Should a future Canadian government have the power to regulate foreign ownership of this countrys telecommunications sector? Stephen Harper's Conservatives don't seem to think so.
Through the Comprehensive Economic and Trade Agreement (CETA) currently under negotiation with the European Union the Conservatives are set to make it extremely difficult to reverse their recent reforms allowing foreign multinationals to take over Canadas telecommunications industry.
A leaked German CETA negotiating document dated June 18 reveals that Canada has agreed to weaken its telecom reservations under the accord from an Annex II to Annex I category. An Annex II reservation allows future policy changes and protectionist measures in a sector while an Annex I reservation only allows Canada to maintain current limits on foreign ownership or to further liberalize the sector.
In practical terms, this change means that if a Liberal or NDP government wins office in 2015 they would have a hard time reversing the Conservatives reform to the Telecommunications Act buried in last years 450-page omnibus budget. That move allowed foreign-controlled corporations to buy 100 per cent of telco companies holding up to 10 per cent of the Canadian market. The foreign company is then allowed, in the words of the leaked German CETA document, unlimited expansion from 10 per cent market share.
If the Conservatives stay the path on CETA a future government that tries to reverse these telco policies could face a challenge from a European investor.
During the last formal exchange of CETA offers in October, Ottawa proposed the much stronger Annex II reservation for telco. But as part of a recent top-up market access package Canada gave in to EU pressure to downgrade this reservation.
This is the first time in any trade agreement, notes the German memo, that Canada has included telecommunications in such a way. In NAFTA and all previous trade and investment treaties, Ottawa reserved the right to adopt or maintain any measure with regard to restricting foreign ownership in telco.
They did so with good reason. Foreign ownership of this countrys telco sector is bad for Canadian workers, security and culture. The spectrum (airwaves) telco providers use is a limited and valuable public asset. As such, its particularly damaging to the Canadian economy when foreign companies transfer telco jobs, as well as research and development functions, to their existing structures outside of Canada.
Beyond jobs, the Telecommunications Act currently makes companies responsible for strengthening and safeguarding Canadian culture. But the separation between Internet, phone, music and the broadcasting industry has largely disappeared so allowing foreign ownership in telecommunications also paves the way to foreign ownership in broadcasting. And this will almost certainly undermine current Canadian cultural content rules.
Finally, there are privacy and national security issues with foreign ownership in the telco sector. Many countries monitor individuals communications and having foreign companies in charge makes Canadians data more vulnerable to the whims of other governments.
After the Conservatives announced they were looking to open the sector up to foreign telecom providers, Public Safety Canada privately warned Industry Canada that the plan poses a considerable risk to national security. According to a Feb. 25, 2011 letter marked "secret" that Daniel Lavoie, a senior official with Public Safety, sent to Industry Canada, "The security and intelligence community is of the view that lessening or removing restrictions from the Telecommunications Act, without implementing mitigation measures, would pose a considerable risk to public safety and national security."
Locking telco ownership rules into CETA creates concerns for jobs as well as Canadian culture and security.
But even more fundamentally, there is the question of the sovereignty of the people. Canadians must be able to elect officials who can reverse the current governments telco policies. Locking us in to a current government's policies goes against the very core of democracy.
This article was originally published in the Hamilton Spectator and is reprinted here with the author's permission.
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