by Elaine Dewar
By late 1973, economic nationalists were gaining the upper hand in Ottawa. They got a boost from events. In August, 1971, President Richard Nixon had shocked the world by taking the US dollar off the gold standard, imposing a 90-day freeze on wages and prices, and a 10% surcharge on all imports—without notice to its best friend and largest trading partner, Canada. Then, after the 1973 Yom Kippur War in the Middle East, OPEC, the Saudi-led oil cartel, embargoed nations that had supported Israel, including the US, and cut production. The price of oil suddenly quadrupled, which drove up inflation while suppressing economic growth. The result was an economic malaise dubbed stagflation.37 Worse, Canadians in Quebec and the Maritimes found themselves scrambling for winter home heating oil because Canadian energy policy and infrastructure had been configured for a continental energy market, not to protect Canadian security of supply. Most of the foreign oil that was available went to the American eastern seaboard first. Being Puerto Rico North was no longer comfortable at all.38
Canadian public opinion, especially among the university-educated boomers in southern Ontario, swung decisively to the economic nationalist side of the debate. Canadian boomers were outraged over so many things that the Americans had done or were doing: the Nixon surcharge; the awful carnage of the Vietnam War; America’s presumed role in the overthrow of a democratically elected government in Chile;39 the Watergate revelations which had been displayed for months via the televised US Senate Watergate Committee hearings.40 Many boomers—me included—began to believe that a culturally, politically, and economically independent Canada was a really good idea. The one concern muttered out loud at dinner parties was this: what if the US marines came marching up Bay Street to protect their investments? The US had helped support Brazil’s 1964 coup to protect American interests there, hadn’t it?41 The US had just helped get rid of Salvador Allende in Chile, hadn’t it? How independent could Canada actually be?
In December 1973, the federal Liberal government, with the insistence of the NDP, threw a big nationalist bone to an angry (and fearful) electorate. It passed a law to create a government agency called FIRA—the Foreign Investment Review Agency.
FIRA was granted the power to screen all proposed acquisitions of control of Canadian companies by foreign entities. By April 1974, a few months before the next federal election, the new agency was in business. Though FIRA was aimed mainly at manufacturing and resource companies, Canadian-owned publishers were also protected by it. From 1974 forward, no Canadian-owned book or periodical publisher, or distributor, could sell control of itself to foreigners without permission from the Minister of Industry who could refuse to allow the transaction, or extract in exchange for that permission a significant benefit for Canada. Even indirect acquisitions of the Canadian subsidiaries of foreign-owned publishers were soon regulated by FIRA. Roy MacSkimming quoted the Minister of the day, Hugh Faulkner, who declared that: “The Canadian government believes strongly that the major segment of the book publishing industry in Canada should be owned by Canadians. Canadian books and magazines are too important to the cultural and intellectual life of this country to be allowed to come completely under foreign control, however sympathetic and benign.”42 Canadian companies were encouraged to buy control of foreign subsidiaries operating in Canada or to become controlling partners of the subsidiaries of foreign companies entering the Canadian market.43
On July 8, 1974, the Liberals were returned to power with a majority, winning back many of the voters they’d lost in Ontario and Quebec in 1972. David Lewis, leader of the NDP, lost his seat. The new nationalist policies of the government, along with the creation of FIRA, had proven to be vote getters for the Liberals, not for the NDP who’d promoted these policies first. Canadians embraced this Liberal form of nationalism, especially in cultural industries. We told ourselves this kind of nationalism was okay: after all, it wasn’t based on ethnicity or religion, it wasn’t exclusionary. Canadians come from everywhere: the stories reflecting us to ourselves would be multicultural too.
A decade later, the Conservatives came to power in a landslide, led by Brian Mulroney, the boy from Baie Comeau, Quebec. He had vowed to offer a friendlier attitude toward foreign investors, especially Americans, not that FIRA was ever much more than a paper tiger. “Canada is open for business again,” is how the Prime Minister put it to 1,450 US executives at a dinner organized by the Economic Club of New York only a few months after he won the 1984 election. His government was there “to assist and not to harass the private sector in creating new wealth and the new jobs that Canada needs.”44 He also enticed a young political operative named Nigel Wright to leave law school at the University of Toronto in order to write speeches and work with his Senior Policy Advisor, Charles McMillan, whose assignments included reshaping Investment Canada, the new name for the old FIRA.45
The Foreign Investment Review Act and its agency were quickly renamed as their aims changed from holding off foreign ownership to encouraging it. Under the new Investment Canada Act, the Minister of Industry became responsible for making sure that certain new investments in Canada by foreign entities, or any shuffling of the ownership of foreign-owned Canadian subsidiaries, resulted in good things for Canada. The Minister got to review new businesses started by foreigners, and also the sale of Canadian businesses to foreigners, plus planned mergers between Canadian subsidiaries of foreign-owned companies. The real point of the new Act was to get net benefits for Canada from these sorts of transactions.46
But Mulroney was never so politically insensitive as to throw open the doors to foreign investment in cultural businesses. Foreign ownership of designated cultural industries remained off limits under the new Investment Canada Act, unless certain exceptional circumstances prevailed.47 These rules applied to the entire publishing system, including the publication, distribution, and sale of books, magazines and newspapers.
Mulroney’s Investment Canada Act forbade the establishment in Canada by foreigners of a new publishing company, or a new book distribution company, or even a bookseller, without the express permission of the Minister of Industry who would expect to see a net benefit for Canada. The Act also forbade mergers or acquisitions of the Canadian subsidiaries of foreign-owned publishers or distributors, even if they were part of larger transactions outside of Canada, without notification and ministerial review. Control of existing Canadian publishers, distributors, or even those stores primarily in the business of selling newspapers, books, and periodicals, could not be sold to a foreigner unless the Canadian company was in financial distress and no Canadians offered to buy it. Even if both of these circumstances applied, the Minister still had to review the transaction and extract net benefits for Canada before granting permission to proceed. And permission did not have to be granted.
The Investment Canada Act became law as the Free Trade Agreement with the US was being thrashed out in Washington’s back rooms. The country was split on the virtues of the deal that Mulroney signed in his first term: the nationalists wanted no part of it, while continentalists were convinced it would make Canada wealthier, or at least save it from economic decline. The Agreement had to be ratified by both Parliament and the US Senate. So, in a bid for political support, well before the election of 1988, a new and even tougher nationalist cultural policy was announced. It was named after Progressive Conservative Prime Minister Brian Mulroney’s hometown—Baie Comeau, Quebec. It was the brainchild of Communications Minister Marcel Masse, a Quebecer who took it as a given that any nation must have its own cultural life. Under this Baie Comeau policy, 51 percent of the shares of any foreign-owned publishing subsidiary in Canada acquired indirectly by another foreign entity had to be sold off to a Canadian entity within two years. Masse sold this new policy to his colleagues as a smart way to prove to Canadians that Canadian culture would be protected from the Free Trade Agreement, which required the same treatment for Canadian and US investors and industries in other areas.48 The policy was politically astute:
it defanged the arguments of the noisy and influential cultural community which worried that Canada’s cultural gains, so painfully achieved under the FIRA and the Investment Canada Act, along with federal and provincial grants, would be swept away by an Agreement aimed at getting rid of protectionist practices, tariffs, and taxes.
The Baie Comeau Policy proved to be politically effective. Mulroney won the 1988 Free Trade election defeating the Liberals, led by John Turner, a former free-trade advocate, who converted to the nationalist side at the last moment, and for a time seemed close to carrying the day. The PC’s pulled through with another majority, though their seats were greatly reduced, while the Liberals doubled theirs and the NDP won the greatest number of seats ever (until 2011). About two million more people voted against Mulroney and Free Trade than voted for them.49
The Free Trade Agreement was duly ratified. So was the North American Free Trade Agreement, followed by a series of other free trade deals including the most recent one with the European Union. In all these deals, Canadian cultural industries were allegedly, or at least publicly, kept off the negotiating table. Because: Canadian control of Canadian culture had proven to be the third rail of Canadian politics. No government could be seen to reduce that control without feeling the burn.
To recap the history: the first iteration of the nationalist Canadian publishing policy was nothing more than the guarantee of a small debenture by the Davis government in order to save itself from the nationalist fuss raised by Jack McClelland at the right moment. The second iteration was no accident, but cultural protection was not its main thrust. It was part of a much larger nationalist economic policy that helped Trudeau the Elder win back the votes of English-speaking nationalists in southern Ontario and Quebec, which he’d lost in 1972. The third iteration, the Baie Comeau Policy and the cultural provisions of the Investment Canada Act, allowed Prime Minister Brian Mulroney the political breathing room to complete the free trade negotiations with the US, quietly started by the Trudeau government years before, and to win a national election in which nationalism versus free trade was the central issue. The Baie Comeau Policy and the Investment Canada Act made it clear that Canadian culture would not be used as a bargaining chip in trade deals because Canadian culture is vital to national sovereignty in a way that softwood lumber could never be.
All iterations of this nationalist policy were rooted in the notion that Massey-Levesque had gotten it right, that Canadians could only develop a national identity if we could see ourselves reflected (in all our splendid ethnic diversity) in books, newspapers and magazines, on television and radio, in song, and on the stage. No such reflections would result if we had no means to help our artists find audiences or laws to prevent the Americans and the British and the French from flooding us with their offerings and buying up all our talent. Canada’s evolving nationalist cultural policy embodied the belief that a country is built from words, images, and sounds, as much as from bricks, lumber, and steel, and that a shared culture is essential to national survival. Perhaps most important, this nationalist policy embodied the public will: there would have been no nationalist ownership rules if Canadian politicians hadn’t believed that their political lives and agendas depended on them.
And so, Canadian book publishers became contractors building Canada. They became recipients of hundreds of millions of dollars in grants and tax credits administered with close attention by civil servants tasked with making the policy and the law work. The Canadian book publishing industry expanded its offerings from the miserable 14 novels and 35 works of poetry and drama produced in 1951. In 2014, according to Statistics Canada, Canadians produced 10,433 new titles.50 That’s a lot of mirrors.
Why the emphasis on publishers (and producers of film and TV and recordings), instead of on the artists who create those reflections?
Because, even as late as 1998 most Canadians did not have home computers,51 and hardly anyone grasped that a global network called the Internet would soon connect everyone to everyone else across almost all national boundaries. Few policy-makers foresaw that this Internet would become a global territory where works of the imagination would be displayed, sold, or offered for free. Few (Avie Bennett was one of the few) understood that such a network would change all the rules of the cultural game, especially the boundary rules.52 Even as late as 2008, writers, filmmakers, and musicians still could not get their creations in front of audiences by themselves: they had to sell rights to publishers, producers, and record companies willing to invest in them and bring their works to market.53 In spite of the rise of the blog, the availability of an endless array of online publishing formats, the success of Amazon, etc., the development of YouTube, Instagram, the whole Silicon Valley oeuvre, most professionals working in the book business still believe that unless the taxpayer bankrolls Canadian publishing companies, Canadian writers will be like so many fish out of water, gasping out their stories in quiet rooms, unheard.
And because of that, though Mulroney’s Investment Canada Act has been amended over the years since the Baie Comeau Policy was announced, it has not fundamentally changed. In the last throes of the Mulroney government’s political life, a new book policy was announced that was a lot like the old book policy. Liberal Prime Minister Jean Chrétien transferred responsibility for screening foreign takeovers in the cultural sector to the Minister of Canadian Heritage in 1999. The Conservative Stephen Harper government made a few changes to the Investment Canada Act: the federal government still reviews offers to purchase Canadian companies, but only if those companies have asset values greater than specific thresholds. These value-based and national security reviews were introduced after Chinese state-owned entities made one offer too many for vital oil sands projects. When it comes to cultural industries, especially publishing, the threshold value which kicks off a review is very low. In other words, the Act and the Policy still exist and still purport to protect publishing, and other cultural industries, from foreign ownership.
Yet on Canada Day, 2000, without public explanation or debate, Canada’s nationalist publishing policy—dubbed the Book Policy in 1992—had actually been stabbed in the heart. That was the day that the U of T received the gift of 75% of McClelland & Stewart’s shares while Random House acquired 25%, along with other more significant benefits. This transaction was the first step in the movement of control of M&S to a foreign owner. It was permitted by the very public servants who were supposed to make sure that control of Canadian publishing companies remained in Canadian hands. Only six weeks earlier, the civil servant in charge of such reviews in the Department of Canadian Heritage—Michael Wernick—had testified to the Standing Committee on Canadian Heritage that Canadian control “of both publishing and the retailing sector is important to maintain,” that it remained the government’s policy, and that this policy had been successful.54
The knife had been inserted this way: the Liberal Government’s Minister of Canadian Heritage, Sheila Copps, signed a Letter of Opinion that resulted in Random House of Canada agreeing to buy 25% of M&S’s shares. The gift would not have been made without that sale, and Random House would not have bought those shares without that Letter of Opinion. The Opinion asserted that the Minister would still consider M&S to be a Canadian company after this transaction took place, and that her successors would be bound by that opinion too, unless the facts presented to the government to get the Opinion changed in a material way.55 The issuance of this Letter led predictably to M&S’s absorption into the global Bertelsmann publishing empire. Any senior civil servant who read the proposed contracts submitted for review by Avie Bennett’s lawyers would have understood that if these transactions went through, M&S’s transformation into another imprint in the Bertelsmann stable would be inevitable.
Yet at the press conference held to announce the transaction, Avie Bennett was praised repeatedly for his philanthropy and his foresight in giving control of M&S to U of T to hold for all Canadians. There were two rounds
of applause to salute his “astonishing generosity.”56 University of Toronto’s President, Robert Prichard, declared, in a University-issued press release/story, his admiration for Avie Bennett’s “extraordinary commitment to the future of Canadian literature, one that utilizes the University as a trustee to perpetuate McClelland & Stewart’s long-standing contribution to Canadian arts and culture.” Margaret Atwood wrote a letter of praise. Michael Ondaatje described the gift as “remarkable.” Three years later, this transaction was cited by the Governor General, Adrienne Clarkson, when she elevated Bennett to the highest office in the Order of Canada—Companion.
Since M&S had been the sine qua non for Canada’s nationalist publishing policy, and even styled itself as “The Canadian Publishers,” when U of T was permitted to sell its M&S shares to Random House of Canada in 2011, it marked that policy’s last breath. The proof? Two years later, Stephen Harper’s Minister of Canadian Heritage and Official Languages, Shelly Glover, approved Torstar’s sale of Harlequin Books to Rupert Murdoch’s HarperCollins LLC for $455 million. The Investment Canada Act provisions permitting such a sale were not met.57 And no one blinked.
And now we come to the tricky part. I’ve spent most of my adult life working as an editor, journalist, and author—in other words, in the publishing trade. Canada’s nationalist laws and policy, first FIRA, and then more explicitly Baie Comeau and the Investment Canada Act, allowed me to pursue what I laughingly call my career as a writer. So, I must declare that though I bring this narrative to you with a pure heart, it is nevertheless soaked in conflicts of interest and personal relationships. Good friends of mine work in the book business. I have had relationships with some of the companies, institutions, and people who played key roles in this story. For example: a few years ago I almost sold a book to McClelland & Stewart Ltd., but backed out because I didn’t like their new contract. In addition, Random House of Canada has been my publisher on three projects, the first of which was very contentious and expensive for the company and from which a book failed to emerge, yet its officers and editors stood by me to the end. Its current staff, and its former publishers, editors, and Chairman, have my affection and respect. (For a list of my conflicts and entanglements, please read this endnote.58)
