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The Progressive Economics Forum

Canada’s trade deficit in cultural services

With the Conservatives’ “Born in the USA” Copyright Act now tabled, the fur is flying. A year after leaping to the defence of the oil and gas industry, Terrance Corcoran has got Big US Media’s back (does Terry ever stand up for anyone but the wealthy and powerful?). As always, Michael Giest, who knows way more about copyright than yours truly, has assembled an excellent legal and policy analysis of the Canadian DMCA (here and here).

So I went over to Statscan to find out what our trade balance with the US looks like in this area. It is not surprising that Canada runs a rather hefty trade deficit with the US in cultural services (table 2). Overall, it is a deficit of $300 million, although in one category, film production, we enjoy a surplus due to all of the movies and TV shows shot in Canada. But in the category of interest to the DMCA, “copyrights and related services (royalties)”, we had imports of $879 million in 2005 compared to exports of only $146 million, for a trade deficit of $733 million (ie. this amount leaves Canada and goes into the coffers of Big Media).

Back in 1996, imports for this copyrights category were only $180 million and exports $54 million, for a deficit of $126 million. So the royalties flowing south have grown rapidly, as has our deficit in this sector. Which makes one wonder what all the fuss is all about. The US industry has thrived in Canada over the past decade, with profits up almost five-fold. As capitalists we should expect them to want even more, but that does not mean we should hand it over on a silver platter without anything in return.

The implication of the Canadian DMCA is that it will likely increase that trade deficit by strengthening the rights of copyright owners at the expense of users, shifting a delicate balance that has been struck over the years between private profit and public interest. And with some considerable irony, too, since the Tories are ostensibly about free trade and small government, whereas this legislation is about protecting monopoly rights of foreigners while expanding the powers of the state to invade privacy on behalf of those interests.

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