The Harper government is leaning toward allowing Internet bookseller Amazon.com to set up a warehouse and shipping centre in Canada, a senior official says, based on the belief the U.S. firm's entrance would offer a "net benefit" for Canadians.
The official said the move would be in keeping with the March 3 Throne Speech which trumpeted the virtues of opening markets to more foreign competition and investment.
"Look at the Speech from the Throne: it's anti-protectionist. It's [about]free and open trade."
The official cautioned against assuming Ottawa has made up its mind, saying Amazon's proposal will still have to go through a review process and no final decision has been made.
But the view in government is tilted toward the idea that Amazon's proposal is not unreasonable.
"If you look at the issue specifically, it's Amazon setting up a warehouse to be able to distribute what they already distribute via the Internet," the government official said of the U.S. bookseller's request to establish a physical presence in Canada.
"There's no change in terms of Canadian content."
Canadian booksellers have called on Ottawa to reject Amazon's application, arguing that it would hurt domestic businesses and amount to a scaling back of this country's protectionist policy toward its cultural sector.
Heritage Minister James Moore, whose department is reviewing Amazon's application, told reporters Tuesday that Ottawa plans to render a verdict "soon."
The senior government official said if Ottawa were to rule in Amazon's favour, there would be "no rule bending" at play.
It's not clear yet if Ottawa would demand any concessions from Amazon were it to approve the firm's application.
Meanwhile, on Tuesday, an Amazon executive broke the company's silence since controversy over its plans erupted last week, saying the Internet bookseller has been a big supporter of Canadian culture for years.
Paul Misener, vice-president of global public policy at Seattle-based Amazon, said his company has poured "tens of thousands of dollars" a year into supporting Canadian culture since it launched Amazon.ca in 2002.
Mr. Misener took on the Canadian Booksellers Association for claiming that a U.S.-based company couldn't effectively promote Canada's culture.
"At some level it seems preposterous that that claim could be made, especially given our track record of eight years serving Canadian customers and authors and publishers," Mr. Misener said in an interview. "To claim that somehow an American company can't help Canadian culture is just proved wrong by the facts."
Amazon goes further than other Canadian booksellers by promoting domestic books beyond its borders, he said. Customers in more than 170 countries, ranging from China to Sweden, ordered books at Amazon.ca last year, he said. "I don't think anybody is doing anything near this to help disseminate Canadian cultural products globally."
When it launched Amazon.ca, the web retailer switched to carrying Canadian versions of books rather than the U.S. publications which "cut out the Canadian publishers," Mr. Misener noted.
Jacqueline Hushion, executive director of the Canadian Publishers' Council, said its members have generally appreciated having Amazon as a customer. "I think publishers have been satisfied with Amazon.ca's relationship with them and Canada."
Nevertheless, the publishing community is divided on the issue, with Canadian-based publishers still sensitive to Amazon's foreign ownership. The Association of Canadian Publishers "endorses the policy of Canadian ownership of all elements of the book supply chain: publishing, distribution and retail," said executive director Carolyn Wood. "As with all cultural industries, the stronger and more stable the Canadian production and supply chain, the more likely Canadians are to encounter the culture of their own country."
Mr. Misener said that Amazon's goal in building its own shipping and warehouse depot in Canada is to slash costs and pass on savings to customers with lower prices and other offers, including free shipping.
He said that Amazon's ultimate plan is to branch out into a wide array of products beyond books, as it has done in its U.S. home base and other countries.
"We certainly envision increasing the number of categories of products available, just like we have elsewhere in the world," he said. Canada is alone among major countries in which Amazon operates without domestic employees, he said.
Wendy Evans of retail specialist Evans & Co. Consultants Inc., said Amazon is gunning to improve its profit margins through greater efficiencies.
If Amazon gets the green light to expand, it will reshape the landscape for virtually all retailers - not just booksellers, she predicted. "It's another huge competitor in our marketplace that will compete across a large number of categories. That could be limitless, really. They're competing with a different [lower]cost structure."