The case, pushed doggedly by the U.S., has been mired in an international trade court since last March, prompting barrages of legal submissions and occasional salvos of heated rhetoric. Last week a panel of the Geneva-based World Trade Organization decided that Ottawa had violated international rules in protecting the Canadian magazine market. The full details of the WTO ruling were not disclosed, and neither the trade body nor the Canadian and U.S. governments would confirm them. The panel also ruled that Ottawa's preferential postal rates for Canadian-owned publications were a GATT violation, but let stand a more significant measure in which the government subsidizes postal costs of local publications. The magazine was transmitted to a Canadian printing plant via satellite, thereby avoiding a 1965 tariff Ottawa had imposed on similar imports.
SI claims it consulted two government agencies before making the move and was given a go-ahead.
Apparently, nothing about the WTO decision directly affects the status of TIME's Canadian edition, which was exempted from the 1965 tariff, along with Reader's Digest Canada, because of its then substantial local editorial operations in Canada. Another legislative measure, commonly known as C-58, was passed by Parliament in 1976. That bill effectively prevented local advertisers from writing off as a business expense the cost of their ads in TIME Canada. U.S. government sources refused to comment in detail on the leaked ruling, citing its confidentiality. For the government, the problem is a ticklish one.