Protecting American Streaming and Innovation Act

Digital trade is a critical engine of the United States economy, allowing American companies to deliver innovative audiovisual and audio products and services globally, creating high-paying jobs in the United States and exporting American culture and values.

The United States-Mexico-Canada Agreement (USMCA), which entered into force on July 1, 2020, includes a robust digital trade chapter intended to prevent discriminatory barriers and ensure a level playing field for North American digital service providers.

Canada’s law, the Online Streaming Act, empowers Canadian regulators to apply “contribution” and “discoverability” obligations to audio and audio-visual content, resulting in a revenue-based tax that targets American companies.

Canada has chosen to exempt domestic streaming companies from these obligations, while applying strict obligations to U.S.-based companies. The contribution obligations currently require U.S. companies to pay mandatory high-percentage contributions based on models derived from traditional broadcasters and direct these funds exclusively to domestic cultural funds. They also require U.S. audio streaming companies to pay twice because royalties paid by audio services to Canadian rightsholders are included in services’ taxable revenue. Discoverability obligations potentially require U.S. companies to undertake costly and technically burdensome platform modifications, including the implementation of invasive data collection and reporting systems, to enforce content prioritization or quotas. These obligations are discriminatory and place a disproportionate burden on United States commerce.

These measures appear to contravene Canada’s commitments under the USMCA to provide non-discriminatory treatment to United States digital products and services and avoid unnecessary barriers to digital trade, and appear to be unreasonable, discriminatory, and excessively burdensome towards United States commerce. These measures also appear to be a prohibited performance requirement.

Canada has invoked the USMCA “cultural industries” exception to defend measures like the Online Streaming Act that affect audiovisual and music services. However, the exception traces to the Canada-U.S. Free Trade Agreement era and retains a legacy definition of “cultural industry” centered on traditional publishing, recordings, and broadcasting, rather than modern means of digital delivery.

If left unchecked, Canada’s discriminatory digital policies will set a harmful global precedent, encouraging other nations to adopt similar protectionist digital sovereignty regimes that target successful United States streaming companies and content producers. Trading partners such as Australia, Brazil, Israel, and others have adopted or are considering similar discriminatory digital policies that primarily impact U.S.-based services. Additionally, even within Canada, Quebec is considering an overlapping regime targeting United States companies.

It is in the national economic interest of the United States to enforce its rights under trade agreements and statutory authorities and take appropriate action to address foreign practices that are unreasonable, discriminatory, and burden or restrict United States commerce.

In general— Not later than 30 days after the date of the enactment of this Act, the United States Trade Representative shall initiate an investigation under section 301 of the Trade Act of 1974 (19 U.S.C. 2411) to determine whether Canada’s implementation of its Online Streaming Act (Bill C-11), including the related regulatory actions of the Canadian Radio-television and Telecommunications Commission (CRTC), constitutes an act, policy, or practice that is unreasonable or discriminatory and burdens or restricts United States commerce.

Consultations— In conducting the investigation required by subsection (a), the Trade Representative shall—

Initial report— Not later than 90 days after the date of the enactment of this Act, the United States Trade Representative shall submit to the appropriate congressional committees a report on—

Quarterly updates— The Trade Representative shall submit updates to the report required by subsection (a) on a quarterly basis for a period of two years describing—

Public summary— The Trade Representative shall make publicly available a non-confidential summary of each report and update submitted under this section.

Determination of non-Compliance— If, not later than 180 days after publication of an affirmative determination under section 3(c)(1), the United States Trade Representative determines that Canada has not taken satisfactory steps to remove or amend the discriminatory measures identified in the investigation with respect to which the determination was made, the Trade Representative shall take appropriate action under section 301(c) of the Trade Act of 1974 (19 U.S.C. 2411(c)).

Forms of action— Actions under subsection (a) may include—

Notice and consultation— Before taking any action under this section, the Trade Representative shall—

Termination of action— The Trade Representative may terminate any action under this section if—

the term appropriate congressional committees means—

the term online streaming service means any digital service delivering audiovisual or audio programming to users in Canada via the internet.