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Cablegate: What Is Canadian? Goc Reviews Its Definition Of

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 OTTAWA 001797

SIPDIS

PASS USTR FOR MELLE, CHANDLER, BALASSA, BURCKY AND SCHNARE

STATE FOR EB/TPP/BTA AND WHA/CAN

DOC FOR ITA/MAC -- OFFICE OF NAFTA

E.O. 12958: N/A
TAGS: ETRD SCUL CA
SUBJECT: WHAT IS CANADIAN? GOC REVIEWS ITS DEFINITION OF
"CANADIAN CONTENT" IN FILM AND TV PRODUCTION

REF: 02 OTTAWA 922

1. SUMMARY/INTRODUCTION: Canada applies various tests to
define "Canadian content" of entertainment products, in
order to make funding decisions and to enforce broadcast
content requirements. On June 17, the GOC announced results
of a year-long review (reftel) of the definition of
"Canadian content" as it applies to film and television
production. While the resulting recommendations suggest
numerous changes, they broadly support the GOC's overall
approach to cultural policy. They stress that "Canadian
content can be created only by Canadians." They also
propose that the current "points/expenditure system" - under
which Canadian content is determined by a formula based
partly on the nationality of key creative personnel - be
replaced by a co-called "creative expenditure model." END
SUMMARY/INTRODUCTION

2. THE CURRENT REGIME: As a condition of license,
Canadian radio and television broadcasters are required to
fill certain percentages of their broadcast schedules with
"Canadian" programming. Key public sector film and TV
funding bodies, Telefilm Canada and the Canadian Film and
Television Production Fund (CFTPF), are mandated to support
distinctively "Canadian" productions. The GOC's Canadian
Film or Video Production Tax Credit (CPTC) is also designed
to support production of "Canadian" content.

3. THE RULES: Telefilm Canada and the Canadian Audio-Visual
Certification Office (CAVCO) apply specific rules to
determine whether a given production is Canadian for
purposes of GOC funding and tax credits. These rules are
based on the nationality of key creative personnel
(director, screenwriter, key actors, etc.) and on a minimum
(75 percent) of production costs being paid to Canadian
entities. The Canadian Radio-Television and
Telecommunications Commission (CRTC), the broadcast
regulator, applies similar rules to determine whether a
production is Canadian for purposes of meeting TV
broadcasting quotas.

4. THE PROBLEM: Critics have pointed out for years that
these rules do not truly govern content; they implicitly
assume that what Canadian personnel produce will be
"Canadian content." As one columnist recently wrote, "the
requisite number of Canadians may be employed, but the film
itself may be about American tourists eating Japanese food
in Bangladesh. . . . And why should it be preferred to a
film made by Americans of a Canadian story, as in `The
Shipping News' [a film set in Newfoundland starring U.S.
actors]?" With Canada now the site of a large amount of
U.S.-financed and/or internationally co-produced film and
television, the rules have become somewhat harder to apply.
Moreover, such questions about what is (or should be)
considered Canadian are not only more culturally
problematic, but also of growing economic/commercial
importance.

5. POLICY CONTEXT: Post predicted a year ago (reftel)
that the GOC review, while potentially useful, would likely
not tackle important larger issues about the relevance of
Canadian cultural policy measures. In many cases, Canada's
media/entertainment industries today are vastly more
prosperous, successful and dynamic than they were when these
policies were first formulated. As expected, the results of
the GOC "Canadian content" review are framed within the
broader status quo of Canadian cultural policy and are meant
to reinforce it. In fairness, it bears noting that some
wider issues in cultural policy have been addressed recently
by Parliamentary committees - such as the House Industry
Committee's recent study of foreign ownership restrictions
in telecommunications, and the House Heritage Committee's
examination of the state of Canadian broadcasting (see
website parl.gc.ca under "committee business"). However, we
see little prospect of these studies leading to actual
changes in policy.

6. RECOMMENDATIONS: The results of the "Canadian content"
review are available at website canadianheritage.gc.ca under
"what's new." Following are key features.

-- The review reinforces a basic tenet of Canadian cultural
policy: "Canadian content can be created only by Canadians.
. . . Foreigners cannot relate an event or tell a story from
a Canadian point of view . . . . The mere fact of being
very largely created by Canadians is what gives an
audiovisual work its unique Canadian identity." (This
effectively dismisses the criticism cited in para. 4 above).
-- The review recommends replacing the various current
systems for assessing Canadian content, including the
current points/expenditure system described in para. 3, with
a single "creative expenditure model" which would be applied
nationwide. This would focus on all the "creative costs" of
a production, classed into four groups: authors, creative
collaborators, performers, and technicians. To qualify as
Canadian, a production would need to meet minimum
expenditure requirements in each group. These minimum
expenditure requirements would be subject to a system of
options. Producers could exercise an option to use non-
Canadian elements, and pay for this flexibility by incurring
higher minimum expenditure requirements. For details, see
section 3.2 of the report at website canadianheritage.ca
under "what's new".
-- It recommends that the distribution of Canadian feature
films in Canada continue to be reserved for Canadian-owned
and -controlled companies (a long-standing protective
measure).

-- It recommends that the broadcast regulator consider
exempting commercials that promote Canadian feature films
from the twelve-minute-per-hour TV advertising limit. This
could reduce the perceived disadvantage faced by Canadian
films in advertising and promotion vis--vis bigger-budget
U.S. productions.

7. COMMENT: Canada's cultural-policy-making establishment
is making few concessions in the face of the profound
economic, demographic and technological changes which have
transformed North America's media landscape in recent
decades. At least under the leadership of outgoing Prime
Minister Jean Chretien, all indications are that any policy
changes will be designed to reinforce and improve the
existing complex of protections and incentives, rather than
re-evaluate its relevance. However, it is clear that the
challenges to the status quo - both technical (the Internet,
satellite signal theft, etc.) and political (Chretien is
scheduled to retire sometime in the coming eight months) -
will not go away.

CELLUCCI

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