The EUs Opposition the Liberalisation of Trade - Dissertation Example

The EU’s Opposition the Liberalisation of Trade in Cultural Products Introduction The matter of the preservation versus the liberalization of culture is not new among the contentious issues surrounding the globalization phenomenon, although it occupied a less conspicuous space in the consciousness of the authorities and the public. As early as 1947, at the time the General Agreement on Tariffs and Trade, or GATT, was first promulgated, all that cultural issues encompassed was that recognition be given to a certain modicum of local content to be applied as quota in the export of cinematographic films (Baughn & Buchanan, 2001). This being said, overall the protection of local culture was accorded little attention. The Nature of Cultural Products The United Nations Educational, Scientific, and Cultural Organization (UNESCO) defines cultural products as “experience goods”, the value of which cannot be measured in the manner other goods are measured and assessed. These products are comprised of music, cinema and television (which together are collectively referred to as the audiovisual industry). The difference lies in the attributes, the processes, and effects of such products, which makes them as a group such a bone of contention, even among the traditionally more stalwart proponents of global liberalization. The production process differs radically in that it involves a costly undertaking during the initial development, the result of which is an intellectual good the proceeds of which must defray the sunk costs invested in its development. The problem lies in the ease with which such products, in their electronic form, are easily and cheaply reproduced and mass-produced for widescale distribution (UNESCO, 2006). Needless to say, such counterfeit goods fetch much cheaper prices on the open market, thus undercutting the legitimate vendors and ultimately the producers whose expected recoupment out of projected sales is put in jeopardy. Another attribute that sets aside cultural products, or more specifically audiovisual goods, is the difficulty by which the successful material is arrived at. In many cases, market research fails in forecasting audiovisual products that would succeed (UNESCO, 2006); in many cases, the success is attributed to an intangible connection the artist (of the audiovisual material) is able to make with its audience-market. A good example of this is the Harry Potter movie which was culled from the Harry Potter series, the first volume of which was originally turned down for publication by countless seasoned publishers as being unmarketable. Only by sheer luck did the eventual best-seller see print at all, let alone spawn a box office windfall. More remarkable, however, is the fact that a cultural product need not be financially profitable to be considered a “success”, so to speak, from a socio-cultural perspective. This further muddles the criteria by which successful cultural products may be gauged. One other attribute that must be mentioned here is the manner by which the cultural product is “consumed”. The nature of consumption is such that for most of us, simply listening to or viewing the material once is sufficient to complete the experience-consumption of the good. It also goes without saying that physically, audiovisual goods are indistinguishable from each other. Previously in celluloid, magnetic tape, and long-playing record form, the medium is now in the optical or laser disc form which, were there no label attached to it, could not be told apart from other audiovisual goods recorded on a similar technological medium. And lastly in this brief enumeration of attributes, cultural goods may even be transmitted in a non-corporeal form, that is, through an electronic transmission through the internet, at the blink of an eye. They thus defy means of detection, regulation and monitoring which are normally applied to tangible goods and services. It is thus to address the particulars of these attributes, as much as the impetus to exploit additional markets, that certain countries which are the regular and common sources of these cultural products, push for the treatment of cultural goods in the same manner other economic goods would be treated (Van Grasstek, 2006). The argue, therefore, that the opening up of channels to the trade of other goods should likewise be done for cultural goods, in order to stem the illegal piracy of audiovisual materials The trade of cultural products Presently, there is no existing agreement that regulates the international sale and distribution of cultural goods, that is, an agreement that exclusively sets the parameters for cultural trade and investment as its main purpose. It is for this reason that negotiations for such an agreement were pursued during the Uruguay Round and the succeeding Doha Development Agenda. These efforts and others, however, have only yielded, at best, the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs). These efforts have so far failed to yield a truly integrated and solid agreement that squarely establishes a regulatory framework that would enable the more liberal flow of cultural goods among countries. While some 40 countries have committed in the sphere of the entertainment services such as motion picture and video production and distribution, still the agreements are replete with rather strong limitations as to what degree the reforms could be carried out. The position of Japan, Canada, and the United States The Doha negotiations had established the perspectives of at least five nations that submitted specific communications on the matter of the liberalized trade of cultural products. Japan stressed in its communication that liberalization of audiovisual services is included among the right of citizens in Member countries to free access to information and a variety of cultures. Canada’s take is radically difficult, communicating that it refrains from making any commitment to restrict their ability to determine their own cultural policies (Graber, 2004). The polarized views expressed by these communications by Japan and Canada show the wide range of views that exist concerning this matter of the free trade of cultural goods. Herold (2005) relates in her study the similarly discordant positions of the United States and the European Union on the matter of globalization of the trade in cultural goods. Herold describes that during the Uruguay Round, the EU and its Member States refused to allow non-EU servie providers nationwide market access, citing bilateral agreements among EU Member States and third countries. This foiled the American initiative to try to secure commitments from the major countries, the EU in particular, towards the liberalisation of the film and television industries. While the US was frustrated in this, the EU themselves were disappointed in not having secured a permanent “cultural exception” to the pertinent provision in the GATS mandating the eventual open access to cultural products among and between member countries. Uruguay did not spell the end of it, however, as the initiatives towards greater liberalization scored a small victory in the inclusion of the audiovisual sector among the provision on liberalization. The provisions were severely limited, however, as they admitted of numerous exceptions and limits, creating a series of de facto situations that, in effect, worked in the same way as they would as exclusions to the GATS framework, rendering them virtually ineffective. During the Doha round, the different proponents arrived prepared to defend or pursue their particular positions. On the one hand, the United States signified its willingness to discuss liberalization of audiovisual material, and officially petitioned that the audiovisual services by included in the negotiations. While several smaller nations capitulated, the EU was firm in its position that it and its Member States be excluded from the effectivity of the provisions. The reasons stated were that the EU and its Member States have the right and prerogative “to preserve and develop the capacity to define and implement their cultural and audiovisual policies for the purpose of preserving their cultural diversity” (Herold, 2005:93). It is a curious matter that liberalisation and globalisation of the trade in cultural products could be argued as a claim to a right by either side of the controversy. Japan argued that it is the citizens’ right to claim access to cultural products; the EU, on the other hand, claim the right to preserve its cultural diversity by resisting liberalisation and globalisation efforts. This calls for a closer examination of the official position of the EU as articulated by its policy makers. An examination of the European perspective In a paper released by the European Parliament, the matter of cultural diversity and the globalization of cultural goods and services was discussed, explaining in greater detail the European position on rejecting the liberalised trade of cultural goods and services. In the final study for the European Parliament, the Directorate General for Research (2001) expressed apprehension that negative effects are exerted by the predominance, particularly of North American companies in the export of cultural goods, creating a very real oligopoly. The report highlighted that the effect would be to concentrate cultural content on the satisfaction of the interests of the general public, while sacrificing the more particular and specialised tastes and preferences (i.e. diversity), and thereby foregoing content quality in the pursuit of commercial success and profitability. The study outlined the measures that the EU is justified in taking in the interest of protecting and defending its cultural diversity. The measures are founded on three considerations. The first is called the “political-social context” (Directorate, 2001:5), which stresses the recognition of the uniqueness of cultural minorities, and the imperative that in order to preserve their cultures, the expression of the different social groups should be fostered through the various mass communication media. The second consideration is the expansion of new and cutting edge technologies, mentioning in particular development in digitalization of audiovisual media and the improved access through the Internet, provides venues and opportunities for producing and distributing cultural shows pertaining to a minority group, and a way by which access and participation of the media products may be exploited more intensively. The third consideration is the promotion of the process of European integration (Directorate, 2001:5). As the Union further expands and new Member States are incorporated, competencies within the union are further widened. The availability of local media channels provides a means by diversity may be promoted. Diversity is seen as a true and defining attribute of European culture, and promotion of this diversity would promote likewise the strengthening of European identity. Attendant to these considerations is the reality that European media is fragmented in strength and concentrated in its focus, such that it would be incapable of competing on equal footing with the possible liberated influx of North American cultural goods and capital in the audiovisual sector. According to the study, such is already the case in advertising, film distribution, pay television, and the music industry, where local players and representation are but agents of the major American (Hollywood) major corporations and producers. Other than the unfavourable circumstances currently obtaining, the Report views the audiovisual sector as inherently subject to a firm set of ground rules which work to delimit the unhindered development of free market competition in this sector. The report specifies these limitations in the following explanation: Firstly, the tendency to resort to vertical concentration leads a good number of the television networks to establish their own production companies or buy others out, thereby defeating the cause of cultural pluralism; and Secondly, this same tendency to integrate vertically signifies that broadcasting companies are in the process of consolidating an “excessively dominant position” in relation to the production firms, thereby creating a barrier that hampers the ability to explore opportunities to internationally market the broadcast rights to these programmes (Directorate, 2001:6). An evaluation of the European perspective The report mentions one important inconsistency in its position, and that is its seeming efforts towards the attainment of two contradictory objectives, which are articulated as follows: “to strengthen European production in order to increase its presence in the international market and thus be able to compete with North American products which also penetrate the domestic market; and “to guarantee cultural diversity, which is one of the characteristics which best defines the European identity, baking the production of those nations with a low apacity, and helping them to become profitable.” (Directorate, 2001:7) In these observations, the report appears to be correct in its evaluation. It is pointed out that the two objectives are clearly contained in the text of the legislation that embodies the European Parliament’s position, although not in stark juxtaposition as is presented here. Practical measures taken by the EU show that the active pursuit of the two-pronged direction, that is, international competitiveness and cultural diversity are both being actively targeted. However, of the two, the report states the apparent priority given to the first in comparison to the second, i.e., competitiveness over diversity. This observation was arrived at as a result of the realisation that most of the aid in the EU’s Media Programmes were awarded to countries that housed the most active and the largest audiovisual industries in Europe, namely the UK, France, Germany, Spain and Italy, to the disadvantage of the countries that have a relatively less active and smaller production capacity. A final interesting insight drawn by the Directorate in their report is the attribution of each of these objectives to particular proponents. The report stated that Community legislation gives a greater weight to the opinions of the Commission as against the views of Parliament. Documents on the media programmes of the EU show that the EC attributes a higher importance to the “strengthening of the industrial fabric of the countries with the aim of promoting the development of competitive companies” (Directorate, 2001:7). It appears that in its pronouncements, the European Parliament insists on the priority of the social cause, namely the protection, support, and incentive to the industry in the countries with a lower level of production capacity, in order to encourage the development of greater cultural diversity. Conclusion The issue that is under consideration in this paper is the liberalization of global trading in cultural goods, in particular the audiovisual products that are comprised of music, movies, and television programmes that are for the most part rendered in electronic form. From the very nature of these goods, it would not serve the purpose of either the producer or consumer of such products to consider them in the same classification as the other economic goods and services. Cultural products are characterized by expensive production methods in the development stage, but cheap reproduction methods. The intangible content provides the value to the good, which physically is hardly discernible from others of its kind. The cultural element is normally indefinable as to what attributes it should embody for success, thus the successful cultural product could only be described as one that is the result of the spark of insight and genius. The material content is easily transmissible through digital means that defy regulation and detection; and yet the access to their availability, as well as refusal of their entry, are both claimed as rights by nations of either persuasion. The European Union has elected to oppose the liberalisation of the global trade in cultural goods, anchoring its rationale in its need to preserve and aid the flourishing of cultural diversity which will be jeopardised by the entry of large players in the entertainment industry. The EU Parliament is justified in deciding in this direction. Unlike the US which is more or less a blend of various cultures, though diversified as to its residents’ national origins, are united in a cultural mix that is not threatened with extinction should certain elements be lost in the process. Europe, on the other hand, is a conglomeration of distinct cultures which are the wellspring or origin of many of the different cultural affiliations found in the US. The disappearance of any one of them would mean the extinction of the culture, the drying up of the wellspring, so to speak. To this extent, the position taken by the EU is a responsible one, which may eventually be modified should this region have strengthened its own cultural industries to ensure their continuance. Presently, Hollywood does exert dominance over the global entertainment industry; naturally, its interest in Europe is as a fertile market for its goods. However, the US may also be interested in the protection of its intellectual property goods in general, not just products with cultural content, from piracy which is normally the case where the entry of such goods is expensive (for the consumer) for failure of the economy to liberalize. In the meantime, stronger measures should be taken towards the proper regulation of the illegal transmission of cultural goods. This may be particularly true of the Eastern European countries where social structures and institutions are still in the process of development. How this could be achieved, given the intangible nature of electronic transmissions, will have to be addressed by the regulators and technical experts. Until full liberalisation, however, it will continue to be a necessity. References Baughn, C C & Buchanan, M A 2001 “Cultural protectionism”, Business Horizons, Vol. 44, Issue 6, November-December 2001, Pages 5-15 Directorate General for Research, European Parliament 2001 Globalisation of the Media Industry and Possible Threats to Cultural Diversity, Final Study. Brussels, July 2001. Accessed 27 July 2010 Graber, C B 2004 “Audiovisual Media and the Law of the WTO”, in Christoph Beat Graber/Michael Girsberger/Mira Nenova (Hrsg.), Free Trade versus Cultural Diversity, Schulthess: Zürich 2004, pp. 15-65. Accessed 28 July 2010 Herold, A 2005 EU External Policy in the Audiovisual Field: From “Cultural Exception” to “Cultural Diversity”. European University Institute, Florence Kern, P 2010 “The European Union and Cinema”, Skillset. Accessed 28 July 2010 McCalman, P 2004 “Foreign direct investment and intellectual property rights: evidence from Hollywoods global distribution of movies and videos”, Journal of International Economics, Vol. 62, Issue 1, January 2004, Pages 107-123 Neary, J P 2003 Advancing Global Trade: Pro Liberalisation and Development. CESifo Forum, February 2003. Accessed 26 July 2010 < http://www.cesifo-group.de/pls/guestci/download/CESifo%20Forum%202003/CESifo%20Forum%202/2003/forum2-03-p3.pdf> OECD 2005 “Digital Broadband Content: Music”, Paris. Accessed 26 July 2010 Pauwels, C & Loisen, J 2003 “The WTO and the Audiovisual Sector: Economic Free Trade vs Cultural Horse Trading?”, European Journal of Communication, September 2003 vol. 18 no. 3 291-313 Venturelli, S 2000 “Ownership of cultural expression: Speech & culture in the new intellectual property rights regime of the European Union”, Telematics and Informatics, Vol. 17, Issues 1-2, February-May 2000, Pages 9-37 UNESCO 2006 Trends in Audiovisual Markets: Regional Perspectives from the South. Accessed 27 July 2010 from Van Grasstek, C 2006 “Treatment of cultural goods and services in international trade agreements”, in UNESCO, Trends in Audio-Visual Markets. Read More