Steve Saretsky

And the reason for that is that many trade agreements make it clear that you can't condition investments in this way.

And among those trade agreements would include Canada's trade deal with the United States.

So KUSMA or the USMCA under the investment in the investment chapter has restrictions on what would be known as performance requirements.

So we've got an investment from Canada.

an entity from the other country, they come in, you can't establish certain kinds of performance requirements.

This would be a pretty clear-cut example of a performance requirement where you have to invest, but you can't own the IP.

Even countries like France, Italy, Australia that have pretty high percentages of investment requirements don't take the position sort of absolutely that you can't own the IP.

And the risk is, in the Canadian context, yes, what are these companies going to do?

Well, I think they're going to legally challenge the decision.

I also think they're going to look to play this out in the trade arena.

Because what happens is, if this is a prima facie case of violating Canada's trade obligations, then the response from Canada is going to be, well, maybe so, but we've got the right to do that in the treaty because we have a specific exemption for culture.

The cultural sector has an exemption.

But there is a condition or a caveat that attaches to that, and that is the U.S.

is entitled to levy tariffs at an equivalent rate as the benefit that Canada has from using that cultural exemption.

In other words, if this is worth hundreds of millions of dollars from a Canadian perspective for film and TV,

The U.S.

would be entitled to levy tariffs in the hundreds of millions of dollars, and they can target any sector they want.

It's not limited just to film and TV.

They can target dairy or lumber or steel, whatever sector they want.

They can levy equivalent tariffs.