Under intense pressure from the solid majority of Canadians who wanted local alternatives to the culture of Donald Duck and Roseanne Barr, the Mulroney government negotiated a clause that exempted cultural institutions and industries from the terms of both the Canada/U.S. FTA and NAFTA. Or so it seemed. The exemption effectively froze funding at 1988 levels, and prevented Canada from mounting new protection mechanisms. As the other machinery of government was dismantled, leaving the federal government unable to generate revenue, culture budgets have been cut, while many of the protective mechanisms in place before the “exemption” was created have rapidly rusted into irrelevance.