Summary: The Canadian Magazine Dispute

The Canadian Magazine Dispute was a conflict between the USA and Canada over tariffs placed on foreign magazines sold in Canada. The Canadian government started placing tariffs on foreign magazines in the 1920s in an effort to preserve their domestic magazine industry. Eighty-nine percent of the magazines purchased in Canada are foreign. Only eleven percent of the magazines purchased in Canada are produced domestically. Even though, such a small number of the magazines purchased are produced domestically the Canadian government believes that these magazines are of cultural importance and contribute to the national Canadian identity. Since magazines are typically published weekly, monthly, or quarterly, they are not forced to meet …show more content…
Time Warner, a US company that produces Sports Illustrated magazine attempted to get around the tariffs and prohibitions by producing Sports Illustrated Canada in the US and then sending it electronically to printers in Canada therefore claiming it was indeed produced in Canada. At one point, it was estimated that up to one hundred split-run US periodicals would be able to claim tax deductions by following this printing method and therefore offer incentives to advertisers. The domestically produced Canadian magazines would not be able to offer these same incentives. In order to prevent the domestic magazines from losing ad revenue the Canadian government added a substantial tax on the advertising revenue of the split run magazines. Foreign companies producing these magazines would have to prove that their magazines contained eighty percent Canadian content to avoid this added tax. The US filed a dispute with the World Trade Organization over this tax as they felt it was discriminatory and they won that dispute. Since then, the US has considered imposing harsh tariffs on goods imported from Canada in response to the tariffs the Canadians have imposed on the US produced magazines. ("The Canadian Magazine Dispute | …show more content…
Protecting jobs is always a consideration when it comes to trade disputes. For instance, currently the US is considering imposing strong tariffs on imported lumber from Canada as they are able to sell it at a lower cost than domestically (US) produced lumber. The US uses Canadian lumber to build homes and produce the paper that US produced magazines are printed on. This is an example of why trade disputes often end in compromise rather than a definitive order in favor of one-side over the other in the dispute.