WTO Rejects Canada’s Appeal

A World Trade Organization appeals board on Monday decided against Canada in a dispute with the United States, ruling that Canadian taxes on advertising in local editions of foreign magazines violate global trading rules.

The appeals board ruling effectively upheld the earlier decision of a WTO panel, which had found that laws seeking to protect Canadian magazines against foreign competition--mostly from U.S. magazines--were not in the interests of free trade.

A Canadian government statement acknowledged the loss of the appeal to the WTO, which first ruled in March against taxes imposed on Canadian editions of U.S. magazines such as Time Warner Inc.’s Sports Illustrated.

In a further blow to Canada, the WTO appeals panel also ruled in favor of the United States in rejecting postal subsidies Ottawa offered to Canadian publications. A WTO panel in March reached a decision favoring Canada on this issue.

The postal subsidies operated by charging less to mail domestic magazines than foreign magazines.

“We’ve just received the ruling and will have to look at it carefully to assess our options,” said Canadian Heritage Minister Sheila Copps.

Copps said Canada would seek new means to achieve its cultural policy objectives in ways consistent with the ruling.

The United States launched the WTO complaint against a Canadian law enacted in December 1995, which imposed an 80% tax on advertising in U.S. magazines that published separate editions in Canada.

The law targeted Sports Illustrated by referring to so-called split runs that began after March 26, 1993, just days before Sports Illustrated Canada was first issued.

“This decision is a real blow to Canadian culture and shows us clearly what’s wrong with these trade agreements,” declared Maude Barlow, chairwoman of the Council of Canadians, a nonprofit group that encourages protectionist policies.

She added that she expected the United States to use the decision to challenge a whole range of cultural protections.

The Canadian Magazine Publishers Assn. said the decision called into question Canada’s ability to foster its own culture.

Charles Larabie, spokesman for the Canadian trade minister, said Canada was operating under the assumption, based on past WTO decisions, that it had 15 months to conform.