How Trade Trumps Culture

Our current Prime Minister, Rt Hon Helen Clark, is a culture buff and has held the portfolio of Minister of Culture since the Labour Party was elected in 1999. Their policy platform also talked of the need for nation building after a soul-destroying period of market-driven government. A central plank of her government’s election policy was to introduce compulsory local content quotas for free to air radio and television because the volume of New Zealand content in the media was the lowest of any western industrialized nation. Shortly after the election Helen Clark was told she couldn’t do that because New Zealand had make market access and national treatment commitments in the General Agreement on Trade in Services (GATS).

Her reply:

‘We have unilaterally disarmed ourselves on trade but very few others have been so foolish. We’re now left with perfectly legitimate calls for local content and people saying ‘You can’t do that because of Gats". This seems a bit ridiculous so we’re just working out the best way to handle it’. (NZ Herald, 10 April 2000)

Like our Prime Minister, very few of those who are involved directly with the culture sector as practitioners and patrons, or who simply value the diversity of culture as enriching of our identities, communities and our individual lives, know that these trade commitments even exist. Those who become aware express the same sentiments to those expressed by Helen Clark. Culture is more than the livelihoods of practitioners or the profits of cultural industries. It is a reflection of diverse civilizations and vehicle for the history, language, poetry, music and stories that weave our identities and relationships, provide ways to reflect our uniqueness and share the richness of diversity. All of these elements are to be both celebrated and contested – but which is only possible in a milieu that nurtures the value of culture for its own sake.

As Helen Clark said, the idea that trade agreements should constrain the legitimate policy choices of governments as they promote and defend genuine cultural diversity is ridiculous. Unlike Helen Clark, however, we are not prepared to accept that cultural policies should be subordinated to securing market access for agriculture.

What form does this threat take? Let me talk here solely about trade in services, but many of these comments could just as easily apply to investment and government procurement. Intellectual property agreements raise somewhat different issues.

First, how does culture come within agreements on trade in services? Services commitments are scattered across over a hundred technical product descriptions – CPC. There has been a tendency in the culture debate to focus on the most obvious classification of audio-visual services and its subheadings of production, distribution, exhibition and broadcasting. Yet Recreational, Cultural and Sporting Services apply to entertainment, news agency, libraries, museums, archives, sporting and recreational, and other cultural services. Professional services includes architecture, urban planning and landscape. Research and development has a subcategory for social sciences and humanities. Other business services include advertising, photography, printing and publishing and translation.

So what people experience as a unitary and integrated service, such as a novel can be disaggregated across a range of sub-sectors that include writing, editing, printing, publishing, photography, translation, news agencies, advertising, finance, retail, distribution and transport. When they are asked to make full commitments to national treatment and market access in these sectors governments are asked to guarantee unimpeded access and rights to operate for foreign firms in all those activities.

Even this list is misleading because it ignores the spectrum of financing, production, distribution and exchange through which transnational corporations and investors dominate the cultural domain. Corporate strategies and policies in generic service sectors such as retail, franchising, distribution, information technology, real estate, consultancy, financial services, telecommunications and e-commerce increasingly determine practices within the culture sector. Of most particular relevance here is e-commerce. Because virtually all cultural goods and services are now created, produced, distributed, exhibited and preserved digitally.

An example of the power of corporate strategies is Walmart, which chooses what music, books, magazines and videos it wants to sell. By dominating market share in the US it can effectively dictate the content of those products. One EMI music executive quoted in BusinessWeek (6 October 2003) claimed it is impossible to take an artist to a mainstream audience without the biggest retail player onside. Major music companies supply Walmart with sanitized versions of the raunchy CDs that they provide to radio stations, while magazines and book titles are vetted to meet the corporation’s self-defined ethical code. Walmart’s international reach, including inroads into China, give it potentially enormous power over culture internationally. Yet the most relevant CPC for Walmart is Distribution services: retail.

It is therefore technically impossible to isolate cultural services within the GATS classifications. It is also very difficult to predict the future implications and applications of any commitments that are made. There are many examples I could use to illustrate this from Canada, Mexico, New Zealand, South Korea, Vanuatu. Let me give just one example that also highlights the growing importance of the bilateral agreements as negotiations to extend the GATS rules and schedules remain largely paralyzed.

It involves the emerging dominance of digital technologies. Few governments anticipated this back in 1994 when they made their first GATS commitments – as the US itself has claimed in relation to Internet gambling! Governments who were concerned to protect their culture sector focused mainly on the CPC categories of audio-visual services. Digital technologies were covered at that stage by ‘other telecommunications services’ and the intellectual property rights agreement (TRIPS). In 1998 the agreement on e-commerce that was brokered by the US, as a pre-condition for President Clinton attending the Second WTO ministerial meeting in Geneva, placed a moratorium on customs duties on e-commerce transactions. This was complicated for those wanting to maintain some national control over digitized cultural representations. But it was also far from optimal for US corporations.

US demands for binding commitments in digital media have intensified, especially in bilateral negotiations where it can exert direct pressure and create cumulative precedents. In the Chile-US free trade agreement signed off in 2003 the US was prepared to accept the grandfathering of existing protections for cultural sectors (known as a ‘standstill’). But it demanded full guarantees of access, non-discrimination and market-driven regulation for its companies in the rapidly expanding digital sphere. The e-commerce aspect of that agreement was drafted so broadly that all products traded or delivered digitally, including cultural services, were covered. This is the first concrete evidence of a changing US industry and government strategy. At an INCD sponsored conference in Washington this January. Bonnie Richardson of the Motion Picture Association of America stated that the industry and government are no longer seeking the removal of existing content quotas and broadcasting regulations. Rather, they are seeking to restrict these to their current scope. The primary battleground in culture is culture is therefore shifting to telecommunications and electronic commerce debates.

Similar proposals were strenuously opposed by the Australian culture sector in negotiations for an Australia-US free trade agreement (AUSFTA) that concluded in 2004. While the US argued that digital is a different product from analogue, the Australian government insisted that it was the same product supplied through a different mode of delivery. The Australian Coalition for Cultural Diversity objected, unsuccessfully, that even agreeing to a standstill would tie the hands of Australian governments in adopting any innovative new policies, including strategies to promote digital cultural industries, and effectively outsource the creation of Australian cultural policies to Hollywood. In the words of the US Trade Representative, the final agreement ‘calls for each government to adopt state-of-the-art protection for digital products such as software, music, text, and videos, and encourages adoption of measures to promote trade through electronic commerce’.

The AUSFTA also imposed onerous standstill provisions on Australian governments. They could not increase existing local content quotas. If the quotas were cut they could not subsequently be restored to their earlier levels. Caps were applied to quotas in free to air radio and television. Provision was made to introduce expenditure-based quotas for ‘pay TV’ of up to 10 percent for arts, children’s, documentary and educational programs, with the possibilities of increasing those for drama to 20 percent provided this was ‘non-discriminatory’ and ‘no more burdensome than necessary’.

This was a concession to the sustained pressure from the cultural lobby, supported by the broader campaign against the agreement. But the Australian government stressed that including these provisions did not indicate a current intention to use them, unless subscription television became significantly more influential or the dominant form of media. Quotas could not be introduced for interactive audio or visual services unless the government proved that local content was not readily available. Again, any rules had to be transparent and the least trade restrictive option. There was no exception for public broadcasting, aside from a general exclusion for grants and subsidies. The standard definition that is cited as protecting public services – ‘services supplied in the exercise of government authority’ – would only apply where there was no commercial element and no competitors in the market. Today, no public television or radio and very few libraries and museums could satisfy that test.

In New Zealand, we look with real envy to Australia with its public broadcasting and current affairs, SBS international news and programs, vibrant film making, drama, music, arts and museums. Often we go there to ‘consume’ it. We know the risks of ideologically driven governments making services commitments that are designed to lock in neo-liberal policy agendas that see culture as a dispensable tradeable commodity. Many more governments have little understanding of the implications or in the case of acceding countries have to concede to unconscionable demands or remain outside the WTO, as Vanuatu has experienced.

This year the GATS negotiations and the deluge of regional and bilateral arrangements have intensified the pressure on governments to sign away the right to make policies and laws that promote and protect genuine cultural diversity. It is essential to strengthen the ability and willingness of governments to say no – not just to audio-visual services but to the whole panoply of commitments that close their policy space.

Jane Kelsey is a law professor at the University of Auckland in New Zealand. This report from the WTO Symposium in Geneva was first published in Arena, (Action, Research and Education Network of Aotearoa) and is reprinted here with permission from the author.