Late this summer, as thousands of Canadians were playing with their coveted new Apple iPads, the government quietly disclosed that it was conducting a regulatory review of Apple and its entry into the electronic book market. The review caught many by surprise, with some left wondering why any government intervention was needed for another offering in the popular iTunes store.

The answer lies in Canada's longstanding cultural policy and the significant protections it establishes over the publication, distribution and sale of books. These include restrictions on foreign entry into the Canadian marketplace that reserve majority ownership for Canadians on the premise that an open market would hamper the ability of Canadian authors, publishers and booksellers to compete.

Those cultural policies are part of a major government consultation that comes amid signals that Canadian Heritage Minister James Moore may be open to relaxing those policies as online sellers and electronic books shake up the marketplace. Last spring, the government approved the establishment of a physical distribution facility for Amazon.ca, a move opposed by the Canadian Booksellers Association. The approval came with strings attached -- Amazon promised new investments in Canada, increased availability of French language content, and higher visibility of Canadian books -- but the precedent was clearly established.

Stark divide

Over the summer, the government opened the door to extending the policy by launching a comprehensive consultation that asked for comments on the prospect of revising book publishing and distribution foreign investment policy. The consultation generated 44 submissions with most of the major book associations, publishers, and booksellers weighing in.

The submissions reveal a stark divide, pitting the Association of Canadian Publishers (ACP) against booksellers and many foreign publishing interests.

The ACP argues that the rules should remain unchanged, as it is hard pressed to find any redeeming quality about foreign competition or any relaxation of the rules. It maintains that the current restrictions are "effective, practical, flexible, and fair."

The ACP is dismissive of foreign publishers, arguing that head offices in New York or London invariably make the decisions based on "assessments of return on investment and shareholder value." By contrast, it suggests that Canadian independent publishers do not answer to foreign executives or shareholders and are more likely to publish Canadian authors. Moreover, it believes that Canadian booksellers and distributors are also more likely to understand Canadian customers than are foreign-owned companies.

Many associations disagree. The Canadian Publishers Council argues that neither Canadian nor foreign-owned businesses are more or less inclined to support the creation, distribution, and/or sale of books by Canadian authors by virtue of their ownership. Leading international publishers such as McGraw-Hill Ryerson, Nelson Education Ltd., Simon & Schuster Canada, and Oxford University Press all support opening up all aspects of the Canadian market.

Each sector after different reforms

To further complicate matters, specific associations are seeking narrow reforms designed to assist their sector. The Association of Canadian Book Wholesalers calls on the government to require publicly-funded institutions to buy their books solely from Canadian wholesalers, while bookstore giant Indigo and Campus Stores Canada want the elimination of restrictions on parallel imports of books, which may artificially increases book prices for students by at least 15 per cent.

In fact, even the Commissioner of Competition enters the fray, advising the government to relax or remove restrictions in order to increase access to capital, improve conditions for the entry of new competitors, and apply pressure on incumbents to invest and innovate.

The partisan voices make it difficult to gauge the effectiveness of the current restrictions, and leave it to the government to determine whether Canadian authors and consumers -- the two groups that the policies are ultimately designed to benefit -- gain from market restrictions or would be better off with an open, competitive market as the world goes digital.