The warnings: Don't expect any quick resolution and don't expect many U.S. magazines-Sports Illustrated, among them-to enter Canada until the issue is resolved.
U.S. Trade Representative Mickey Kantor's challenge of Canadian taxes and disincentives that keep out so called split-run magazines-American magazines that substitute Canadian content and ads-could take more than 18 months to wend its way through the World Trade Organization.
PRESERVING ITS OWN CULTURE
The U.S. acted last week citing SI's problems in Canada when the magazine attempted to expand its distribution of a Canadian split-run edition to 18 times a year in 1993. Under Canadian laws aimed at preserving its own culture, most U.S. magazines are banned from coming out with editions that substitute Canadian content for U.S. content.
SI, however, was excepted because Time Warner's Time was one of a handful publishing before the ban took effect. A Canadian advisory panel said that because of Time, SI and other Time Inc. publications were also grandfathered in.
In Canada, the arrival of SI set off a furor about U.S. cultural intrusion, and Canada made it tough on any U.S.-based magazines with Canadian content and ads by first preventing Canadian companies from deducting advertising expenses for foreign publications. Then, in 1995, an 80% excise tax was imposed on advertising in the publications.
U.S. CHALLENGED ALL THE RULES
The U.S. action challenged not only the Sports Illustrated situation, but all the rules. "We want to say to the world, this will not be tolerated," said Mr. Kantor.
The Canadian rules "affect all American publishers. The trade representative action is long overdue," said Donald Kummerfeld, president of Magazine Publishers of America.
Sports Illustrated, as expected, also praised the decision. The magazine ceased publishing its Canadian edition when the excise tax took effect.
Canadian publications, however, said the country was only protecting its own culture.
CURBS CLOSE A LOOPHOLE
Charles Larabie, Ottawa spokesman for the Ministry of Foreign Affairs & International Trade, said the curbs merely close a loophole.
Maclean's Publisher Brian Segal said the disagreement illustrated some cultural differences.
"Our view is that it's an area where we, because of our proximity to the Americans, need a modicum of protection in order to maintain the potential for the survival of Canadian magazines.
"I think that Sports Illustrated was perceived to be the thin edge of the wedge and if Time Warner could circumvent with that, then they could circumvent with other titles."