Smucker, Sánchez Lead Bipartisan Letter Expressing Concern with Canada’s Digital Trade Barriers

WASHINGTON-Reps. Lloyd Smucker (PA-11) and Linda Sánchez (CA-38) led a bipartisan letter from 27 of their colleagues from the Committee on Ways and Means, expressing grave concerns about Canada's digital trade barriers. The letter was addressed to Canada-US Trade Minister Dominic LeBlanc and Canada's Ambassador to the United States Kristen Hillman.
"While we are strong supporters of the bilateral relationship with Canada, discriminatory policies, like the Online Streaming Act, undermine the value of the United States-Mexico-Canada Agreement (USMCA)," the lawmakers write.

Canada's Online Streaming Act "is actively restricting access, disadvantaging U.S. companies and artists, and undermining the shared commitment to fair competition that is essential as our countries prepare for the USMCA review," the letter states.

The Online Streaming Act is a discriminatory tax that requires American streaming companies operating in Canada to contribute part of their revenues to funds that produce local Canadian content. Estimates show that this law could cost American companies up to $7 billion by 2030.

Read the full letter. Full text below.

Dear Minister LeBlanc and Ambassador Hillman,

We write to share our deep concerns with Canada's Online Streaming Act (formerly Bill C-11)
and the subsequent Canadian Radio-television and Telecommunications Commission (CRTC)
implementing decisions. We urge the Canadian Government to rescind this digital trade barrier
immediately, including by terminating the collection of fees. This is especially important as our
two countries undertake the six-year review of the United States-Mexico-Canada Agreement
(USMCA). While we are strong supporters of the bilateral relationship with Canada,
discriminatory policies, like the Online Streaming Act, undermine the value of the United States-
Mexico-Canada Agreement.

As you know, the Online Streaming Act requires foreign streaming services to contribute five
percent of gross revenues to Canadian production funds as a condition of market access. A
forthcoming CRTC decision may extend these obligations further, adding direct spending
requirements tied to what the Canadian government deems to be "Canadian content." This
constitutes a clearly discriminatory and burdensome levy on cross-border trade that violates the
spirit of the USMCA.

The USMCA was built upon principles of fair and cooperative trade, and decisions that impose
discriminatory regulations on American platforms create a clear distortion in the digital
marketplace. Under this law, Canada is actively restricting access, disadvantaging U.S.
companies and artists, and undermining the shared commitment to fair competition that is
essential as our countries prepare for the USMCA review.

Additionally, streaming services are a vital part of the Canadian economy, but the
implementation of the Online Streaming Act threatens to chill foreign investment. In 2022,
global studios and streaming platforms invested $7.58 billion1 in production in Canada, while
music streaming specifically generated more than $422.7 million in recorded music revenue in
Canada in 20242. Global studios increased their production levels in Canada by 285 percent
between 2011 and 2021, with an average of 97 percent of cast, crew, and production personnel
working on those projects in Canada3. Heavy-handed regulations from the Canadian government
could jeopardize these foreign investments through the Online Streaming Act and CRTC
decisions.

This law not only endangers cross-border investment but also risks undermining confidence in
Canada's commitment to a fair and open digital marketplace at the precise moment when our
countries should be working to strengthen cooperation ahead of the USMCA review. We
recognize the importance of the U.S.-Canada trade relationship and appreciate Canada's decision
to rescind its Digital Services Tax Act. This was the right call, and it certainly improves
opportunities for bilateral cooperation. However, the Online Streaming Act poses an equally
significant threat to this relationship. As we begin our work to prepare for the USMCA review
next year, we urge you to rescind the Online Streaming Act to show a true willingness to end
discrimination against American companies and artists.

# # #