Secret pressure in high places

Brian D. Johnson November 11 1985

Secret pressure in high places

Brian D. Johnson November 11 1985

Secret pressure in high places


Before his sudden resignation from the federal cabinet last September, Marcel Masse became widely known as a determined defender of Canadian culture. As communications minister in a government interested in attracting American investment, he took a bold stand to protect Canada’s cultural sovereignty.

But since his departure there has been growing pressure to include cultural industries as a bargaining chip in upcoming trade talks with the United States. Last week Maclean ’s obtained a series of secret documents, including a letter written by Canada’s ambassador to Washington, Allan Gotlieb, urging Ottawa to weaken Masse’s program to protect Canadian publishing from foreign control.

Sent to Minister of Regional Industrial Expansion Sinclair Stevens last August, the confidential letter conveys objections and threats from highlevel U.S. interests who say that the publishing policies promoted by Masse were “a harbinger” of how Ottawa intended to protect other areas of culture. As well, another document submitted to cabinet by external affairs deparment officials declares that “insistence on exemptions for cultural institutions could prejudice the successful conclusion of the C a n a d a/U. S. A . trade negotiations.”

Masse had made a symbolic decision to protect cultural sovereignty with a policy to review foreign investment in the publishing industry. Announced last July, it effectively prevented the U.S. communications conglomerate Gulf -IWestern Industries from taking over Prentice-Hall Canada after acquiring the New York-based parent company last year. Last month Ottawa gave Gulf + Western until the end of the year to revise its proposal. The documents reveal that factions on both sides of the border now expect

that the Prentice-Hall decision will serve as a test case for the entire cultural sector.

Gotlieb urged Ottawa to allow the takeover. He wrote that former U.S. trade representative Robert Strauss, currently lobbying for the company,

phoned him on July 30 “to say that Gulf + Western will adopt a ‘scorched-earth’ response if we enforce the policy on them.” That response would almost certainly include closing Prentice-Hall Canada.

More recently, powerful forces in both Washington and Ottawa have been pressing the Mulroney government to abandon Masse’s policy. Last week Secretary of State George Shultz raised the issue with External Affairs Minister Joe Clark during a meeting in Calgary. And in Ottawa former Newfoundland premier Frank Moores, a close friend of the Prime Minister, has been lobbying on behalf of Gulf + Western. Meanwhile, members of the arts community say that by backing down, Ottawa will open the door to

foreign invasion of Canada’s cultural industries. Said novelist Margaret Atwood: “What people are really worried about is having a huge and very influential communications empire here under foreign control.”

Under the policy laid down by

Masse, Gulf + Western would have two years to divest the controlling interest in Prentice-Hall Canada to a Canadian buyer. With annual revenues of nearly $30 million, the subsidiary is one of the two largest publishers in the country (the other: McGraw-Hill Ryerson). Since acquiring the parent company, Prentice-Hall, Gulf + Western now controls four publishing firms, some of which have large operations in Canada. And analysts say that the weight of such an empire could jeopardize the Canadian-based competition, whose position is already precarious: foreign-controlled publishers earn 80 per cent of Canadian book sales. Said Malcolm Lester, president of the Association of Canadian Publishers: “The Americans would find it intolerable if 80 per cent of all their book sales were done by foreign-owned companies.”

According to a secret government report to Masse last May, the PrenticeHall subsidiary claimed that 35 per cent of its sales were of Canadian books—but only seven of its 21 general-interest “Canadian” books pub-

lished last year were by Canadian authors. Said popular historian Pierre Berton: “If Gulf + Western is allowed to keep Prentice-Hall, it’s the thin edge of the wedge. We don’t allow foreign interests to buy newspapers or banks, and we have to keep the publishing industry in Canada.”

Novelist Matt Cohen, chairman of the Canadian Writers’ Union, said Gulf + Western’s persistent lobbying proves that “they regard Canada as a cultural market that is theirs by right. But there is no real minister of communications at the moment to carry on the fight within the cabinet.” Acting Communications Minister Benoît Bouchard supports his predecessor’s policy but appears to lack influence in cabinet. Among the documents obtained by Maclean’s is a memorandum from Bouchard to Stevens firmly stating his opposition to the takeover. Wrote Bouchard: “The transaction will have major implications for the industry as a whole. Another large foreign-controlled firm, McGraw-Hill Ryerson, has indicated that if [it] is approved, they will themselves move to acquire other book publishing companies in Canada.”

It was Gotlieb who first sounded the alarm against Masse’s policy last July. In his unusually frank letter—the ambassador himself refers to its “great

candidness”—he says that the policy “is seen as more radical than that pursued by the Trudeau government, although the latter was perceived as highly nationalistic and interventionist as far as foreign investment is concerned.”

Replacing the Foreign Investment Review Agency with Investment Canada, the Mulroney goverment has tried to encourage U.S. investment. But with the publishing policy, writes Gotlieb, the Conservatives have “introduced the Canadianization of a new sector of our economy.” He adds: “The effort we make must be heroic in proportion and consistent in application. It took many years to undermine the image of Canada as one of the best countries in the world to invest. It will take many years to reverse the negative image and build a new one.” He added that Masse’s policy is viewed even less favorably than Trudeau’s energy policy: “Unlike the National Energy Program, which set a

precise limit of 50 per cent on the Canadianization goal, the book-publishing policy has no such ceiling. It is widely seen as a harbinger of what will be done in other areas of communications; e.g. film distribution. Accordingly, its vagueness and lack of specificity attract additional concern.” Although it is hard to determine what effect Gotlieb’s letter (dated Aug. 6) has had on Ottawa, the secret external affairs report to cabinet (dated Oct. 10) clearly echoes its sensitivity to U.S. concerns. That document states: “There is a real potential for conflict between our desire for a successful conclusion to ^ the trade negotiations ? and our pursuit of cul2 tural sovereignty, if the g latter includes restric£ tive policies on ownership, market access and subsidization.”

For Masse’s part, he is still awaiting the results of an RCMP investigation into alleged irregularities in his election expenditures. Although no charges have been laid against him, his political future remains in doubt. In an interview last week he disclosed that he was considering resigning his seat. “At a certain time,” he said, “one has to ask oneself what one is doing.” Meanwhile, members of the arts community and a variety of Ottawa sources say that they suspect Masse’s resignation might have been engineered by a conspiracy of American interests ranging from the communications industry all the way to the Pentagon. Asked about those theories, a source close to Masse said: “It wouldn’t surprise me. The line Masse was taking is that you can’t barter away culture. For them culture is entertainment. It’s a business.”

Any attempt to surrender a degree of cultural sovereignty would likely meet strong opposition among numerous interests in Canada. The cabinet document reports that the Americans would like to include book publishing, copyright law and the film industry in the upcoming trade talks. Said Atwood: “Canadians feel apologetic and crawly just talking about this stuff. Very few other countries would even have let it get to this point.”