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Cultural Protectionism.

With globalization has come the progressive dismantling of many formal barriers to trade and investment as well as the establishment of global markets for goods and services. Greater economic interdependence among nations has been coupled with a greater sense of interconnectedness, as information technologies readily convey ideas and images throughout the world. Yet for many groups, the benefits of this integration are countered by perceived vulnerability to foreign influence and control. Citizens, government officials, and journalists in many nations are raising concerns that the globalization of world economies and communications undermines the cultural identity of a local populace.

Common markets have sewed to promote similar behaviors and the pursuit of similar lifestyles among consumers--especially the young--in many corners of the world. This raises fears that the customs, heritages, and traditions of diverse societies are being eroded. Such fears have led to the call for policy objectives and tools to provide cultural safeguards as nations adapt to globalization. Various forms of trade control, including quotas, taxes, and subsidies, have been applied by several countries for the purpose of protecting and nurturing domestic culture.

Advocates of free trade have long contended with protectionism based on economic rationales. Such protectionism was promoted by producers or communities hurt by imports, or calling for the stimulation or subsidization of exports for particular domestic products. Cultural protectionism adds another dimension to trade policy disputes, and will shape the ongoing formulation of international trade and investment regimes. Indeed, one factor that led to the derailment of the OECD Multilateral Agreement on Investment negotiations in spring 1998 was concern over the protection of Europe's cultural industries. The discord focused on the video broadcasting and motion picture industries, where some nations argued that protectionism was necessary to avoid domination by foreign (especially U.S.) productions.

Cultural protectionism reflects one of the growing list of tensions that arise as trends toward marketization around the globe affect the sovereignty of the nation state. Deference to the principles of comparative advantage demands the reduction of barriers not associated with direct costs of production and distribution. As tariffs, quotas, import licensing, and other long visible trade barriers come down, other concerns become more obvious.

In 1947, when the General Agreement on Tariffs and Trade (GATT) was first established, the closest it came to cultural issues was to recognize special circumstances surrounding cinematographic films, allowing some local content quotas (Article IV). Although such film quotas did allow for a minimum proportion of screen time for films of a specified origin, cultural protection received little attention in GATT. This may have reflected the somewhat greater cultural security of the signatory nations in a world that was more culturally segregated than it is today. Now, negotiations surrounding important trade treaties include debates over cultural exemptions and exceptions. This reflects the recognition of the power of trade to shape cultures and the perceived need of countries to raise or preserve barriers against the "intrusion' of foreign cultural goods and influences.

CULTURAL INDUSTRIES, CULTURAL GOODS

While globalization is often associated with the pervasiveness of such brands as Coca-Cola, McDonald's, Nike, and Marlboro, brand loyalty depends on lifestyle choices and the associated images. As Barber (1996) notes, the ability to produce and globally promote images, symbols, and ideologies conveys the power to shape the values and emotional ties underlying consumer choices. Such sectors as film and video, television broadcasting, publishing (including newspapers and magazines), and the music industry reflect and promote the producer's culture. Advertisements using these media also convey values that have an impact on culture. A noted French film producer, expressing concerns over foreign domination of cultural industries, maintained that

sound and pictures have always been used for propaganda, and the real battle at the moment is over who is going to be allowed to control the world's images, and so sell a certain lifestyle, a certain culture, certain products, and certain ideas. (Cohen 1994)

Opposition by many French critics to the opening of Euro Disney in 1992 (the park was referred to as a "cultural Chernobyl") is also a manifestation of perceived threats associated with cultural industries. Yet it is important to note that the notion of culture and cultural industries as they pertain to trade and services is quite difficult to clearly define or limit. Here we focus on the areas included in the above discussion--movies, television, publishing, radio, and music. This is consistent with NAFTA's definition of "cultural industries" (Article 2107). Outside these parameters, though easily not beyond the pale of culture, are such issues as agricultural protections aimed at preservation of the family farm, textile quotas to protect Southern states' textile heritage, and any restrictions imposed to protect industries with a significant impact on how any particular country sees itself and its historical makeup. For example, in the spring of 2000, Norway and Japan argued before a UN conference on trade in endangered species that reopening commercial trading in whales should be allowed because whaling was an intrinsic part of their culture and national heritage. In fact, Norway resumed exports of whale blubber to Japan this year despite the ban under the auspices of the International Whaling Commission.

In such cultural industries as movies, television, and music, the United States is a dominant player. Information production, including program creation, distribution, and delivery systems (cable, satellite, and hardware) help comprise the information economy in which the U.S. enjoys a strong competitive advantage. The size and wealth of the domestic market are also a source of comparative advantage, as cultural products can realize a substantial return on investment domestically and can be exported with litde additional cost. Cultural industries in the U.S. are in an advantageous position to bear the costs of developing overseas market share. According to Garten (1998), the entertainment industry, including movies, music, software, and broadcasting, is America's second-largest exporter after aircraft.

The global reach of American culture is particularly evident in movies and videos. Hollywood has dominated the film industry since the 1920s, and now receives roughly half of its revenue from overseas, compared to 30 percent in 1980. In 1996, the U.S. accounted for 70 percent of the film market in the European Union (EU), up from 56 percent in 1987. And it holds over half of the film market in Japan.

Cultural protectionism, then, is often directed against "onslaughts" of America's "cultural machine," including such cultural goods as movies, television shows, publications, and sound recordings. The U.S. has been accused of "cultural imperialism," "cultural colonialism," and "cultural hegemony." Former Canadian Prime Minister Kim Campbell has declared that "images of America are so pervasive in this global village that it is almost as if instead of the world immigrating to America, America has emigrated to the world, allowing people to aspire to being Americans even in their distant countries" (Barth 1998). In fact, approximately half of all recent trade disputes between the U.S. and Canada involve cultural industries, as Canada seeks to resist further inroads of this "dark side" of free trade.

COMMERCE AND CULTURE

Canada's fears of U.S. cultural imperialism may be surprising considering that, by many objective measures, the U.S. and Canadian cultures share many similar values. These concerns are more understandable in light of the flow of cultural goods into Canada from its neighbor to the south. Of the films shown on Canadian screens, 96 percent are of foreign origin, primarily American. Three-quarters of music on Canadian radio is not Canadian. Four out of five magazines and six out of every ten books sold are foreign, mainly American.

Global commerce can be viewed as an enterprise involving in-group versus out-group conflict. Under conditions of perceived threat, the zero-sum perceptions of trade are amplified and "foreignness" takes on negative meanings. Appeals for cultural protectionism appear to revolve around three interrelated threats: (1) the potential contamination and destabilization posed by the cultural goods themselves; (2) fears that imported cultural goods will displace local culture, thereby contributing to cultural homogenization; and (3) the economic threat posed by foreign domination of certain cultural industries.

Cultural Contamination

Cultural goods such as movies, television programming, and publications are vehicles for the transmission of ideologies, values, and lifestyles that may be seen as corrosive or corrupting to the recipient culture. Critics in Islamic nations, for instance, have pointed to the licentiousness, violence, disrespect for authority, and materialist consumerism conveyed by Western secular culture as unwanted contaminators threatening to undermine Muslim morality. Kuran (1996) maintains that a key feature of the Islamic economic system is to help prevent Muslims from being assimilated into the emerging global culture. Collectivist morality can be reinforced by encouraging interaction primarily with members of one's own ethno-religious subgroup. Economic transactions across group boundaries open the doors to the individualist morality of the West, diluting Islamic cultural identity.

The concerns of Chinese officials over Western "spiritual pollution" also link commerce to cultural disruption. Unfortunately, the history of Western commerce with China provides rich support for such concerns. The behavior of Portuguese traders in the 1500s earned them the label of "ocean devils" by Ming authorities. In the 1600s, Wang Fuzhi argued that the Chinese and the foreign "barbarian" cultures should be kept apart--like fish, they should pass each other without taking the least notice. Despite Chinese attempts to restrict trade, China was "opened" to the West as a result of the Opium War with the British (1839-1842) and subsequent treaties with European powers. The British military enforced the right of their merchants to import and sell opium in China, overriding Chinese attempts to suppress opium use.

Of course, current Chinese restrictions on foreign cultural goods serve a political purpose as well. Tight control over the media serves to restrict access to ideologies (both domestic and foreign) that promote dissent. The impact of state-controlled propaganda is diluted when a variety of information sources are available.

Displacement and Cultural Homogenization

Foreign cultural goods may also be seen as threatening, not so much on the basis of their content per se but on their ability to displace domestic cultural work and traditions. Critics in several nations have voiced concerns that their cultural heritage is vulnerable to the "monoculture" spread through U.S. films, broadcasts, and publications. The average market share of domestic films in the EU has fallen to less than 12 percent. Although the U.S. is not nearly so dominant in other cultural goods, such as publishing and rock music, the call for defense of national cultures provides an appealing rallying cry for societies undergoing globalization.

Many nations with strong cultural traditions, including France, Greece, and Brazil, have institutionalized the preservation and promotion of their heritage through governmental ministerial positions. To the extent that domestic cultural productions compete with heavily financed and promoted foreign productions for "shelf space" (whether in stores, in theaters, or on television), they may be pushed out. This disables the domestic country's ability to express itself, and results in a loss of the global diversity in cultures and traditions.

Linguistic Imperialism.

If the global "monoculture" has a single language, it is English. English is the language of the lion's share of the world's books, newspapers, and magazines, and is promoted through radio, television, and films. Although English is the primary language of only 380 million people, it is used by approximately 1.6 billion. Almost 80 percent of the content posted on the Internet is in English. Japanese, the second most frequently used language on the Net, occupies only 2.5 percent. While the extensive reach of the English language is due primarily to centuries of English colonization, its continued spread is both a consequence of and contributor to globalization.

The EU has long worked to ensure linguistic diversity among its members. It has 11 official languages, a policy stemming from 1958, when the European Economic Community (EEC) introduced a policy of multilingualism to ensure that one national language of each member country was represented. In France, the Academie Francaise works to protect the language against Anglophone slang. The National Cultural Ministry in Paris has prevailed on the legislature to replace such terms as "talk show" and "prime time" with more acceptable French phrases. In China, authorities have scrutinized the names and brands of more than 20,000 Western firms, and have forced more than 2,000 to change names considered "offensive" to Chinese culture.

Economic Loss

Cultural protectionism can also be viewed in the light of economic gains and losses. Trade in cultural goods affects the livelihood of foreign and domestic producers, and affects currency flows and trade balances, just as does trade in other goods and services. Consumer demand in the television and film sector will triple in the next 20 years. While such growth holds promise for more producers, it also ups the economic stakes. Between 1995 and 1996, Europe's trade deficit with the U.S. in films and television went from $4.8 billion to $5.65 billion. France, England, Sweden, and other nations with filmmaking traditions, such as India, Japan, and Indonesia, may feel the same vulnerability to foreign competition that the U.S. auto industry felt in the late 1980s.

The economic impact of such dominance extends beyond "cultural industries," however. Cultural products also provide a forum for advertising and promoting other products. Product placement in movies blurs the distinction between entertainment and advertising. Tie-ins and licensing of spin-off merchandise also add to the economic impact of cultural products.

Economic nationalism frequently ebbs and flows with changes in the perceived economic security of a nation's people. Under conditions of economic threat, patronage of domestic products is more likely to take on a patriotic connotation. Economic difficulties in Asia, for example, led to a "buy Thai" program in Thailand, where McDonald's found it expedient to develop a patriotic image campaign. The company promoted itself as an exporter (of chicken wings to Hong Kong and shrimp to McDonald's in Europe) that was creating jobs and earning foreign money for Thailand. In Malaysia, radio stations pledged to play more local music to help cut the cost of imported discs.

However, economic considerations have also been seen to mitigate the restrictions mounted in the name of cultural protectionism. Though state laws in China banned the use of satellite dishes consistent with the war on "spiritual pollution," the sale of these dishes benefits their manufacturer, the People's Liberation Army. The dishes are widely used. Similarly, the Chinese Communist Party's propaganda and news agency is now backing the growth of mega-bookstores in China.

China's negotiations for entry into the WTO also continue to result in measured reductions in barriers to foreign participation in "culturally sensitive" areas. China has recently announced the easing of restrictions on investment in distribution channels of CDs, videotapes, and DVDs-- a $7.3 billion segment of its market. The government has also shown greater tolerance of foreign influence over content in joint venture sports, fashion, and entertainment magazines as well as distribution methods.

In the Wake of the Titanic

The global success of the movie "Titanic" provides an interesting example of the salience of the three factors noted above. As of 1998, "Titanic" had grossed almost $1.8 billion worldwide. In France, it caused the domestic market share of French movies to drop from 34.5 percent to 27 percent in 1997. When the French movie "Asterix and Obelix Versus Caesar" opened in February 1999, appeals to patriotism were used in its support. One of the movie's creators claimed "We've got to sink 'Titanic' with this film, in the name of French pride." The newspaper Le Monde called the movie "a national affair of the highest importance" (Barrett 1999).

In Beijing, "Titanic" sold $4.3 million worth of tickets in the first half of 1998--nearly half of all movie tickets sold in the Chinese capital during that time, and triple that of the bestselling Chinese film. When the Disney movie "Mulan" was to be released in China, government approval was stalled. The director of the State Administration of Radio, Film, and Television's Propaganda, Distribution, and Projection Department announced that the government had not made a decision on allowing "Mulan" to be shown. A Western diplomat noted that the government wanted to let "Titanic" cool down before allowing in another Hollywood blockbuster. Political control was also a factor. The Chinese government had imposed a ban on Disney films following the movie "Kundun," which was sympathetic to the Dalai Lama. The ban lasted three years and was lifted with the eventual approval of "Mulan" in China.

GOVERNMENTAL POLICIES

China's requirements for government approval provide one means of controlling the inflow of cultural goods. In addition to its control over the production and screening of films, China limits the number of foreign films to ten per year. Foreign TV shows are limited to 25 percent of all TV programming. Import quotas and quotas requiring a certain percentage of domestic cinema (screen quotas) and TV presentations are widely used. Preservation of a certain percentage of the broadcast market, for example, is seen throughout Europe. In 1989, the European Community adopted its Directive on Broadcasting, which held that member states should ensure--"where practicable"--that broadcasters reserve the majority of their entertainment broadcast transmission time to European works. As countries seeking EU membership are granted accession, they must adopt all existing rules and regulations, including broadcast quotas. The first wave of applicants, including Hungary, Poland, and the Czech Republic, are already putting broad cast quotas into place. In France, 40 percent of all TV programs must be French, with a total of 60 percent of all programming European. In the early 1990s, France also established rules requiring that 40 percent of music played on French radio and television be of French origin.

Canadian satellite services are bound by government regulation to include a strong representation of domestic programs, and conventional broadcasters are to devote 60 percent of their time to Canadian-originated programs. Prime-time programming by private TV stations must offer 50 percent domestic programs, and every foreign channel that comes in by carrier must have a one-to-one ratio with a Canadian channel. Since January 1999, Canada's domestic content regulations have required that at least 35 percent of music played on prime-time radio be Canadian.

Canada, France, and other nations also support domestic production of cultural goods through a combination of subsidies, grants, and tax credits. Films and TV shows made in Canada are eligible for government support, as is the domestic music industry. France taxes cinema tickets to help French film production, and has also extended its support to television programs.

Additional government regulations are employed to protect domestic cultural industries. A "dubbing license," for example, is required for each non-Spanish/non-EU film distributed in Spain. Distributors may obtain licenses by financing production of a Spanish film or by acquiring the rights to distribute Spanish or EU films. In many countries, including Canada, Malaysia, Indonesia, and the Philippines, foreign direct investment in film distribution or broadcasting is severely restricted. India limits the amount of earnings from foreign films, videos, and television that can leave the country.

Table 1 on the next two pages lists some of the means used by a number of countries to further cultural protection. It is based primarily on information provided in the Motion Picture Association's "Trade Barriers" report to the U.S. Trade Representative. Although not intended to be comprehensive, it does depict the scope of measures ostensibly used to protect domestic culture.

The Argument for Free Trade in Cultural Goods

Despite policies to restrict foreign cultural products and nurture domestic producers, the same arguments used to promote free trade in other industries can be readily applied to cultural industries as well. Cultural protectionism has been portrayed as the outcome of interest group pressures that serve a small group of constituents under the guise of serving the broader interests of society. It also assumes that governments can and should limit the intrusion of foreign cultural products, irrespective of the tastes or wishes of their own people. Shouldn't people be allowed to view what they wish, regardless of its origin?

Moreover, quotas may not be conducive to the production of a quality product. National quotas in cultural industries have reportedly led to the production of "quota quickies"--local productions designed to satisfy official requirements and acquire government subsidies. The basis for awarding subsidies is also problematic. Government handouts in France and Britain have often been provided to some of the nations' most successful film producers--firms that arguably would have the least need for them.

Protectionist policies may even work against other stated policy goals. France has announced a policy to support European culture and assist in European co-productions. However, its domestic rules on the use of French language in films and broadcasting have actually accelerated a decline in those productions. A country's protectionist efforts may also limit the competitiveness of the companies within its borders that depend on free information flow. Whereas some constituents within a nation may be helped by protectionist policy, others will be hurt.

Just as with other types of products, cultural goods may not always be easily classified as "foreign" or "domestic" in a more and more global environment. Canadian-born Shania Twain is considered by Canadian government and industry standards to be Canadian, despite the fact that she lives in the United States and records in Nashville. Although films made in the U.S. are often produced with European capital and European directors, they are considered American. Yet if films are based on the home company making the film, how does one categorize Columbia Tristar, owned by Japan's Sony, or Fox, owned by Australia's News Corporation?

The global growth in cultural industries has been accompanied by a global search for cultural talent and ideas, including the establishment of foreign subsidiaries. At the same time, the burgeoning importance of international markets encourages Hollywood to develop fare that can be appreciated without reliance on a shared grasp of English or the nuances of any single culture. As one observer has noted, "There is nothing particularly American about boats crashing into icebergs or asteroids that threaten to obliterate human life" ("Culture Wars" 1998).

Protectionist policies may also stimulate a protectionist response from other countries. For nations like Canada, this could be problematic.

Canada needs to find an international audience because its domestic market is small. The country is the second-largest exporter of television programming after the U.S., and therefore also has an interest in seeing that commerce in cultural goods is not too severely restricted.

Technology and Culture. It can certainly be argued that trying to halt the spread of culture through trade and investment rules is a futile endeavor, given such technologies as satellites, fiber-optic communication networks, and the Internet. It only takes a modest investment in a receiving dish and decoder for any European to receive CNN, the NBC Super Channel, Britain's BskyB, and the BBC. In Canada, laws have been designed to protect Canadian-owned satellite television broadcasters from American programming, but they are widely violated and little is done to enforce them. In any case, cable provides an alternative. All four major American networks can easily be received by cable TV subscribers in Toronto.

In fact, the argument that foreign-made productions might dominate the "shelf space" or local available capacity of a nation is undercut by the exponential growth in information processing capacity that has resulted from new information technologies. Hundreds of video channels, including movies, are potentially available through fiber-optic communication networks. Books, documents, and music can be accessed through the Net and downloaded onto compact discs. "What point is there, then, in attempting to reserve some portion of information transmission capacity for local asks Graham (1996). "It is likely that households will eventually have ready access to virtually every 'cultural' product ever made."

While the United States promotes the principle of free enterprise, a number of observers have wondered whether American officials would be as adamant about the wisdom of market forces if it were the U.S. being inundated with another nation's culture. It was not that long ago that American anxieties were raised when Sony purchased Columbia Pictures and Matsushita bought MCA. (Matsushita later sold MCA back to a North American firm).

Many Americans' support of the "English only" movement in response to the influx of Spanish immigration, and the installation of V-chips to protect against certain programming, demonstrates that many Americans also share concerns about preserving their culture. Nevertheless, Washington has been a strong supporter of free trade in cultural industries. Given the differences in national perspectives, the development of international accords to address this arena becomes desirable, though problematic.

INTERNATIONAL ACCORDS

Over the past two decades, nations have made large strides in the trade liberalization process. Multilateral agreements have led to lower tariffs and nontariff barriers, coupled with a reduction in foreign investment barriers. Yet in negotiating lower barriers to trade and investment, each country has brought to the table certain products and services, along with certain protective devices, it considered worthy of exceptions to across-the-board reductions. Some, threatened by the impact of trade liberalization on their culture or cultural industries, have argued that cultural goods and services should not be treated like other forms of merchandise.

Tensions over trade in cultural industries are reflected in the history of GATT. As a direct response to perceptions that trade barriers were a contributing cause of World War II, GATT bound signatory countries to general obligations of non-discrimination among the products of GATT members (Most Favored Nation treatment, also called MFN or "normal trade relations") and between domestic and imported products (national treatment). Among the other GATT obligations are a general prohibition of quotas, transparency in the rules and processes of trade in goods, and a commitment to dispute resolution procedures.

As noted previously, Article IV of GATT did provide a cultural exemption, allowing local content quotas in cinematographic films. During the 1960s, the U.S. repeatedly tried to establish a clear ruling as to whether television programming was covered by GATT and therefore subject to national treatment obligations. Other delegations argued that television programming was like a service and thus outside the scope of GATT at that time. No consensus was reached.

GATT was characterized by "rounds" of multilateral trade negotiations that originally focused on tariff reduction but were later expanded to other key trade issues and barriers. The Uruguay Round began in 1986, was signed in 1994, and took effect in 1995. During this round, the U.S. sought to eliminate the Article IV exemption, while some European nations continued to press for additional safeguards for their audiovisual industry. In fact, European nations, led by France, called for either a general exception for trade in "cultural industries" or at least a specific exemption for trade in audiovisuals. Faced with pressures to conclude the agreement successfully, "GATT 1994" was signed, without eliminating the Article IV exemption or providing specific guidelines on culture and trade.

As part of the Uruguay Round achievements, GATT was absorbed into the new World Trade Organization (WTO) but maintained its essential characteristics with improved dispute resolution procedures. Under the current framework, any imposition of new tariffs, quotas, or other trade barriers placed on "cultural goods" will need to be consistent with GAIT/WTO obligations, such as national treatment and MFN, unless a specific exemption can be applied. The burden of proving the applicability of any exemption is on the member state claiming it. Exceptions include those arising from the GAIT text itself, such as Article IV on cimematographic works, or within a country's reservations or schedules. An example of the latter is the EU's exemption to the General Agreement on Trade in Services for audiovisuals.

Exceptions for cultural goods can be seen in the 1988 Free Trade Agreement between the U.S. and Canada. Under this accord, foreign investment received "national treatment," meaning that neither country could apply standards to mergers involving foreign entities that were different from or harsher than those for purely domestic mergers. Yet in business sectors related to Canadian culture, mergers can be restricted. Included among the protected industries are: film and video recordings; audio or video music recordings; the publication, distribution, or sale of books, magazines, periodicals, or newspapers; satellite programming; radio; television; and cable broadcasting. As discussed below, Canada also has attempted to protect its cultural industries through import, tax, and broadcast policies. With the development of NAFTA, each member country also specified key industries as excepted from national treatment obligations. For the United States, it was airline and communications industries; for Mexico, energy an d rail industries; and (again) for Canada, cultural industries.

Disputes over MFN and national treatment obligations often deal with "like product" and substitution analysis. Because governments must treat "like' foreign and domestic goods similarly, discrimination against foreign goods often centers on arguments that they are substantially different from their domestically produced counterparts. Under GATT and the WTO, dispute panels have tended to focus on the objective, economic side of the analysis. More subjective, contextual aspects of a product that may reflect culturally determined features are thus much less likely to be taken into account.

Cultural protectionism has come under WTO scrutiny. Canada had a long-standing law restricting the import of most Canadian editions of U.S. magazines, including the use of discriminatory postal rates. In 1993, the publishers of Sports Illustrated magazine attempted to get around this law by beaming the content of its new Canadian edition over the border by satellite. Canada retaliated by passing a law that levied an 80 percent tax on Canadian ads in Canadian editions of U.S. magazines. The United States protested this effort by bringing the case to the WTO. In 1997 the WTO Dispute Settlement panel determined that Canada's excise tax measure was in violation of national treatment obligations. Later that year the WTO Appellate Body upheld the ruling.

It should be stressed that GATT/WTO obligations do not directly prevent a country from acting in a manner inconsistent with such obligations. It does mean, however, that countries adversely affected by such actions may ultimately, through resort to WTO dispute resolution procedures, be allowed to retaliate with the removal of equivalent market access benefits enjoyed by the "culturally protected" country. This reinforces the position that protecting appropriately defined cultural products and industries is best done through multilaterally accepted solutions.

If Canada had chosen not to bring its treatment of foreign split-run magazines into compliance with the WTO panel's decision, the U.S. would have had the option of asking the WTO for permission to withdraw benefits enjoyed by Canadian goods having access to American markets. Indeed, as Canada responded to the WTO ruling by working to develop alternative methods of protecting local publications, U.S. trade officials repeatedly threatened trade sanctions if those measures were deemed inconsistent with Canada's international trade commitments.

Officials representing the U.S. argued that the dispute over split-run magazines was not about culture, but about providing market access. From the Canadian perspective, reports Atkey (1997), "'Cultural industries' is not a term that the U.S. understands or appreciates on a philosophical level." For the U.S. it's about business, and restrictions on business constitute protectionism.

Many nations and nongovernmental organizations are concerned that the GATT/WTO system is overly influenced by purely economic and market-based appeals, reflecting the interests of MNCs over the societal concerns of diverse nations. Efforts are currently under way to further the protection of domestic cultures. In March 1998, the government of Sweden hosted the UNESCO Intergovernmental Conference on Cultural Policies for Development. This was followed three months later by the International Meeting on Cultural Policy held in Ottawa, Canada. Representatives at these meetings worked to gain support for the further exemption of "cultural goods" from treaties that require the lowering of trade barriers. The International Meeting on Cultural Policy led to the development of the International Network on Cultural Policy, which was composed of 46 member countries as of December 2000.

Nations considering further steps in economic integration will see cultural policies as particularly salient. The expansion of trade liberalization to include a Multilateral Agreement on Investment (MAI), for example, could yield substantial economic benefits to signatory nations. As noted earlier, however, the most recent effort to establish such an accord could not overcome concerns about an investment-related impact on domestic cultural goods and industries. While France has insisted that the audiovisual sector be excluded from discussion in the next WTO round, the EU internal agreement leaves room for negotiating safeguards for cultural protection. Canada has indicated it will call for a new WTO agreement on trade in cultural goods and services. The U.S. is resisting such efforts. Caught in the battle are several Eastern European countries negotiating for admission to the WTO. In accession negotiations, Croatia did not ask for freedom to implement measures to restrict access to its audiovisual market, an d offered full national treatment for distributors of motion picture and other AV services. The EU, at the instigation of France, has encouraged Croatia to take a more restrictive stance to keep U.S. film and television industries out. Negotiations for Albania and Moldova have been similarly affected.

Principles embodied in the current international trade regime do not generally favor barriers erected to protect cultural interests. As such, unilateral references to cultural interests as justification for trade and investment barriers where less than clearly substantial cultural values are at issue will continue to be contentious and counterproductive. Moreover, because culture itself is difficult to define and contain, attempts to carve out broad cultural exemptions to trade obligations will fail for lack of necessary circumscription and discipline. The situation calls for a mechanism allowing for some cultural safeguards and the preservation of easily recognized, important cultural interests. Failing that, attempts to raise trade barriers in the name of cultural preservation will continue to be received with skepticism and retaliation.

Economic protectionism merely under the disguise of cultural interests is neither economically efficient nor socially justifiable, and should be discouraged just as any unnecessary obstacle to international trade. On the other hand, it is clear that individual and national cultural rights are a well-recognized and important consideration in the global community and are entitled to protection against unwarranted threats of extinction or degradation. Many of the issues discussed here are legitimately at the heart of deeply held values and heated debates. We contend that whereas some broad parameters of agreement in a trade context might be helpful, each case for or manifestation of economic protectionism for the benefit of cultural interests must be evaluated, justified, and negotiated on its own merits.

Culture changes over time, and the pace at which foreign influences are introduced may be as critical as the amount. A case-by-case approach mitigates the threats to existing culture by introducing change incrementally. This gives a society the time to adjust to or reject the influence. It also provides time to reduce the gap between government policy and social acceptance. Clearly the trend is toward reduced trade barriers, though we do not accept this as inevitable. A case-by-case approach may also allow for an orderly and negotiated increase in some trade barriers for the purpose of cultural protection. Current mechanisms within GATT/WTO, NAFTA, and other trade agreements do facilitate this approach, either through bilateral or multilateral negotiations or by the use of dispute settlement procedures. In these contexts, countries are free to negotiate reciprocal benefits as proposals for protecting culture are brought forward.

In the years to come, stakeholders who are interested in the protection of national cultures will be working to strengthen their influence and relationships with those responsible for the formulation of trade and economic policy. This will involve establishing networks among interest groups (including NGOs) within and between nations, as well as with international bodies. One outcome of such efforts may be to seek agreements with the U.S. and other countries to promote global cultural diversity by temporarily or permanently allowing some quotas and subsidies to preserve certain local cultural industries. Subsidies represent an approach that is not necessarily inconsistent with GATT. In fact, they were part of the Canadian response to having to remove protectionist measures following its loss in the Sports Illustrated dispute. Subsidies, however, rely on cost as the driver of demand for cultural products. And they may be the least affordable for smaller, poorer countries that may experience the greatest threa t of cultural effacement. Other proposals to take account of culture in the world trading system include the creation of a General Agreement on Trade in Culture (GATC), the provision of exemptions from GATT/WTO obligations under specified conditions, and the development of a cultural waiver under the WTO.

Although Washington is likely to resist such efforts, the U.S. government arguably can take steps to demonstrate sensitivity to cultural concerns. According to Garten (1998), it has been suggested that the government could expand aid to UN efforts to restore neglected or destroyed national monuments in many nations, or encourage the World Bank to build up foreign countries' tourism infrastructure in ways that promote the local culture. The World Bank has supported cultural lending projects in Brazil, Uganda, Guatemala, Peru, and Morocco.

Similarly, major MNCs that may be concerned about rising cultural protectionism might help to fund cultural activities and cultural industries in other nations. Corporate efforts might also include showcasing regional films and theatrical productions, and financing the teaching of a region's history, literature, and art. Such efforts would be directed not at trying to halt the "intrusion" of foreign culture, but to assist in seeing that local cultures are promoted as well.

Corporate efforts in promoting local cultures may not need to be treated as altruistic endeavors--they may build on consumer preferences. While globalization may make the world smaller, the "threat" of globalization may reinforce the desire for local connections and identity. Individuals may seek a greater sense of "authenticity" based on their community's shared culture and historical experience. Indeed, Spanish-language programming has its own global market. In Los Angeles, one of the most popular television channels broadcasts in Spanish, and both Spanish and Korean television have made significant inroads in many other areas of the U.S. as well. As noted previously, technology may be used to circumvent regulatory attempts to protect local cultures from globalization. It may also be used to promote cultural diversity. The expansion of information transmission capacity can readily assist in the preservation, viability, and access to local cultural activities.

In any event, the march of globalization with its heightened levels of economic, political, and social interaction will continue to place a growing strain on attempts to preserve recognized values and images that embody cultural identities. Those striving to reduce market and investment barriers further through international agreements as well as those producing and distributing "cultural" products and services must find ways to balance the demands for market access with concerns for deeply held cultural sensitivities.

C. Christopher Baughn is an associate professor of management at Boise State University, Boise, Idaho, where Mark A. Buchanan is an associate professor of law and international business and Director of International Business Programs.

References and Selected Bibliography

Ronald G. Atkey, "Canadian Cultural Industries' Exemption from NAFTA--Its Parameters," Canada-United States Law Journal, 23(1997): 177-200.

Benjamin Barber, Jihad vs. Mc World (New York: Ballantine Books, 1996).

A. Barrett, "After His Success Against Caesar, Asterix Gets a Modern Assignment," Wall Street Journal, February 4, 1999, p. B1.

Steve Barth, "Cultural Protectionism," World Trade, March 1998, p. 43.

Michael Braun and Leigh Parker, "Trade in Culture: Consumable Product or Cherished Articulation of a Nation's Soul?" Denver Journal of International Law, Fall 1993, pp. 155-191.

Chi Carmody, "When 'Cultural Identity Was Not an Issue': Thinking About Canada--Certain Measures Concerning Periodicals," Law and Policy in International Business, 30, 2 (1999): 231-320.

Roger Cohen, "Aux Armes! France Rallies," New York Times, January 2, 1994, p. H1.

"Cultural Protectionism: Television of Babel," Economist, February 5,1994, p. 52.

"Culture Wars," Economist, September 12, 1998, pp. 97-99.

Joshua Fishman, "The New Linguistic Order," Foreign Policy, Winter 1998-99, pp. 26-40.

Jeffrey E. Garten, "'Cultural Imperialism' Is No Joke," Business Week, November 30, 1998, p. 26.

Edward M. Graham, Global Corporations and National Governments (Washington: Institute for International Economics, 1996).

Timur Kuran, "The Discontents of Islamic Economic Morality," American Economic Review, May 1996, pp. 438-442.

Trade Barriers to Exports of US. Filmed Entertainment: 1999 Report to the United States Trade Representative (Washington: Motion Picture Association of America, Inc., December 1998).
Table 1

Cultural Protectionism in Filmed Entertainment

Country    Film/Cinema

Australia




Brazil     Screen quota for local films
           is 49 days per calendar year.







Canada     Foreign acquisitions of
           Canadian-owned film distribu-
           tion firms are prohibited.
           * Government subsidies are
           available to Canadian-
           controlled production
           companies.

China      Despite a 1995 intellectual
           property rights agreement
           stipulating no quotas for any
           media, there is a 10-film
           limit on revenue sharing deals
           for theatrical releases.



Colombia











Egypt      Film distributors are limited
           to the importation of three
           prints, unless they obtain
           special approval from the
           Chamber of Cinema to import
           more. * Theaters must exhibit
           Egyptian films at least one
           week each season (there are
           three seasons in Egypt). * An
           entertainment tax of 40% is
           placed on admissions to
           foreign films (vs. a 20% tax
           for Arab films).

France     Cinemas must reserve five
           weeks per quarter to exhibit
           French feature films, or four
           weeks for theaters that
           include a French short-subject
           film during six weeks of the
           previous quarter. * The
           government provides sub-
           stantial subsidies to assist
           local film producers.

Hungary














India      There is an annual remittance
           ceiling of US$6 million on
           earnings generated from
           foreign films, videos, and
           television for balance-of-pay-
           ments reasons.

Indonesia  The annual import quota for
           films was most recently
           set at 160; a further
           45 titles may be allowed *
           Importing and distributing
           films and videocassettes
           is restricted to wholly
           owned Indonesian firms. * The
           film and cinema business
           is now closed to foreign
           investment. * Each year, a
           screen quota is established
           by ministerial decree.

Italy      Theaters under construction
           or renovation that
           exceed 1,3000 seating
           capacity are subect to
           "seat and screen" quotas.
           Of the seats installed,
           15% are to be allocated for
           showing Italian and EU films,
           distributed over at least
           three screens. For theaters
           with a capacity of 2,000 or
           more, the quota is 20%. * Low-
           interest loans and tax rebates
           are given for films of
           national cultural interest.

Korea      Cinemas are required to show
           Korean films 146 days of the
           year on each screen. The screen
           quota may be lowered by 20-40
           days, depending on level of local
           film production and is an
           incentive for showing local
           films during the holidays.

Malaysia













Maxico     Most films may not be dubbed * A
           screen quota of 30% for
           national films was initiated
           in 1993, with reducations
           to 10% in 1997. A 1998
           film law proposed a gradual
           increase in the quota
           until it again reaches 30%


Poland












Spain      Film law stipulates that EU
           picture must be shown at
           least one day for every two
           days that a dubed film
           from a non-EU country is shown.
           This has been relaxed to a
           1-to-3 ratio. * A "dubbing
           license" is required
           for each non-Spanish/
           non-EU film distributed
           in Spain. Licenses may
           be obtained by financing
           production of a Spanish
           film and/or by acquiring
           rights to distribute
           Spanish or EU films.

Country    Broadcast/Television

Australia  Of all television programming
           broadcast between 6:00
           a.m. and midnight, 55% must be
           of Australian origin.

Brazil     Brazil's Cable Law stipulates
           that cable television operat-
           ors must reserve seven
           channels for coverage of
           domestic activities, and one
           channel for exclusive
           transmission of Brazilian
           cinematographic works.

Canada     Broadcasts certified as
           Canadian content must make up
           60% of over-the-air television
           broadcast time--50% during
           evening hours for privately
           founded broadcasters.


China      Foreign programming is
           restricted to 25% of total
           air time for braodcast
           stations. * Foreign equity in
           broadcast stations is
           prohibited. Importation of
           foreign programming must be
           approved by the government.

Colombia   Of the programming scheduled
           during prime time, 70%
           must be national product.
           * Foreign investment is
           limited to 15% of total
           capital of local television
           production companies, and
           must involve a transfer of
           technology that will
           contribute to the development
           of the television industry.

Egypt













France     Of the feature films and total
           transmission times allocated
           to audiovisual works, 40% must
           be of French origin. An
           additional 20% (60% total)
           must be of EU origin.





Hungary    State-owned channels must
           commit 70% of programming
           to European works, 51% of
           which must be Hungarian. For
           private national television,
           an annual quota of 35% (ex-
           cluding commericals, films,
           news, sports, and quiz shows)
           must be Hungarian. Consistent
           with EU policy, however,
           licensing requirements stipu-
           late that more than 50% of
           broadcasting time must be of
           European content.

India      Proposed policies limit
           foreign equity to 20% in
           the broadcast industry.




Indonesia  Foreign investment
           in stations private
           televisions and radio
           broadcast services
           is now prohibited.









Italy      More than 50% of monthly
           transmission time is to be
           reserved "as a rule" for EU
           works. At least half of
           the EU works must have
           been produced within
           the previus five years.









Korea      Imported television programs
           may not exceed 20% of broadcast
           time. Iri 1988, the level
           was set at 15%, with news,
           education, documentary,
           and sports footage excluded
           from the percentage.


Malaysia   Licensing conditions require
           boradcasters to devote
           70-80% of air time to local
           programming. There is a
           ban on foreign programming
           between 8:30-9:30p.m.
           on terrestrial (non-satellite)
           networks. * Foreign
           investment in those networks
           is prohibited; in cable
           and satellite operations,
           it is limited to 20%
           through licensing agreements.

Maxico     Under NAFTA, Mexico reserves
           the right to prohibit
           English-language advertising
           on television. * Every
           cable operator and
           direct-to-home (DTH)
           satallite television service
           must provide at least
           15% mexican programming.

Poland     Of all programming boradcasting
           by national, state-owned
           television stations, 60% must
           be of Polish origin. Quotas
           for privately owned natinal TV
           stations range from 30% to 45%.
           Foreign ownership in private
           broadcast television
           stations is restricated
           to 33%. The limit is 49%
           for new investments in
           cable networks.

Spain      EU works must comprise 51% of
           broadcast time. Over half
           of this must be originally
           filmed in any Spanish
           language.












Based on: "Trade Barriers to Exports of U.S. Filmed Entertainment: 1999
Report to the United States Trade Representative" by the Motion Picture
Association.
COPYRIGHT 2001 JAI Press, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2001 Gale, Cengage Learning. All rights reserved.

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Title Annotation:globalization and the motion picture industry
Author:Baughn, C. Christopher; Buchanan, Mark A.
Publication:Business Horizons
Article Type:Statistical Data Included
Geographic Code:1USA
Date:Nov 1, 2001
Words:7728
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