Ms Guevremont Presentation Session 2 Final

UNESCO Expert Meeting for Policy Leaders and Decision Makers in the Broadcasting and Audio-visual Industry in AsiaSingapore 27-28 February 2006: 

UNESCO Expert Meeting for Policy Leaders and Decision Makers in the Broadcasting and Audio-visual Industry in Asia Singapore 27-28 February 2006 Treatment of Cultural Goods and Services in International Trade Agreements Véronique Guèvremont Researcher University Paris 1 – Panthéon - Sorbonne

Slide2: 

   An overview of the way cultural goods and services are treated in international agreements -- multilateral, regional and bilateral. The case of the CCT project’s sample group Reference: Treatment of Cultural Goods and Services in International Trade Agreements by Van Grasstek

Summary: 

Summary 1. Introduction: Culture and the Market 2. Definitions and concepts 3. Cultural trade and developing countries 4. Multilateral trade agreements 5. Regional and bilateral trade agreements 6. Perspectives

1. Culture and the Market: 

1. Culture and the Market The “specificity” of cultural trade From the commercial viewpoint, cultural exchanges are economic transactions between producers and consumers… This implies a small role for the state and few, if any, trade restrictions From the cultural viewpoint, culture cannot be left to the uncertain tastes of the invisible hand because cultural goods and services embody values and play a special role in a community

The double nature of cultural goods and services: 

The double nature of cultural goods and services The “specificity” of cultural goods and services… They are specific… Because they have both an economic and commercial value, and a cultural nature (they convey identities, values and meanings).

Distinct perspectives on cultural trade…: 

Distinct perspectives on cultural trade… - Trade could be a threat to cultural diversity and national identity; Cultural policies protect and promote cultural diversity; The State has a role to play. - Trade is more likely to enhance than to reduce cultural diversity; Cultural policies are a form of protectionism; Promoting cultural diversity can be done without restraining trade; Cultural trade – or entertainment – is an economically significant business

Government expenditures for the arts: 

Government expenditures for the arts - Every country in the world treats at least some aspect of its domestic cultural life as a public good…. - But the range of activities that receive government support will vary widely from one country to another… - United States: 6$ per capita - Canada: 46$ per capita - France: 57$ per capita

2. Definitions and Classification: 

2. Definitions and Classification Definitions and classifications can be approached in two different ways… - One is to approach the issue at a conceptual level; - The other is to detailed taxonomies that are employed in trade agreement.

Conceptual definitions of cultural trade: 

Conceptual definitions of cultural trade Characteristics of audiovisual services… Heterogeneous products, Expressions of creativity and cultural diversity, Combination of IT, knowledge, and creativity of artists and professionals, Protected and highly regulated market in a majority of countries, Sensitivity related to cultural values and expressions, The contents define the economic value and the level of commercial and cultural protection, Audiovisual services are capital intensive, have very high costs of production, and reproduction costs are marginal thanks to the technology Their value structures are highly dependent on telecomm networks and infrastructure..

Classifications in trade agreements: 

Classifications in trade agreements WTO agreements: Multilateral agreements are about “goods” or “services” There is no trade agreement on “cultural goods” and/or “cultural services” There is no cultural exception: cultural goods and services are covered in WTO agreements There is no definition of “cultural product”… There is no definition of “cultural services”… but a list of services is annexed to the GATS: the list includes “audiovisual services” and “recreational, cultural and sporting services”

Audiovisual Services: 

Audiovisual Services Motion Picture and Video Tape Production and Distribution Services Motion Picture Projection Service Radio & Television Services Radio and Television Transmission Services Sound Recording Other Audiovisual Services

Recreational, cultural & sporting services: 

Recreational, cultural & sporting services Entertainment services (including theatre, live bands and circus services) News agency services Libraries, archives, museums and other cultural services Sporting and other recreational services Other

Supply of AV services include…: 

Supply of AV services include… The production, commercialization, selling and delivery of services It covers : production distribution (including broadcasting and exhibition of films, TV and Radio programs, and music recordings). It also includes the commercialization of advertising space for all companies operating in the sector. It also includes the broadcasting of radio or TV events Transmission of images through telecom networks.

Economic importance of the entertainment and media markets: 

Economic importance of the entertainment and media markets Estimated at US$ 1,228 billion for 2003 (earnings on international tourism amounted in the same year to US$523 billion… less than half): - North America: 43,5 % (US$ 523 billion for the USA and US$ 23 billion for Canada) - EMEA: 35,8 % (US$ 450 billion) - Asia: 18,2% (US$ 229 billion) - Latin American: 2,6% (US$ 32 billion)

3. Cultural trade and developing countries: 

3. Cultural trade and developing countries Many developing countries have become major exporters of cultural goods This trend is especially notable in the area of cultural hardware While developing countries hold much lower share of the market for cultural software, their exports are growing both in absolute and relative terms UNESCO figures show that in 1994, developing countries exported $4.2 billion worth of cultural goods, and accounted for 11,5% of the global market; By 2002, their exports had grown to $11,6 billion, and 21,2% of the global market.

Local Challenges: 

Local Challenges On the local level, some of the difficulties that developing countries face which limit their opportunities in the cultural industry include: Absence of basic infrastructures; Restricted access to technical expertise, resources and training; Reduced support (financial and otherwise) for enterprise development; Limited distribution capacities; Minimal long-term planning and/or ability to invest in R&D; Outdated copyright legislation and insufficient enforcement mechanisms for preventing piracy.

Slide19: 

Despite these difficulties, some developing countries have done well… India produces more films than any other country; The Hong Kong movie industry has lengthy tradition; Both Brazil and Mexico are major exporters of television programming.

4. Multilateral trade agreements: 

4. Multilateral trade agreements A. GATT B. GATS C. TRIPs D. Agreement on subsidies E. Investment agreements

A. General Agreement on Tariffs and Trade (GATT): 

A. General Agreement on Tariffs and Trade (GATT) Basic trade principles: Market Access: Lowering trade barriers (customs duties (or tariffs) and measures such as import bans or quotas that restrict quantities selectively National Treatment: Imported and locally produce: Goods should be treated equally — at least after the foreign goods have entered the market. Most-favoured-nation (MFN) Treatment: Grant someone a special favour (such as a lower customs duty rate for one of their products) and you have to do the same for all other WTO members.

Exceptions: 

Exceptions Article IV: Special Provisions relating to cinematograph Films Article XX (f) - National treasures Nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures: (f) imposed for the protection of national treasures of artistic, historic or archaeological value;

B. General Agreement on Trade and Services (GATS): 

B. General Agreement on Trade and Services (GATS) The GATS contains a set of rules covering international trade 3 Pillars 1. Set of general obligations and disciplines 2. Annexes on specific issues 3. Countries schedules of specific commitments

Slide24: 

There are notable differences in scope and content between the GATT and the GATS Unlike the GATT, the GATS covers measures affecting both the product (service) and the supplier. The definition of services trade covers not only cross-border supply, but three additional forms of transaction (“modes of supply”).   While quota-free entry (“market access”) and national treatment are generally applicable obligations under GATT, they apply under the GATS on a sector-by-sector basis and only to extent that no qualifications (“limitations”) have been scheduled.

General obligations: 

General obligations Each Member has to respect certain general obligations that apply regardless of the existence of specific commitments: Most-favoured-nation treatment Transparency Availability of legal remedies Etc.

Most-Favoured-Nation Treatment: 

Most-Favoured-Nation Treatment - In the context of the GATS, the MFN obligation (Article II) is applicable to any measure that affects trade in services in any sector falling under the Agreement, whether specific commitments have been made or not. - Exemptions could have been sought at the time of the acceptance of the Agreement (for acceding countries: date of accession). They are contained in country-specific lists, and (in principle) their duration must not exceed ten years in principle.

GATS’s exception: 

GATS’s exception No exception for any cultural services However… According to article XIV: (…) nothing in this Agreement shall be construed to prevent the adoption or enforcement by any Member of measures: (a) necessary to protect public morals or to maintain public order;

Specific commitments: 

Specific commitments In addition to respecting the general obligations referred to above, each Member is required to assume specific commitments relating to: - MARKET ACCES (Article XVI) - NATIONAL TREATMENT (Article  XVII) The relevant sectors as well as any departures from the relevant obligations of Articles XVI and XVII are to be specified in the country’s Schedule of Commitments.

Four modes of supply: 

Four modes of supply Cross border supply Consumption abroad Commercial presence Presence of natural persons In today’s world… (1) depends on technology (3) is high cost (and firms are too small in Developing countries; (4) is constrained by immigration issues but DCs can supply many services through this mode

Slide30: 

The 4 Modes of Supply Under GATS (Source:WTO) COUNTRY A COUNTRY B Mode 1: service transactions Mode 2: service transactions Mode 3: service transactions Consumer from A Consumer from A Company Foreign affiliate Consumer from A Supplier Direct investment in country A Service supply Consumer from A Supplier The service crosses the border The consumer goes abroad Service supply

Slide31: 

The 4 Modes of Supply under GATS (Source:WTO) Mode 4: service transactions Mode 4: employment Service firm Natural person Temporary employment Consumer from A Natural person Natural person Service supply Self-employed goes to country A or employee sent by firm from B COUNTRY A COUNTRY B

Slide32: 

Items deemed to be predominantly delivered through one mode (Source:WTO) Transportation (except supporting and auxiliary services to carriers in foreign ports), Communications services Insurance services Financial services Royalties and license fees Travel (excluding purchases of goods) Supporting and auxiliary services to carriers in foreign ports

Slide33: 

Items for which significant elements of 2 modes of supply are involved (Source:WTO) Construction services Computer and information services Other business services Personal, cultural and recreational services

List of commitment: 

List of commitment A schedule of commitments contains at least eight entries per sector: the commitments on each market access and national treatment with regard to the four modes of supply.

Commitments in Cultural services: 

Commitments in Cultural services Relatively few countries make commitment in cultural services (audiovisual or others) While there are some 58 WTO members that have made commitments in one or more cultural subsector, another 82 members have made no commitments in any of these sectors Apart form the United States, the only countries to make commitments in all subsectors were the Central African Rep., Gambia, and the Kyrgyz Rep.. The data show that the largest number of commitments were in the area of entertainment (Theatre, Live Bands, and Circuses)

C. TRIPS: Agreement on trade-related intellectual property rights: 

C. TRIPS: Agreement on trade-related intellectual property rights The areas covered by the TRIPS Agreement are: Copyright and related rights Trademarks, including service marks Geographical indications Industrial designs Patents Layout-designs (topographies) of integrated circuits Undisclosed information, including trade secrets

Slide39: 

The agreement covers five broad issues: How basic principles of the trading system and other international intellectual property agreements should be applied How to give adequate protection to intellectual property rights How countries should enforce those rights adequately in their own territories How to settle disputes on intellectual property between members of the WTO Special transitional arrangements during the period when the new system is being introduced.

D. Agreement on Subsidies: 

D. Agreement on Subsidies General Approach: Subsidies are considered to be a distortion of maket forces that should be reduced or eliminated; The are no special provision in either GATT or other WTO agreements affecting subsidies to cultural good per se; If a country were to subsidize the production or exportation of cultural goods, these would be just as subject to the Agreement on Subsidies as any other article of commerce.

Subsidies in cultural services…: 

Subsidies in cultural services… Subsidies are among the incomplete aspects of GATS rules In its current form, the GATS does not prevent governments from providing subsidies to their cultural industries The only provision of GATS specifically dealing with subsidies is Article XV. It recognizes that “in certain circumstances, subsidies may have distortive effects on trade in services,” and negotiations have begun with the aim of developing “the necessary multilateral disciplines to avoid such trade-distortive effects.”

E. Investment agreements: 

E. Investment agreements The Agreement on trade-related investment measures (TRIMs) outlaws certain investment measures affecting trade in goods for enterprises operating within the territory of a member The GATS remains the most important avenue for dealing with investment in cultural industries. GATS mode 3 deals with “commercial presence” (i.e. investment) by foreign service providers.

5. Regional and bilateral agreement: 

5. Regional and bilateral agreement Tendencies: Many of the more significant FTAs negotiated over the pas several years are North-South agreements The cultural provision in these FTAs tend to reflect the positions of the industrialized partner

FTAs negotiated in recent years…: 

FTAs negotiated in recent years… FTAs negotiated by Canada and the EU: Will typically provide for some form of cultural exception; The exception can be explicit (i.e. provisions that identity cultural services as exceptions); The exception can be implicit (positive list of commitment; absence of any commitments in cultural areas). FTAs negotiated by United States: Prefers the more ambitious approach of “negative list” in which all services are covered in an agreement except those that are specifically exempted by the parties

US-Singapore FTA: 

US-Singapore FTA Chapter on cross-border trade in services: Apply to the any measures by a Party affecting trade in services by service suppliers of the other Party (“top down” approach: all services are covered, subject to reservations or exceptions) Basic obligations include National Treatment, MNF Treatment and Market Access; Exclusion of “subsidies or grants provided by a Party or a state enterprise Obligation concerning local presence stating that “[n]either Party shall require a service supplier of the other Party to establish or maintain a representative office or any form of enterprise, or to be resident, in its territory as a condition for the cross-border supply of a service”. Singapore has made reservations concerning cultural services (only two) 1, The fist reservation concerns broadcasting services 2. The second reservation concerns distribution and publication of printed media,

US-Singapore FTA: 

US-Singapore FTA Chapter on electronic commerce: Covers electronic supply of services, digital products, transparency and cooperation and finally definitions; The definition of “digital products” refers to “computer programs, text, video, images, sound recordings, and other products that are digitally encoded and transmitted electronically, regardless of whether a Party treats such products as a good or a service under its domestic law”. Basic obligations concerning digital products: fall into three categories: Custom duties: The Parties are prohibited from applying customs duties on digital products of the other Party transmitted electronically National treatment MFN treatment

US-Singapore FTA: 

US-Singapore FTA Chapter on investment: The basic obligations: National treatment, MFN treatment and the Minimum standard of treatment (i.e. in accordance with customary international law, including fair and equitable treatment and full protection and security). Parties are allowed to maintain non-conforming measures provided they conform to certain requirements and are listed in their Schedule of reservations and exceptions. The United States have done such reservation in the cultural sector which concerns the right to restrict ownership of radio licenses for all communications by radio, including broadcasting.

Assessment of the US-Singapore FTA: 

Assessment of the US-Singapore FTA Significant impact in the cultural sector Like other FTAs negotiated by US, it involves a change of approach in negotiation concessions (from a “bottom up” to a “top down” approach) New priority: Digitally delivered content should remain free of cultural protectionism. Digital products (goods or services) are subject to the same basic obligations that apply to the electronic supply of services: national treatment, MFN treatment and free market access

6. Perspectives: 

6. Perspectives A. Trade nogotiations B. Cultural agreements

A. Trade negotiations: 

A. Trade negotiations The Doha Round of WTO negotiations… Was lauched in 2001 Was originally intended to be concluded in 2005 But disagreemtns among WTO members over matters such as trade in agriculture have required that the deadline be postponed (it could be untill the end of 2006)

Cultural trade and the Doha Round: 

Cultural trade and the Doha Round Cultural diversity and other issues related to cultural trade per se are not explicit topics of negotiation in the Doha Round… However, the negotiation still include market access for goods and services (cultural or otherwise); Although audiovisual and other cultural services are ‘on the table’ in the GATS negotiations, that does not mean that any countries will be obliged to make new or expanded commitments in these sectors; Countries that wish to abstain form new-market negotiations are free to do so.

The GATS negotiations: 

The GATS negotiations The GATS negotiations have gone through 3 phases; The first came in the years leading up to the launch of the round, when countries made general proposal… Four countries tabled proposals for audiovisual services: Brazil, Japan, Switzerland, and the United States; The second phase started in 2002, when countries made more precise request of their trading partners (the dealine was June 2002); The negotiations entered a new phase in March 2003 when initial offers were due.

Proposals: 

Proposals Key elements of the proposals made byt the four demandeurs in audiovisual services: The Swiss proposal calls for both a ‘cultural diversity safeguard’ and an Annex to the GATS on audiovisual issues; The US paper acknowledges the validity of subsidies in pursuing cultural objectives The Brazilian submission stresses the importance of discussing subsidy issues

Subsidy and Safeguard provisions of GATS: 

Subsidy and Safeguard provisions of GATS The subsidy and safeguard provisions are important items of unfinished business form the Uruguay Round In boht cases the original agreement provided little more than a mandate to flesh out these matters in futures talks A permissive subsidies regime is sometimes put forward as an alternative to an outright cultural exception The argument has also been made that subsidies in this field can be justified on solid grounds of economic theory

B. Cultural agreements: 

B. Cultural agreements On 20 October 2005, the UNESCO General Conference approved the Convention on the Protection and Promotion of the Diversity of Cultural Expressions The result of a long gestation process and two years of intense negotiations, this Convention reinforces the notions enshrined in the UNESCO Universal Declaration on Cultural Diversity (2001) that cultural diversity is a “common heritage of humanity” and that its defence must be considered "an ethical imperative, inseparable from respect for human dignity”. 

The UNESCO Convention: 

The UNESCO Convention The CONVENTION recognizes… the need to incorporate culture as a strategic element in national and international development policies, as well as in international development cooperation; the need to take measures to protect the diversity of cultural expressions, including their contents; that cultural activities, goods and services have both an economic and a cultural nature, because they convey identities, values and meanings, and must therefore not be treated as solely having commercial value.

Objectives of the Convention: 

Objectives of the Convention To protect and promote the diversity of cultural expressions; To give recognition of the distinctive nature of cultural activities, goods and services as vehicles of identity, values and meaning; To reaffirm the importance of the link between culture and development for all countries, and to strengthen international cooperation and solidarity; To reaffirm the sovereign rights of States to maintain, adopt and implement policies and measures that they deem appropriate for the protection and promotion of the diversity of cultural expressions on their territory.

Relationship to other instruments: 

Relationship to other instruments Mutual supportiveness Complementarity Non-subordination “Nothing in this Convention shall be interpreted as modifying rights and obligations of the Parties under any other treaties to which they are parties”.

The adoption of the Convention: 

The adoption of the Convention 148 Member states voted for the Convention 2 Member states voted against the project 4 Member states abstained