By Howard Law, author of MediaPolicy.ca, and Canada vs. California: How Ottawa took on Netflix and the streaming giants (Lorimer, 2024)
“I don’t know what you mean by ‘glory,'” Alice said.
Humpty Dumpty smiled contemptuously. “Of course you don’t—till I tell you. I meant ‘there’s a nice knock-down argument for you!'”
“But ‘glory’ doesn’t mean ‘a nice knock-down argument,'” Alice objected.
“When I use a word,” Humpty Dumpty said in rather a scornful tone, “it means just what I choose it to mean — neither more nor less.”
“The question is,” said Alice, “whether you can make words mean so many different things.”
“The question is,” said Humpty Dumpty, “which is to be master — that’s all.”
― Lewis Carroll, Through the Looking Glass
***
It’s a post-modern cliché, but there is something to the idea that to name a thing is an expression of power.
Last November, 15 Republicans and 12 Democrats sitting on the House Ways and Means committee wrote to Canada’s trade minister Dominic Leblanc. They thanked Canada for rescinding its digital services tax. Then they called for the repeal of our Online Streaming Act (the “OSA”) because it’s “discrimination.”
Today, news reports in the Canadian press habitually list the OSA as laying square in the US trade cross-hairs.
Now that stop-and-start trade talks are heating up again it’s a good time to separate fact and fiction on the OSA.
Despite our long border and our differing origin stories, Canada and the United States have many things in common. We are democracies and we are neighbours. And we are global traders.
What we also have in common, although it seems to be slipping lately, is that in matters of cross border trade in goods and services, we respect each other’s sovereign decision-making provided they respect principles of fair treatment.
Of US companies operating on Canadian soil, or vice versa.
We wrote it all up in a trade treaty ratified by Canadian Parliament and the US Congress, the 2018 CUSMA deal (“USMCA” to Americans) and the two earlier versions signed in 1988 and 1992.
November’s congressional letter invited Canada to rescind the OSA because, according to its signatories, the OSA is “discriminatory” against US streamers and in violation of USCMA.
The TL:DR version of this post is to say the OSA is neither of those things.
Why Canada regulates television and streaming
Off the top, we should reinforce why Canada has cultural rules about streaming at all. (This is often a “walk in our shoes” explanation for Americans.)
America hosts the iron throne of Hollywood’s global entertainment empire. Its studios, streamers and indie movie producers make American movies and shows for its big domestic audience, where it recovers its sunk costs, before exporting them to an even bigger global audience.
While American audiences may not notice as much as do citizens of other countries, as a rule Hollywood tells American stories, or sometimes stories on foreign soil starring Americans and an American vibe. Giving credit where it is due, Hollywood’s output dazzles around the world.
Like a lot of other countries, Canada is much smaller than the USA – 340 to 40 in millions of populations – which means a much smaller home market for Canadian stories and Canadian stars (and yes, we export, too).
In addition to that disparity of scale, Canada bears the extra cost of producing news, sports and entertainment programming to meet our official, and politically foundational, cultural commitments to the English- and French-speaking populations and indigenous communities.
That’s why Canada regulates its domestic broadcasting and streaming market – so that Canadian studios have enough money to make quality shows that tell Canadian stories with Canadian stars and a Canadian vibe that draw the attention of Canadian audiences.
In the last decade and a half, global streamers became a big part of that Canadian market. Their market entry eventually cued the application of the OSA’s regulatory rules to Netflix and a passle of big streamers who together claimed a huge chunk of our Canadian market with – just take a Canadian’s word on this if you can – minimal regard for the exposure of Canadian content.
It’s not discrimination
Is the Canadian OSA fair to the USA?
Elected officials on both sides of the border know well the technical meaning of “discriminatory trade treatment,” but it’s worth describing for the lay observer.
The trade argot of “discrimination” doesn’t mean that US companies carrying on business on foreign soil must be treated identically to domestic companies under a common regulatory regime such as the OSA.
Rather, “national treatment” rules in the CUSMA trade treaty mean that streamers like Netflix and digital platforms like YouTube must be treated “no less favourably” than Canadian broadcaster/streamers with whom they share the Canadian market.
The “no less favourable” legal test is a pragmatic accommodation of the menagerie of American media companies of different sizes, services and products operating under the same foreign laws as Canadian broadcasters and streamers. What that means is that “discrimination” is not a cherry-picking exercise of ferreting out a single asymmetric rule governing both US and Canadian companies. You have to look at the fairness of the entire regulatory package.
What’s bugging Netflix?
The White House and US Congress stick up for American companies. It’s expected.
But the question of the day is whether US streamers and digital platforms are being treated unfairly under the OSA vis-à-vis Canadian companies or whether they are seeking to exploit public expectations that the White House will back American companies, rightly or wrongly. (No doubt, Hollywood’s studio chiefs see the OSA as the Canadian Parliament backing its own broadcasters, rightly or wrongly.)
What’s bugging Netflix et al about the OSA is the very existence of Canadian regulation of their Canadian operations. If you read the thousands of pages of their submissions to the both our Canadian Parliament and our broadcasting regulator the CRTC (the Canadian counterpart to the American FCC), their oft-repeated desire is to operate in Canada without regulatory costs or expectations of any kind. You won’t find a single occasion on which they say otherwise.
That’s why the streamers keep asking US Congress to push for the outright repeal of OSA. They likely aren’t satisfied with Prime Minister Mark Carney’s recent overruling of the CRTC on streamer cash contributions to Canadian media subsidy funds, even though the OSA also imposes comparable obligations on the streamers’ direct Canadian competitors.
It may annoy Americans to hear this, but the streamer accusation of “discrimination” is 100 per cent performative. The fact is that the OSA treats US streamers more favourably, not less, compared to Canadian broadcasters in the Canadian market.
The Canadian OSA affords more generous, not less favourable treatment to US streamers
That may seem counterintuitive to what Hollywood is telling the White House and US Congress, but it’s true.
To begin with, of the general principles written into the text of the OSA, the first principle is the equitable treatment of Canadian and foreign services. Yet, the fact is that non-Canadian services get a break relative to the regulatory expectations of Canadian broadcasters in the OSA. That was explicitly admitted by the Liberal government in at least two important instances when it legislated the OSA in 2023.
By authority of section 3(1)(f), for example, Canadian broadcasters must make their shows by employing Canadian talent and Canadian crews in a “predominant and maximum” manner. A lower threshold was deliberately fixed for US streamers making Canadian shows.
In section 9.1(h), Canadian cable companies must provide fair terms of access and revenue sharing to Canadian broadcasters. But the OSA did not extend that fair dealing rule to govern the relationship between broadcasters and multi-channel digital platforms like Roku or YouTubeTV (should it expand to Canada). Online, the law of the media jungle prevails: distributors dictate terms to content creators.
On the other hand, the exception that proves the rule (that you can’t cherry-pick examples of discrimination) is that the OSA in certain circumstances favours mandatory copyright ownership by independent Canadian producers when they make the shows they license to both Canadian broadcasters and American streamers. More on that further down.
The “irritants”
But regulatory principles aside, the US streamers have identified more specific “irritants” in the CRTC’s implementation of Parliament’s OSA.
The Ways and Means congressional representatives cited the biggest such irritant in its November letter: the CRTC’s cash levy on global streamers pegged at five per cent of their Canadian revenues, worth about $200M (CDN) annually. That number was set by the commission in June 2024.
You may have heard: two years later Prime Minister Carney is now belatedly in the process of overruling those cash payments as a pre-emptive concession to US trade pressure. His shock move occurred a week after he met privately with Netflix CEO Ted Sarandos in a New York hotel room.
Was Carney suddenly persuaded by the Netflix claim that the cash levies were “discriminatory?”
The cash levies in question were destined for “media funds.” Those are pools of public-private subsidy cash flowing from Canadian broadcasters, the Canadian government, and (until the Carney intervention) from American streamers.
The media funds are disbursed to independent Canadian producers to finance their Canadian content productions. The producers then make licensing and distribution deals for those shows with the very same broadcasters and, but for Carney’s intervention, US streamers, too. In other words, the cash going in the top of the media fund funnel comes out the other end, returning to its contributors in the form of lower licensing fees for that Canadian content.
By comparison to the $200M in streamer cash levies that Carney nixed, the large Canadian media companies continue to pay the same five per cent, worth about $309 million. Canadian governments chip in another $1.36 billion, depending on what you are counting.
Again, to point out the cherry-picked counterexample that proves the rule (that you have to look at the last line on the dinner cheque, not the line items), before Carney intervened, the streamers were set to pay more than Canadian broadcasters to “local news” media funds. Maybe unfair, but probably not if you consider Canada’s private broadcasters directly spend $682M annually on their money-losing local news stations.
Any more irritants?
Count on it.
This next CRTC regulation is the most important one: Canadian broadcasters and American streamers operating in Canada must invest in the acquisition or financing of Canadian content for their libraries.
The minimums for these “Canadian Programming Expenditures” (CPE) run at 25 per cent of revenues for Canadian broadcasters and, according to the CRTC’s last order, a mere 8.5 per cent of US streamers’ Canadian revenues.
(In May 2026, the CRTC increased the cash levies on US streamers from 5 per cent to 6.5 per cent and added the expected “CPE” direct investments in Canadian programming to reach a combined cash and investment contribution of 15 per cent. Carney is reviewing that, too, and there’s no prediction on a final number.)
As noted above, the large Canadian broadcasters combine their own cash contributions with CPE investments to get to the much higher 25 per cent.
Discriminatory? Less favourable? To whom?
Finally, there’s at least one more stone in the streamer shoe: ownership of copyright.
I know, you are wondering: could we pick a less arcane subject? Here’s why it’s an issue that drives the discrimination debate.
When Netflix was lobbying against the introduction of Canada’s OSA in 2022, its chief spokesperson in Canada told legislators that its biggest concern was holding copyright in the Canadian shows it was expected to invest in. From its point of view, Netflix just had to own copyright or at least enjoy the presumptive right to demand majority control of the entire commercial lifespan of a Canadian show it buys from a Canadian studio.
But Netflix’s problem was that historically the Canadian government always insisted that Canadian studios —not Canadian broadcasters— retain copyright in their dramas and documentary productions so that they can build the long-term revenue streams that sustain their project-by-project enterprises. Practically speaking, that rule gave the puny Canadian studios needed leverage when negotiating with the larger Canadian broadcasting companies for licensing and distribution deals.
Netflix just didn’t like that deal. As a global distributor, Netflix wanted planetary copyright for any show they acquire from a Canadian studio.
To be pragmatic, Canadian Parliament legislated a framework in the OSA text which presumptively gave copyright ownership to the Canadian studios but in the same breath instructed the CRTC to find a solution that accommodated Netflix and the other streamers. The final compromise, released by the regulator in a two-part ruling in November and May, was that Canadian studios will have to cede majority of a shared copyright to American streamers or Canadian broadcasting partners about half of the time.
Does any of this violate CUSMA?
This is a question that may never be conclusively answered. I am suggesting here there is no violation because the OSA treats American companies better than Canadian companies.
Don’t forget, the door was always open to Netflix and the White House to put the merits of their discrimination case before an independent arbitrator as provided by the CUSMA agreement that was ratified by US Congress three times in 1988, 1993 and 2020.
There is a different strategy now, one of brute trade power.
