E N F O R C E M E N T   AND   C O M P L I A N C E

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What is this Agreement and what does it do?

Who benefits from this Agreement?

How can this Agreement help my company?

Can the U.S. Government help me if I have a problem?

How can I get more information?

What is this Agreement and what does it do?

By resolving a lengthy dispute between the United States and Canada over discriminatory measures that the Canadian Government had adopted to protect its publishing industry, this Agreement has significantly increased opportunities for U.S. and other foreign magazine publishers to generate advertising revenue in the Canadian market.

Canada agreed to ease its restrictions on U.S. and other foreign publishers who wish to sell "split run" magazines in Canada. Split runs are magazines that have Canadian editions with foreign editorial content, but with advertising aimed at Canadian readers. It also agreed to liberalize foreign investment restrictions in the magazine publishing sector and to amend tax laws that discriminated against foreign publishers.

The Agreement is in the form of an exchange of letters dated June 3, 1999, between the U.S. Trade Representative and the Canadian Ambassador to the United States. It has no expiration date.

Who benefits from this Agreement?

Any U.S. or other foreign publisher who is interested in selling magazines in Canada with advertising directed at Canadian readers, or who wishes to invest in Canada, can benefit from this Agreement

How can this Agreement help my company?

This Agreement finally resolved a dispute that began in 1965 when the Canadian Government amended its customs tariff to exclude the entry of split run periodicals. The measure was designed to prevent the diversion of Canadian advertising expenditures to foreign (mainly U.S.) publishers and to protect Canada's cultural identity. After a WTO dispute settlement panel found in favor of the United States in 1997, the Canadian Government terminated its import ban and other discriminatory measures against split runs. At the same time, however, it introduced Bill C-55, the Foreign Publishers Advertising Services Act, in its House of Commons which would imposes criminal penalties on U.S. and other foreign publishing companies that use the magazines they produce to advertise directly to Canadian readers.

The following are the main provisions of the Agreement of June 3, 1999 that resolved this dispute:

-Market Access. Canada agreed to narrow the scope of Bill C-55 so that it applies only to foreign-owned magazines exported to Canada which exceed approved levels for advertising directed at the Canadian market. Initially the exemption is up to 12 per cent of the total revenues from advertising directed at the Canadian market. That percentage increases to 15 after eighteen months and 18 after thirty-six months. If the publisher exceeds those percentages, a warning letter will be issued by a Canadian Government Ministry before any enforcement action is taken.

-Investment. Prior to this Agreement, Canada did not permit foreign majority ownership of Canadian magazine publishing companies. The Canadian Government agreed to permit up to and including 100 per cent foreign ownership in the establishment of businesses to publish, distribute and sell periodicals. It also agreed to permit the acquisition of such businesses if they are not Canadian-owned. Partnerships of foreign investors with majority Canadian ownership are also permitted. These foreign investments are subject to review for "net benefit" under the Investment Canada Act. Net benefit is deemed to include undertakings by foreign investors that each periodical title will contain a substantial level of original Canadian editorial content created for the Canadian market. It also includes employment creation and a willingness to have titles edited, typeset and printed in Canada.

-Taxation. Canada agreed to amend its Income Tax Act to include business deductions for advertisers in split run magazines regardless of the nationality of the publisher or its place of business. One half of the standard deduction will be allowed if original Canadian editorial content is less that 80 per cent of the total non-advertisement content of a magazine. The full deduction will be available to advertisers in magazines with 80 per cent or more original Canadian editorial content.

Can the U.S. Government help me if I have a problem?

Yes. If your company is experiencing difficulties selling magazines in Canada or investing in a business that publishes, distributes or sells periodicals there because the Canadian Government is not complying with this Agreement, contact the Office of Trade Agreements Negotiations and Compliance's hotline at the U.S. Department of Commerce. The Center can help you understand your rights under this Agreement and can alert the relevant U.S. Government officials to make inquiries with Canadian authorities, if appropriate, that could help you resolve your problem.

How can I get more information?

The complete text of the U.S. Canada Magazines Agreement is available from the Office of Trade Agreements Negotiations and Compliance's web site.

If you have questions about this Agreement or how to use it, you can e-mail the Office of Trade Agreements Negotiations and Compliance (TANC), which will forward your message to the Commerce Department's Designated Monitoring Officer for the Agreement. You can also contact the Designated Monitoring Officer at the following address:

Designated Monitoring Officer -

U.S. -Canada Magazines Agreement

Office of NAFTA and Inter-American Affairs

U.S. Department of Commerce

14th Street & Constitution Avenue, N.W.

Washington, D.C. 20230

Phone: (202) 482-3810

Fax: (202) 482 - 5865

TANC offers these agreements electronically as a public service for general reference. Every effort has been made to ensure that the text presented is complete and accurate. However, copies needed for legal purposes should be obtained from official archives maintained by the appropriate agency.