Tories agree to EU trade deal, ensure European access to telecom market

OTTAWA—The Conservative government announced it reached an agreement in principle for a free trade deal with Europe, ensuring EU access to Canada’s telecom sector and eliminating EU tariffs on Canadian communications technologies. The government announced the agreement Friday morning, though it did not provide the text of the deal, saying it has not been finalized for release. A backgrounder released at a media briefing Friday morning said the deal will ensure “that all players in the telecommunications market have fair access to networks and services, and ensure that regulators act impartially, objectively and in a transparent manner.” Information provided at the briefing indicated that the government will not be changing foreign ownership limits under the Telecommunications Act. Last year, a leaked document related to the free trade deal, called the Comprehensive and Economic Trade Agreement (CETA), showed that the European Union’s demands had included the elimination of foreign ownership restrictions for Canada’s telecommunications and book publishing sectors, and relaxing foreign investment reviews under the Investment Canada Act. The leak last year showed Canada's position was in line with its Telecommunications Act, which the Conservatives amended to allow foreign companies to own small telecom companies with less than 10 per cent national market share. A government backgrounder on Friday said the Canadian government has protected its right to “use the Investment Canada Act to review certain investments before they are approved.” Under the Investment Canada Act, the federal government can reject foreign takeovers for national security reasons or if they are not seen to provide a “net benefit” to Canada. On a conference call with media Friday, a government official said on a not-for-attribution basis that the threshold to trigger Investment Canada Act reviews for EU-based companies will be raised to $1.5 billion, while companies from other countries will face a threshold of $1 billion within four years. The current threshold is $344 million. This month, under the Investment Canada Act, the government rejected a $520-million deal for Paris- and Cairo-based Accelero Capital Holdings to purchase the Allstream business services unit from Manitoba Telecom Services Inc. The government said Friday that copyright provisions covered in the deal largely echo Canada’s amended Copyright Act, following the passage of a copyright modernization bill last year. Earlier leaked drafts of the demands showed the EU had sought changes to strengthen Canada’s copyright regime. The Wire Report reported in July 2012 that many of those demands were watered down from earlier positions. The free trade deal includes support for e-commerce between Canada and the EU with a commitment that no duties will be applied to digital products transmitted electronically, the Canadian government backgrounder said. European tariffs, ranging from 2.2 to 3.7 per cent, will also be eliminated on Canadian communications technology products, including those for optical fibres and cables, semiconductors, electrical sound and visual signaling equipment, and other products. The Wire Report reported this summer that Canada had agreed to remove advertising and news agencies from its “cultural industries” exemption in the CETA. Under the Income Tax Act, the government provides a tax deduction for advertising spending with Canadian-owned broadcasters and newspapers, though not for foreign owned-companies. That tax credit is not expected to be affected as the official on the conference call said Canada and the EU both use tax credits to support cultural industries and agreed to leave them outside the agreement. The deal is expected to be ratified within 18 to 24 months with approval from EU members and Canadian provinces. Canada must also pass federal legislation to implement the agreement. The text of the deal cannot be released until its final wording is approved, according to information provided at the briefing Friday morning. The government said the CETA will eliminate 98 per cent of Canadian and EU tariff lines and that the deal could increase bilateral trade by 20 per cent. —With reporting by Simon Doyle at sdoyle@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Tories agree to EU trade deal, ensure European access to telecom market

News | 10/18/2013 12:14 pm EDT

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