusion of the fact that two senators had abstained was out of order or irregular. I can cite examples of minority Senate reports. The one that comes to mind first concerns changes to the Patent Act. It was a long minority report -- probably longer than the majority report.
In light of what has happened to the bill since the Senate last saw it, the Senate deserves more than, "Here are four amendments," without supporting explanatory notes in the body of the report.
However, I have made my recommendation.
The Chairman: As I was telling you, it is my intention to speak to it tomorrow.
Senator Lynch-Staunton: Yes, and you will speak to it anyway.
The Chairman: I am trying to be fair to your motion, Senator Lynch-Staunton, that the report on the bill this evening include a narrative.
Is that your motion, Senator Lynch-Staunton?
Senator Lynch-Staunton: I am not talking about this evening, Madam Chairman. I am saying that whenever the report is tabled it should include observations on the nature of the amendments and how they affect the bill, which the Senate gave approval to in principle at second reading. These are major amendments. The Senate deserves more than just a technical report.
The Chairman: Therefore, your motion is that the report on the bill include observations on the nature of the amendments and the additional clauses. May I put the motion to a vote, Senator Lynch-Staunton?
Senator Lynch-Staunton: As you wish. I am sure everyone agrees.
The Chairman: Is it agreed, honourable senators?
Some Hon. Senators: Agreed.
Some Hon. Senators: No.
The Chairman: The motion is not carried.
Therefore, I will report the bill this evening.
Senator Kinsella: Could we have a roll call on that vote, please?
The Chairman: We will do them one by one.
The clerk will read out the names of the senators, after which they will say "yes" or "no."
Mr. Michel Patrice, Clerk of the Committee: The Honourable Senator Adams.
Senator Adams: Abstain.
Mr. Patrice: The Honourable Senator Fairbairn.
Senator Fairbairn: No.
Mr. Patrice: The Honourable Senator Fitzpatrick.
Senator Fitzpatrick: No.
Mr. Patrice: The Honourable Senator Forrestall.
Senator Forrestall: Yes.
Mr. Patrice: The Honourable Senator Joyal.
Senator Joyal: No.
Mr. Patrice: The Honourable Senator Kinsella.
Senator Kinsella: Yes.
Mr. Patrice: The Honourable Senator Lynch-Staunton.
Senator Lynch-Staunton: Yes.
Mr. Patrice: The Honourable Senator Milne.
Senator Milne: No.
Mr. Patrice: The Honourable Senator Poulin.
Senator Poulin: No.
Mr. Patrice: The Honourable Senator Spivak.
Senator Spivak: Yes.
Mr. Patrice: The Honourable Senator Stewart?
Senator Stewart: No.
The Chairman: Honourable senators, yeas, four; nays, six; and one abstention.
I declare the motion defeated. The meeting is adjourned.
The committee adjourned.