USMCA: Canada gives 'national treatment' to US labels and performers for neighbouring rights

By Emmanuel Legrand

Following ratification of the US-Mexico-Canada Agreement (USMCA) by the Government of Canada on April 29, US performers and record labels will now be able to collect neighbouring rights from the public performance of their recordings in Canada (equitable remuneration), despite the fact that the US has not implemented a similar legislation.

  USMCA gives US performers and labels "national treatment" and they will be treated with the same rights as Canada's performers and labels. Since Canadian copyright law recognises neighbouring rights for performers and labels, this provision will also apply to US nationals from now on.

  In the US, performance rights for recordings only apply to recorded music played by non-interactive platforms such as Pandora, SiriusXM or webcasters and are collected by SoundExchange. There is no equitable remuneration for the use of recorded music by traditional radio station or TV channels.

Doing the right thing

  For Graham Henderson, President and CEO of Music Canada (pictured, below), the trade body representing major labels in Canada, giving national treatment to US performers and labels rectifies "an unfair situation." Speaking to this writer, Henderson said it was "a case of doing the right thing."



  Henderson added: "The way we look at it in Canada is that our brothers and sisters from across the border deserve to be remunerated, whether or not the US is a bad actor. If we are going to wait for the US to introduce equitable remuneration, we'll be waiting until next century! We can continue to pursue a quest and try to convince the US that they should introduce rights but it is probably going to go nowhere. Should we punish American performers? So what is happening here is a question of doing the right thing."

  Henderson said that the measure may also benefit Canadian artists. At the moment, radio stations in Canada that play American artists do not pay equitable remuneration whereas they do when they play a Canadian artists. He explained: "If stations play Canadian music on Canadian radio, they have to write a cheque but not when they play music from the US. That was not an incentive to play Canadian music. Removing this perverse incentive will produce better results for Canadian artists."

Repeal the previous limitations

  The Canada Gazette has published on April 29 a statement "Amending the Statement Limiting the Right to Equitable Remuneration of Certain Rome Convention or WPPT Countries," in order to allow Canada "to fulfill its obligations to provide national treatment in respect of certain uses of sound recordings whose makers were US nationals at relevant times." The previous statement from 2014 limited "the scope and duration of the right to equitable remuneration for makers from other WPPT or Rome Convention member countries that do not offer a similar right."

  The new wording states that the USMCA "will subject Canada to new national treatment obligations with respect to the right to equitable remuneration for US rights holders such that further changes will be required to the 2014 Ministerial Statement once the agreement enters into force." As a result, the amended statement "would repeal the limitations included in the 2014 Ministerial Statement regarding a sound recording whose maker, at the date of the sound recording’s first fixation, was a national of the United States."

  Henderson expects income from equitable remuneration collected by Re:sound, the umbrella society collecting neighbouring rights on behalf of rights holders, is likely to go up as a result, although he says it is too early at this stage to come up with a number.

A critical change for Canadian law

  Neighbouring rights were introduced by the Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations signed in 1961 and reinforced by the World Intellectual Property Organisation's Performances and Phonograms Treaty (or WPPT) of 1996. The US has not ratified the Rome Convention but has adhered to the WPPT in 2002.

  Most countries around the world that have national neighbouring rights legislation have excluded American performers and labels from the proceeds of equitable remuneration since the reciprocal right was not available to their nationals in the US. SoundExchange has taken the unprecedented step earlier this year to report six countries (UK, France, Germany, Japan, the Netherlands, and Canada) to the US Trade Representative for not giving national treatment to Americans.  

  For SoundExchange President and CEO Michael Huppe, USMCA brings "critical change to Canadian law." Noting that "many territories continue to discriminate against American artists and labels, leaving them unpaid when their music is used in other countries," the ratification of the USMCA "will ensure equal treatment for American music creators that will finally provide them millions of dollars in royalties every year when their recordings are used in Canada."

Close the compensation gap

  Huppe continued, "I want to thank the US Trade Representative and his team for securing this important piece of the USMCA, and also the Government of Canada and USTR for ensuring that this important principle was fully implemented as intended in the interest of American music creators. Canadian and US leadership on this issue sets an important example that should become the standard for trade agreements with other countries where American music creators are denied equal treatment under the law."

  Huppe said that it will continue its campaign to obtain "full national treatment" from other countries. SoundExchange believes that a potential trade deal between the US and UK "presents another opportunity to significantly close that compensation gap created when countries choose to penalise Americans by denying them royalties earned for the use of their recordings."