More than a year has passed since the dispute between the United More States and Canada over the latter's legislation on magazines, Bill C-55, was resolved. Canada agreed to amend this bill to accommodate U.S. concerns, and the United States dropped its threat of retaliation. In the months that followed, no new bilateral cultural trade disputes emerged on the scale of the magazine dispute. How should we interpret this period? Is it peace, or just a pause in fighting? Without question, it is not peace. The fundamental sources of tension between Canada and the United States, which include the pressures of information technology and deepening economic integration on Canadian distinctiveness, remain. This is instead a brief interlude, and will be followed in the near future by yet another trade dispute centered on culture.
The resonance of the magazine dispute in Canada was due not to its commercial value but to the larger issue of Canadian identity, which is under pressure from the assimilating nature of deepening integration. As integration proceeds, Canadian concerns over cultural distinctiveness from the United States will grow unless or until something is done to counter this national insecurity over identity. The resolution of the magazine dispute addressed only the specific disagreement over Canadian legislation on split-run magazines. This made a settlement of the immediate dispute simpler and in many ways easier. Yet by not recognizing the underlying issues for Canadians, the United States only postponed an eventual cultural trade reckoning between the two countries.
The Perspective from Washington
Three factors contributed to stiffening U.S. resolve to combat Canadian cultural protectionism in the late 1990s. First, there emerged in Washington a new appreciation of the global impact of Canadian policy. Second, a grand coalition formed, linking the U.S. entertainment, media, and information-technology sectors in a common front to oppose cultural protectionism. Third, the failure of the Clinton administration to secure fast-track negotiating authority over international trade deals from the 105th and 106th Congresses reoriented the energies of American trade negotiators.
Policymakers in Washington have long understood that other trading partners would look to the U.S. treatment of Canada for precedents, since most countries aspire to have the kind of access to the American market that Canada enjoys. Successful Canadian protectionism can be a model for other countries seeking to escape U.S. retaliation. Canada's support for liberalizing trade in most sectors and its active participation in successive rounds of multilateral trade negotiations has meant that, for the most part, Canada has been a model trading partner in the best sense. However, there are exceptions to this rule where culture is implicated.
The Multilateral Agreement on Investment (MAI) served as an example of this linkage of Canadian cultural concerns and consequences for the international system. Although initially the MAI raised only modest concerns in Canada and the United States, Canadian cultural protectionists began to argue that Canada's ability to maintain its identity would be undermined by the liberalization of investment rules contained in the agreement, which they argued would allow U.S. interests to buy up Canadian cultural industries. With this argument, they were able to rally opposition to the MAI despite the fact that U.S. investors already had greater access to the Canadian market through the Canada-U.S. Free Trade Agreement (CUFTA) and the North American Free Trade Agreement (NAFTA) than the MAI would provide. What was even more startling was that these Canadian arguments were subsequently echoed in Europe and even in Asia. In an increasingly small world, ideas travel fast, and the Canadian concern that the MAI would lead to greater American cultural hegemony struck a chord around the world. …