October 24, 2018

On September 30, Canada, the US and Mexico agreed on a new agreement to govern trade among the three countries to replace the North American Free Trade Agreement (NAFTA). The new agreement, called the US-Mexico-Canada Agreement (USMCA), is a comprehensive trade agreement that covers a wide range of industries.

This bulletin examines those provisions of the USMCA that relate to the communications industries including telecommunications, broadcasting and digital trade. Fasken has issued another bulletin that examines other aspects of this agreement. The USMCA: A First Look At Key Contentious Issues

Apart from the specific provisions related to Super Bowl commercials, shopping channels and the term of copyright protection, the USMCA will require no substantive changes to Canada’s existing regulatory regimes that apply to the communications industry.

Telecommunications

Chapter 18 of the USMCA deals with telecommunications. It applies to any measure affecting trade in telecommunications services, including:

  • any measure relating to access to and use of public telecommunications networks or services;
  • any measure relating to obligations of suppliers of public telecommunications services;
  • any other measure relating to public telecommunications networks or services; and
  • any measure relating to the supply of value-added services.

There are detailed sections addressing each of these topics. At a high level the chapter provides for the use of public telecommunications networks to move information in each Party’s territory and across their borders, as well as for access to information in databases in the territory of any Party. Each Party may still take measures to protect the privacy of the personal data of end users, provided that the measures are neither discriminatory nor arbitrary and that they do not constitute a restriction on trade.

Each Party must ensure that suppliers of public telecommunications networks in its territory provide interconnection with public telecommunications services of another party. These obligations extend to interconnection, number portability, dialing parity and access to telephone numbers. No party may prohibit the resale of any public telecommunications service and no party shall prohibit suppliers of public telecommunications services from entering into agreements to provide roaming services. There is no specific mention of mobile virtual network operators (MVNOs) in the text.

Chapter 18 also contains provisions that are applicable to major suppliers of public telecommunications services, defined as a supplier that has the ability to materially affect the terms of participation (having regard to price and supply) in the relevant market for public telecommunications services as a result of: (a) control over essential facilities, or (b) use of its position in the market. Of particular interest is Article 18.5 which requires the Parties to ensure that that a major supplier in its territory accords suppliers of public telecommunications services of another Party treatment no less favorable than that major supplier accords in like circumstances to itself, its subsidiaries, its affiliates, or non-affiliated service suppliers regarding:

  • the availability, provisioning, rates, or quality of like public telecommunications services; and
  • the availability of technical interfaces necessary for interconnection.

Article 18.7 also contains a provision on resale that requires each Party to ensure that a major supplier does not impose unreasonable or discriminatory conditions or limitations on the resale of its public telecommunications services. However, a footnote to this section states that a supplier of mobile services is not a major supplier unless a Party determines that the supplier meets the definition of major supplier in 18.1.

Chapter 18 also addresses the provision of unbundled network elements, interconnection, leased circuits, co-location, access to poles, ducts, conduits and rights-of-way, and submarine cable facilities controlled by major suppliers. Article 18.12 is interesting since it extends the right to access rights-of-way owned by major suppliers of public telecommunications services to other suppliers. This may go further than section 43(5) of the Telecommunications Act in giving access to rights-of-way.

Article 18.14 applies to value-added services, defined as “telecommunications services employing computer processing applications that:

  • act on the format, content, code, protocol or similar aspects of a customer’s transmitted information;
  • provide a customer with additional, different or restructured information; or
  • involve customer interaction with stored information;”

This article recognises the importance of value-added services to innovation, competition and consumer welfare. It states, among other things, that treatment of value-added services should not be the same as for public telecommunications services without due consideration for the legitimate public policy objectives and the technical feasibility of the requirements, and the characteristics of the value added service.

Article 18.15 endorses a policy of technology-neutrality and generally prohibits requirements that dictate technology choices.

Article 18.19 preserves the right of the Parties to implement universal service obligations in a competitively neutral, transparent and non-discriminatory manner.

There are also provisions in Articles 20 and 24 requiring regulation to be open, transparent and non-discriminatory.

Reservation I-C-7 preserves for Canada its restrictions on foreign ownership as set out in the Telecommunications Act and the Canadian Telecommunications Common Carrier Ownership and Control Regulations.

Reservation I-C-1 preserves for Canada the thresholds for review and the standards for review of direct acquisitions of control of Canadian-owned businesses, including telecommunications carriers, as set out in the Investment Canada Act.

Digital trade

Chapter 19 of the USMCA establishes each Party’s obligations with respect to the rules applied to digital trade among the three countries. The Chapter defines “digital products” as “a computer program, text, video, image, sound recording or other product that is digitally encoded, produced for commercial sale or distribution, and that can be transmitted electronically”.

This very broad definition would capture popular streaming music services, over-the-top subscription video services, user generated content platforms and e-book retailers.

The agreement distinguishes between an “interactive computer service”, which is a service that enables electronic access to a computer server and would include cable and telecom undertakings that provide retail internet access services, and an “information content provider”, which is an entity that creates or develops information provided through the internet, including online video and music services.

Article 19.17(2) prohibits the parties from adopting or maintaining measures that treat a supplier or user of an interactive computer service as an information content provider in determining liability related to information stored, processed, transmitted, distributed or made available by the service, except to the extent the supplier has created or developed the information. However, this prohibition on liability does not apply to any measure pertaining to intellectual property including measures addressing liability for intellectual property infringement.

Under article 19.3, the parties are prohibited from imposing customs duties fees, or other charges in connection with the importation or exportation of digital products transmitted electronically. This provision does not, however, preclude a party from imposing internal taxes, fees or other charges on digital products, provided that those taxes, fees or charges are imposed in a manner consistent with the Agreement. Also, under Article 19.4, the parties are required to accord no less favorable treatment “to digital products created, produced, published, contracted for, commissioned or first made available on commercial terms in the territory of another Party… than it accords to other like digital products”.

Given the national treatment principle embedded in these digital trade provisions, it would appear Canada could impose taxes, fees or other charges on digital products imported into Canada electronically, provided that the same taxes, fees or charges are imposed on Canadian digital products.

Copyright and related rights

Section H of the USMCA establishes requirements with respect to copyright and related rights. Despite the potential for the US to try to impose new obligations on Canada that would require significant changes to our copyright legislation, the final agreement will have limited effect.

The majority of the copyright provisions replicate obligations that are already incorporated into existing international treaties including the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty. Canada ratified both of these treaties when Parliament passed the Copyright Modernisation Act in 2012.

Article 20 H.7 does require a terms of copyright protection in works of life of the author plus 70 years, which is longer than the existing terms of protection in Canada of life of the author plus 50 years. The Canadian government had already signalled its willingness to agree to term extension during the negotiations of the Trans Pacific Partnership.

Article 20.J.11(3) imposes an obligation on parties to implement a “notice and takedown” regime pursuant to which ISPs, in order to qualify for limitations on liability (referred to as safe harbours), will disable access to allegedly infringing material residing on their networks or systems.

Article 20.J.11(6)(a) requires the Parties to impose on ISPs an obligation to adopt and implement a policy that provides for the termination of accounts of repeat infringers.

Canada’s copyright legislation does not provide for a notice and takedown regime or a requirement to terminate the accounts of repeat infringers the Annex to Section J of the USMCA provides that Acticles 20.J.11(3) and 20.J.11(6) do not apply to Canada since it has implemented a “notice and notice” regime that requires notices of alleged infringement to be forwarded to subscribers.

Broadcasting

Under Chapter 32 of the USMCA, Canada has maintained the cultural industries exemption, which was originally adopted in the 1989 Canada-U.S. Free Trade Agreement. Paragraph 2 of Article 32.6 specifically states that the “Agreement does not apply to a measure adopted or maintained by Canada with respect to a cultural industry”. The term “cultural industry” is defined in paragraph 1 to mean persons engaged in the following activities:

  • the publication, distribution, or sale of books, magazines, periodicals or newspapers in print or machine readable form but not including the sole activity of printing or typesetting any of the foregoing;
  • the production, distribution, sale or exhibition of film or video recordings;
  • the production, distribution, sale or exhibition of audio or video music recordings;
  • the publication, distribution or sale of music in print or machine readable form; or
  • radiocommunications in which the transmissions are intended for direct reception by the general public, and all radio, television and cable broadcasting undertakings and all satellite programming and broadcast network services.

In paragraph 4 of Article 32.6, the USMCA also continues to permit the U.S. and Mexico to take measures of “equivalent commercial effect” in response to any action taken by Canada to protect a cultural industry under paragraph 2.

In addition to that, however, a new provision has been added to the cultural industries exemption that might negatively impact Canada. Paragraph 3 of Article 32.6 provides that “with respect to Canadian goods, services, and content” the U.S. and Mexico “may adopt or maintain a measure that, were it adopted or maintained by Canada, would have been inconsistent with the Agreement but for paragraph 2”. This new provision appears to give the U.S. and Mexico even greater latitude to impose obligations on Canadian companies operating in the U.S. and Mexico.

In addition to Article 32.6 dealing with the cultural industries exemption, the USMCA contains two provisions that impact Canada’s broadcasting industry directly.

Both are found in Annex 15-D. The first relates to simultaneous substitution and, oddly enough, actually requires Canada to adopt a new trade restriction by requiring Canada to rescind Broadcasting Regulatory Policy CRTC 2016-334 and Broadcasting Order CRTC 2016-335, which had prohibited Canadian cable, satellite and IPTV providers from substituting the Canadian signal of the Super Bowl over that of the signal transmitted by U.S. television stations.

The second relates to U.S. teleshopping services and requires Canada now to allow these services to enter the Canadian market and be delivered by Canadian cable, satellite and IPTV providers without restriction.

Authors

Scott M. Prescott
Partner
Ottawa, ON
Gerald (Jay) Kerr-Wilson
Partner
Ottawa, ON
Laurence J.E. Dunbar
Partner
Ottawa, ON
Related Articles by Firm
New transparency registry for all private BC companies in the offing
If the bill comes into force it will have far reaching compliance consequences for all private BC companies.
Privacy Commissioner of Canada reverses position on transfers of personal information for processing
The Commissioner has made a surprising reversal of its long-standing position on the transfer of personal information.
Changes are coming!
Five factors to consider when reviewing your Canadian trademark strategy in 2019.
The Canadian gig economy: Embracing the future of work
Instead of quashing models that have the potential to empower the workforce, better protections for gig workers are needed.
A closer look at Canada’s budget
Fasken’s team examines important budget 2019 measures — some which made headlines, and others that should not escape notice.
Selected tax measures in Canada's 2019 federal budget
The budget contains significant proposals to amend income and excise taxes, while also providing updates on previously announced tax measures and policies.
OSFI issues advisory on technology and cyber security incident reporting
The Advisory reflects the fact that OSFI is very focused on this increasingly significant area of risk.
Health Canada pushes for safer medical devices
The announcements foreshadow significant near-term changes to Canada's medical device regulatory regime.
Surprise changes seek to modernise Canadian trademarks law and practice
This bulletin looks at key proposed changes to trademark law in Canada.
Time limits for retaining information about employees
Retention of personal information carries various obligations, particularly in terms of access to the information and confidentiality.
Further hurdles for regulatory approval of notifiable mergers in South Africa
On July 12, the Competition Amendment Bill was introduced in Parliament, substantially revising the earlier version of the Bill.
Hitting the sweet spot: Regulation of sweetened alcoholic beverages
Health Canada issued a notice of intent to restrict the amount of alcohol in highly sweetened alcoholic beverages.
Significant changes proposed to Canada’s AML/ATF regime
The Proposed Regulations are wide ranging and include a number of substantive changes as well as technical amendments.
Canada: Privacy commissioner issues key guidelines for consent and inappropriate data practices
Important guidance documents issued in respect of activities regulated pursuant to the Personal Information Protection and Electronic Documents Act ...
Cybersecurity risks for directors and officers
The cybersecurity field is ripe for affected stakeholders to test claims that directors and officers have failed to discharge their duties.
Cybersecurity Risks for Directors and Officers
Directors and officers in Canada face increased risk of personal liability and threats to job security in relation to cybersecurity...
Proposed changes to Canada's anti-money laundering and anti-terrorist financing regime
A consultation paper released in February could potentially have broad implications for Canada's AML/ATF regime.
Bill 148 Update: Scheduling and the three-hour rule
The Fair Workplaces, Better Jobs Act, 2017 makes significant changes to the Employment Standards Act, 2000.
Does your non-competition clause really protect you?
Or does it merely offer the illusion of protection? What you need to know about the validity and enforceability of a non-competition clause.
Canada: Selected Tax Measures in the Federal Budget 2018
Canada's 2018 Federal Budget contains significant proposals to amend the Income Tax Act and the Excise Tax Act while also providing updates on previously announced tax measures and policies ...
Expect the Intersection of Privacy and AI in 2018
We must consider how to regulate, or at least control, the use of artificial intelligence at different levels ...
Energy Licences and Approvals in Canada
Update on Directive 067: Eligibility Requirements for Acquiring and Holding Energy Licences and Approvals ...
Canada to Revise Tax Voluntary Disclosures Program
Effective March 1, 2018: New Regime will Result in Limited Relief for Certain Taxpayers Disclosing Errors and Omissions ...
Canada: New CASL Ruling
CRTC Provides Guidance on B2B Messaging and the Due Diligence Defence ...
Corporate Parent Liability: Litigation Risks for Resource Companies
Traditionally, parent companies have been considered legally distinct entities and thus immune from the actions of their subsidiaries, a concept described as the “corporate veil”. This position is now being challenged ...
Canada: No Duty to Consult Triggered by Omnibus Changes to Environmental Laws
In Canada (Governor General In Council) v. Courtoreille, 2016 FCA 311, the Federal Court of Appeal found that the federal government did not owe a duty to consult when it developed and implemented changes to environmental legislation through two omnibus bills ...
The Global Reach of Canadian Privacy Law
Federal Court Issues Landmark Ruling in Globe24h ...
Temporary Foreign Workers in Canada: Employer Compliance Rules
The regulations that govern applications for work permits provide a very strict framework for employers who hire temporary foreign workers in Canada ...
Canada is Open for Business
Trump and the Changing Political Landscape in the US ...
Primer on Procurement Rules in the New Canadian FTA
Fasken Martineau Releases Primer on Procurement Rules in the New Canadian Free Trade Agreement ...
Canada: Donald Trump, Paris and the Climate Policy Two­-Step
Will the U.S. withdrawal from the Paris Agreement fundamentally alter Canada's course?
China’s Priorities for a Free Trade Agreement with Canada
Analysis of Chinese language commentary, news media and academic studies, reveal some of China's top priorities for a free trade agreement with Canada ...
Canada: New Authorities under Vanessa's Law
On June 18, 2016, the Federal Department of Health published a Notice of Intent to amend the Food and Drug Regulations and the Medical Devices Regulations to implement key authorities under Vanessa's Law...
Canada: Consultation on New Health Regs for Self-Care Products
Health Canada is seeking consultation on new standards for self-care products, over-the-counter drugs, natural health products and cosmetics ...
Private right of action under Canada’s Anti-Spam Law
As of July 1, 2017, individuals and organizations will be entitled to institute a "private right of action" before the courts against those that contravene certain provisions of Canada's Anti-Spam Law ...
New Federal Consumer Protection Regime for Bank Customers
Canada: The government has introduced a bill which proposes to create a comprehensive federal consumer code and strengthen federal jurisdiction over provincial jurisdiction with respect to products and services of banks.
Canada: Alberta's Renewable Electricity Program
Alberta released details of the Renewable Electricity Program to accelerate the development of renewable power generation through a competitive bid process.
Certainly Uncertain: Construction Trusts after Iona in Canada
A recent decision clarifies the law regarding provincial statutory trusts in the insolvency context, particularly in the construction sector.
The Fight against Climate Change and the Overhaul of Canada's Environment Quality Act
A bill allows government to require a "climate test" from a project proponent.
Health Canada Is Cracking The Whip On Advertising Violations
On January 21, 2016, various hospitals, natural health product manufacturers, physicians and pharmaceutical companies found themselves specifically named by Health Canada in a published list of health product advertising complaints ...
Canada: New Strategic Plan for the Patented Medicines Prices Review Board
The Strategic Plan comprises a fresh vision, a revised mission statement and four new strategic objectives ...
Transport Canada Promises New Drone Regulations
Increase in popularity has had a direct effect on risks involved for the safe use of regular aircraft ...
N. America: Northern Gateway Pipeline
Province must consult and decide but may impose conditions
Canada: Tinkering with Title - Don’t Get Caught by Surprise
The Mining Amendment Act 2015 proposes a new electronic mining lands administration system in Ontario.
New Lobbyists’ Code Will Restrict Dealings with Canada’s Federal Government and Agencies
Canada's new Lobbyists' Code of Conduct will significantly restrict the activities of lobbyists and others seeking to influence federal decision making.
Righting a Wrong: Canadian Regulators Improve the Rights Offering Regime
Canadian regulatory authorities recently overhauled how prospectus exempt rights offerings are to be conducted going forward.
A change of role for a legal representative under the new Clinical Trials Regulation 536/2014?
The roles and responsibilities of the legal representative set out under Clinical Trials Directive 2001/20/EC are likely to change under the new Clinical Trials Regulation 536/2014.
Historic Court of Appeal Decision in Dunkin' Brands: Three Lessons for Franchisors in Canada
The Quebec Court of Appeal has specified the intensity of the franchisor's implied obligations in what is the most significant franchise case in Québec since 1998.
New Compliance Form and Fee for Employers of Foreign Work Permit Applicants in Canada
Employers whose foreign employees must apply for a work permit or extension should be aware of a new Compliance Form and Compliance Fee that they must submit before the person applies for the work permit in Canada.
Use of Trademarks As Metadata & #Hashtags in Canada
A recent decision of the Federal Court of Canada provides guidance on the proper use of IP in this digital world that brand owners need to know now.
Claims that Involve a Fixed Dosage and Schedule Can Constitute Patentable Subject Matter
The Canadian Intellectual Property Office has issued a revised guidance which provides clear instructions on how to approach medical use claims and determine whether such claims are eligible for patent protection.
The Application of the Bhasin Principle of Good Faith in Canada: An Early Example
A recent decision from the Supreme Court of British Columbia provides an early example of how courts will apply the general principle of good faith in Canada.
The TPP Agreement: A Canadian Business Perspective
The TPP will impact goods access and other aspects of Canadian businesses.
Foreign Corruption and the Integrity Framework in Canada: A Difficult Corporate Board Dilemna
Canada's Integrity Framework raises difficult choices for corporate board directors and management regarding voluntary disclosure of prior foreign corrupt activity of an acquired company.
Canada-EU Comprehensive Economic and Trade Agreement Negotiation Completed: Additional Protection for Innovative Pharmaceutical Products
If ratified, key intellectual property provisions in the Canada-EU trade pact will provide additional protection for innovative pharmaceutical products.
An Update on the Proposed EU Revisions to the Regulation of Medical Devices
The proposed European regulatory regime will merge the directives on Medical Devices and Active Implantable Medical Devices into a single regulation and wholly replace the current regulation on In Vitro Diagnostic Medical Devices.
UK FCA consults on requirements for reports on payments to government
While Canada does not currently have a reporting regime for payments to governments, a process is underway to ensure that a regime is implemented in the near future.
Trademark Use: an Important Shift in Canada
Bill C-31, which was given royal assent on June 19, 2014, will eliminate the requirement that a trademark be used in order to be registered in Canada.
Intellectual Property Protection - Industrial Designs
Many companies will consider the availability of and merits of seeking patent and/or trade-mark registration. However, one form of IP protection that is often overlooked is an industrial design registration.
Protocol to Amend the Canada-UK Tax Treaty
The Canada-United Kingdom Tax Convention was amended with the signing of a protocol on July 21, 2014. This article will describe some highlights of the Protocol and comment on the impact of these provisions on cross-border tax issues between Canada and the ...
The end of the Canadian "iPod Tax" saga
The "Certain Televisions Remission Order" confirms that, in fact, there is not now, and never actually was, "tax" on "iPod" imports to Canada.
Updating Canadian Trademark Filing & Registration Strategies
Here are some key trademark filing strategies for avoiding or minimizing the potential impact of recent amendments to the Canadian trademark landscape.
The Canadian insurance M&A environment
There have been a significant number of insurance company M&A transactions in the Canadian market in recent years, a trend expected to continue. Fasken Martineau DuMoulin have surveyed the acquisition agreements from these transactions and analysed ...
Merger control and foreign investment review in Canada
Fasken Martineau DuMoulin’s Huy Do and Jack Yu1 write that acquisitions of, or investments in, Canadian businesses can give rise to merger control and foreign investment reviews. ...
Related Articles
Related Articles by Jurisdiction
Latest Articles