Registration
SOR/99-300 23 June, 1999

Foreign Publishers Advertising Services Act

Regulations Defining Certain Expressions for the Purpose of Section 21.1 of the Foreign Publishers Advertising Services Act

P.C. 1999-1217 23 June, 1999

His Excellency the Governor General in Council, on the recommendation of the Minister of Canadian Heritage, pursuant to section 20.1 of the Foreign Publishers Advertising Services Act[1], hereby makes the annexed Regulations Defining Certain Expressions for the Purpose of Section 21.1 of the Foreign Publishers Advertising Services Act.

Regulations defining certain expressions for the purpose of section 21.1 of the Foreign Publishers Advertising Services Act

Expressions Defined

  1. For the purpose of section 21.1 of the Foreign Publishers Advertising Services Act, the following expressions are defined. "revenues generated by the supply of advertising services directed at the Canadian market", in respect of an issue of a periodical and any material accompanying the periodical whether it is attached or not, means the total amount of space on a page or any part of a page or any lines on a page dedicated to paid advertisements that are placed by a Canadian advertiser, or a person acting on their behalf, and that are directed at the Canadian market. (revenus qui proviennent des services publicitaires destinés au marché canadien) "revenues generated by the total supply of advertising services", in respect of an issue of a periodical and any material accompanying the periodical whether it is attached or not, means the total amount of space on a page or any part of a page or any lines on a page dedicated to paid advertisements. (revenus publicitaires totaux)

    Coming into Force

  2. These Regulations come into force on July 1, 1999.

Regulatory impact analysis statement

(This statements is not part of the Regulations.)

Description

The purpose of this regulatory initiative is to provide for effective enforcement of an exception introduced as an amendment to Bill C-55, the Foreign Publishers Advertising Services Act, resulting from the successful negotiation of a formal agreement between Canada and the United States regarding periodicals. The Government's intention to introduce this exception along with other measures was published in a Government news release of May 26, 1999. The Canada-United States agreement was signed on June 3, 1999, and published in a Government news release of June 4, 1999.

The terms of the agreement between Canada and the United States has ended a long-standing dispute regarding foreign publishers' access to the Canadian advertising services market and has liberalized the Government's former policies respecting periodicals. One of the key changes was the introduction of a further exception, section 21.1, for foreign publishers wishing to access the Canadian advertising services market through the cross border supply of advertising services. Prior to the Canada-United States agreement, only foreign publishers operating in the advertising services market prior to the introduction of the Bill were exempt from the prohibition in the Act.

The new exception described in section 21.1 applies to foreign publishers who supply advertising services directed at the Canadian market by means of a periodical if the revenues generated by the supply of those advertising services represent not more than 12% of the revenues generated by the total supply of advertising services in each issue of the periodical during the period of 18 months beginning on the day the Act comes into force. The level increases to 15 % after 18 months and to 18% after 36 months.

The access exception (section 21.1) cannot be administered without regulations since the measurement of advertising revenues generated by each issue of a foreign periodical would present a formidable challenge for Government officials and foreign publishers. The Regulations will allow for simple, consistent and effective measurement of the exception by defining the expressions "revenues generated by the supply of advertising services directed at the Canadian market" and "revenues generated by the total supply of advertising services" in a manner that employs advertising space in a periodical as a surrogate for advertising revenues.

The definitions provided by the Regulations are simple, easily understood by private sector firms involved in publishing and less demanding than a revenue-based measurement which would have required constant monitoring of confidential and variable information on business' pricing strategies. The Regulations will also make self-assessment of compliance feasible for foreign publishers.

An exemption from pre-publications is being sought by the Government because the Regulations need to be in place in order to enforce the access exception in the Act. It is critical that the Regulations and legislation come into force together. The Foreign Publishers Advertising Services Act must be brought into force by Order in Council. The coming into force provision found in section 22 will make it possible to enact both the legislation and regulations together, ensuring effective administration of the Act and providing guidance to foreign publishers wishing to exercise the limited access provisions of the Act.

Alternatives

Formulas that calculated the value of advertising revenues based on circulation levels were reviewed and dismissed as surrogates for advertising revenues because they were complex and difficult to administer, both for private sector firms and the government. These alternatives did not foster effective compliance, monitoring and enforcement of the access exception found in the Act.

Benefits and Costs

Enforcement of the Foreign Publishers Advertising Services Act requires a simple, reliable and transparent method of assessing the value of advertising revenues that an exempted foreign publisher would be allowed from the supply of advertising services directed at the Canadian market. By enacting the Regulations, foreign publishers will have a clear guide to calculating the acceptable level of advertising revenues (space dedicated to advertisements) to be earned from the Canadian advertising services market and will be better able to determine how to enter the Canadian advertising services market within the scope of the exception provided for by the Act.

The Regulations will not entail any additional costs.

Consultation

The Government's intention to introduce an access exception was announced in a Government news release of May 26, 1999, and the measurement of this exception was clearly identified in the Canada-United States agreement on periodicals published with a Government news release of June 4, 1999. The Canadian Magazine Publishers Association (CMPA) and the Canadian Business Press (CBP) were consulted with respect of the scope and applicability of the legislation and the proposed regulations. Publishers in the United States were consulted by officials of the United States Trade Representative with respect to the terms negotiated under the Canada-United States agreement regarding periodicals.

The consensus among foreign and domestic stakeholders, as well as the Governments of Canada and the United States, was that the designation of space dedicated to advertisements as a surrogate for revenues earned from the advertising services market was the most effective approach to enforcing the access exception (section 21.1) found in the Act.

Compliance and Enforcement

Responsibility for enforcement will rest with the Department of Canadian Heritage.

Contact

Allan Clarke
Director, Publishing Policy and Programs
Cultural Industries Branch
Department of Canadian Heritage
Gatineau, Quebec
K1A 0M5
Telephone: (819) 997-4099
FAX: (819) 997-4169

note:

  • [1] S.C. 1999, c. 23