Culture, trade and globalization: questions and answers

Culture, trade and

globalizationQuestions and answers

UNESCO Publishing

Published by the Division of Creativity,

Cultural Industries and Copyright,

Sector for Culture, UNESCO

Editorial Team:

Guiomar Alonso Cano

Alvaro Garzón

Georges Poussin

Graphics:

Guiomar Alonso Cano

Directed by Milagros del Corral

ISBN 92-3-103748-X

© UNESCO 2000

Contents

Introduction 7

1. What do we understand by ‘cultural industries’? 11

2. What do we understand by ‘cultural goods and

services’? 13

3. What is the growth rate of the international trade

of cultural goods and services? 15

4. What is the market structure of cultural industries? 19

5. What do we mean by ‘free trade’? 23

6. What is copyright and why is it important for

cultural industries? 24

7. What is the GATT? 25

8. What is the WTO? 27

9. What are the differences between the GATT and

the WTO? 27

10. What are the common goals of the WTO/GATT

system? 28

11. What does ‘most-favoured nation’ mean? 29

12. What is the ‘national treatment’ principle? 30

13. What is the GATS? 31

14. What is the TRIPS? 33

15. What is the TRIMS? 34

16. What do we generally understand by ‘cultural

exception’? 35

17. How is the cultural exception applied? 37

18. What do we understand by ‘cultural diversity’? 38

19. What are the Florence Agreement and its Nairobi

Protocol? 40

20. What was the draft Multilateral Agreement on

Investments (MAI)? 41

21. What is pending on the WTO agenda? 44

22. What are the guiding principles for a fair development

of international trade on cultural products? 45

23. Which factors should be taken into account? 47

24. What accompanying measures should be taken at

the national level? 49

25. What co-operation strategies should be adopted at

the international level? 56

Selected list of sources 61

Bibliography 65

Introduction

Over the past fifty years, the general world economictrend has been towards open markets: world exportsincreased from 8% to 27% of world GDP between 1950and 1998 and total trade in 1997 was fourteen timesthe level of 1950. This expansion of international tradehas been accompanied by comprehensive multilateraland bilateral trade agreements establishing the condi-tions for eliminating tariff and non-tariff barriers to thecirculation of goods, services and investments. Theend of the Uruguay Round in 1994 initiated a new eraof global economics, characterized by the emergence oftrading blocks – from the highly integrated EuropeanUnion to the less-consolidated, but still evolving,ASEAN (Association of South-East Asian Nations),NAFTA (North American Free Trade Agreement) andMERCOSUR (the Southern Cone Common Market).More recently, the evolution of telecommunicationsand new technologies has dramatically reduced thecost of providing commercial services. The World

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Wide Web is also transforming the nature of productsand services.

Market integration allows consumers to buy goodsfrom all over the world in their local shops and super-markets. While local businesses must compete withthese foreign goods on their home turf, they also havenew opportunities to develop their export markets byselling in a multitude of other countries.

Cultural goods and services are no exception to thesenew patterns of production, consumption and trade.Cultural markets are increasingly going global; trade incultural goods multiplied by five between 1980 and1998. Cultural (content) industries are growing expo-nentially and will continue to do so in the future; as weshall see, they are to become a central pillar of the infor-mation society, also known as the ‘knowledge society’.

As consumption of cultural goods and servicesspreads all over the world, production itself tends toconcentrate. This results in an oligopolistic market witha highly asymmetric structure. The effects of this marketprofile are as yet unknown: while we are aware that alarge share of the cultural products circulating in mostcountries are produced elsewhere, we know very littleabout the impact of this global cultural market on citi-zens, audiences, businesses and governments.

In this context, the following considerations arise:† First, culture has moved to the forefront. The past few

years have seen the emergence of a powerful interest inculture resulting from a combination of diverse phe-nomena such as globalization, regional integration

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processes and cultures claiming their right to expressthemselves – all this in a context where cultural indus-tries are progressively taking over traditional forms ofcreation and dissemination and bringing about changesin cultural practices.

† Second, the issue of ‘culture and trade’ has now acquiredprime strategic significance. Cultural goods and servicesconvey and construct cultural values, produce and repro-duce cultural identity and contribute to social cohesion;at the same time they constitute a key free factor of pro-duction in the new knowledge economy. This makesnegotiations in the cultural field extremely controversialand difficult. As several experts point out, no otherindustry has generated so much debate on the political,economic and institutional limits of the regional andglobal integration processes or their legitimacy. Whenculture is put on the table, it often prompts complex dis-cussions on the relationship between the economic andnon-economic value of things, that is, the value attrib-uted to those things that do not have an assigned price(such as identity, beauty, or the meaning of life).

† Third, some governments understand that internationaltrade law is exercising growing pressure on their abilityto influence the production and distribution of culturalgoods and services within their borders. This hasincreasingly polarized positions in trade negotiationswhenever they deal directly or indirectly with culturalissues. This mounting tension was revealed in the finaldiscussions of the Uruguay Round in 1994, acquiredmomentum during the negotiations on the Multilateral

9

Agreement on Investments (OCDE, 1995–98), and werecrystallized in the preparations for the WTO MinisterialMeeting in Seattle (USA) in 1999.

† Fourth, and as stated in UNDP’s 1999 HumanDevelopment Report, two-thirds of humanity do not ben-efit from the new model of economic growth based onthe expansion of international trade and the develop-ment of new technologies, and are excluded from theconstruction of the information society. This situationreveals gaps in terms of individual countries’ capacitiesand resources to produce cultural goods and services. Inmany developing or small countries, these capabilitiesare actually shrinking. As a consequence, trade flows ofcultural goods are unbalanced, heavily weighted in onedirection, and cultural industries show great disparitiesin their structures both within and between the variousregional trade blocks.

However, world trade rules are still in the making.Just like in any major social, cultural or political change,rules are gradually established. For instance, trade part-ners have been unable to agree on how far investmentshould be liberalized, or on the necessity (or lackthereof) of creating legal frameworks to regulate newindustries such as electronic commerce.1 In short, traderules are evolving and being transformed; there is stillmuch work to be done.

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1. ‘Electronic commerce’ being understood to mean theproduction, distribution, marketing, sale and delivery ofgoods and services by electronic means.

It is generally admitted that part of the problem isthe lack of shared concepts and definitions. This mightbe explained by the fact that actors in trade negotiationstend to read and interpret the same facts and situationsin opposite ways. Not only their economic interests maydiffer, but their views, values and priorities also tend todiverge.

Therefore, a better understanding of the nature ofthe current changes is crucial for all countries, but par-ticularly for developing ones. They must look forwardand identify areas of strategic interest for their culturalsectors, and, overall, help shape more forcefully theglobal trade structure of cultural goods and services.

The following twenty-five questions and answersexplore key concepts and ideas related to culture andtrade and its potential for development. Their purpose isto provide a basic overview of the multilateral trade agree-ments that regulate global flows of cultural goods andservices, the institutions that oversee their implementa-tion, and their eventual impact on the development ofdomestic cultural industries. Also, some proposals onhow to put in place national support measures and inter-national co-operation strategies are suggested.

1 What do we understand by ‘culturalindustries’?

It is generally agreed that this term applies to thoseindustries that combine the creation, production andcommercialization of contents that are intangible and

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cultural in nature. These contents are typically protectedby copyright and they can take the form of goods orservices.

Depending on the context, cultural industries mayalso be referred to as ‘creative industries’, ‘sunrise’ or‘future-oriented industries’ in the economic jargon, or‘content industries’ in the technological jargon. Thenotion of cultural industries generally includes printing,publishing and multimedia, audiovisual, phonographicand cinematographic productions, as well as crafts anddesign. For some countries, this concept also embracesarchitecture, visual and performing arts, sports, manu-facturing of musical instruments, advertising and cul-tural tourism.

Cultural industries add value to contents and gener-ate values for individuals and societies. They are knowl-edge and labour-intensive, create employment andwealth, nurture creativity – the ‘raw material’ they aremade from – and foster innovation in production andcommercialization processes. At the same time, culturalindustries are central in promoting and maintaining cul-tural diversity and in ensuring democratic access to cul-ture. This twofold nature – both cultural and economic– builds up a distinctive profile for cultural industries.During the 1990s they grew exponentially, both in termsof employment creation and contribution to GNP.Today, globalization offers new challenges and opportu-nities for their development.

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2 What do we understand by ‘culturalgoods and services’?

The concepts of ‘cultural goods’ and ‘cultural services’,which appear clearly distinct, are sometimes difficult todissociate. In fact, their respective definitions and mean-ings are one of the key issues currently being discussedat the international level. The combination of bothterms is commonly referred to as ‘cultural products’, andcould be tentatively defined as follows:

† ‘Cultural goods’ generally refer to those consumer goodsthat convey ideas, symbols and ways of life. They informor entertain, contribute to build collective identity andinfluence cultural practices. The result of individual orcollective creativity – thus copyright-based – culturalgoods are reproduced and boosted by industrialprocesses and worldwide distribution. Books, maga-zines, multimedia products, software, records, films,videos, audiovisual programmes, crafts and fashiondesign constitute plural and diversified cultural offer-ings for citizens at large.

† It is traditionally understood that cultural services arethose activities aimed at satisfying cultural interests orneeds. Such activities do not represent material goods inthemselves: they typically consist of the overall set ofmeasures and supporting facilities for cultural practicesthat government, private and semi-public institutions orcompanies make available to the community. Examplesof such services include the promotion of performancesand cultural events as well as cultural information and

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preservation (libraries, documentation centres andmuseums). Cultural services may be offered for free oron a commercial basis.

While international trade in goods is relativelysimple to grasp (a product is sent from one country toanother and will, eventually, incur a tariff as it crossesthe border), the idea of trade in services is more diverseand harder to figure out. Telephone companies, publish-ing houses or news agencies all provide services in quitedifferent ways. That makes it complex to describe thenature of the services, or to establish common rules togovern their exchange.

The Annexes of the General Agreement on Trade inServices (GATS) (see Question 13) reflect some of thisdiversity. Yet, in general terms, it can be stated that cul-tural services include performing services (theatres,orchestras and circuses), publishing, publication, news,communication and architectural services. They alsoinclude audiovisual services (distribution of films, tele-vision/radio programmes, and home videos; all aspectsof production such as dubbing and print duplication;exhibition of films; and ownership and operation ofcable, satellite and broadcasting facilities or cinemas,etc.), library services, archives, museums as well asother services. So far, there are no common definitions,nor a single standardized system of descriptions fortraded cultural services. Furthermore, different concep-tions exist regarding the nature of certain products suchas books or films, which can be made available on-lineand also have their hard-copy equivalent. Are they

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‘virtual goods’, as some countries maintain, or ratherservices, as others advocate? Since current internationaltrade agreements treat goods and services differently,the rules that will be devised for electronic commercemay influence the choice between physical and non-physical methods of trade.

World trade of cultural goods (in millions of dollars), 1980–98

Source: Study on International Flows of Cultural Goods, 1980–98, Paris, UNESCO,

2000. The UNESCO Framework for Cultural Statistics includes the following cate-

gories: printed matter and literature (books, newspapers and periodicals, other

printed matter); music (phonographic equipment, records and tapes, musical instru-

ments); visual arts (paintings, drawings and pastels, engravings, prints and litho-

graphs, sculpture and statuary); cinema and photography (photographic and

cinematographic cameras and supplies); radio and television (television and radio

receivers); games and sporting goods.

3 What is the growth rate of theinternational trade of cultural goodsand services?

Trade in cultural goods has grown exponentially overthe last two decades. Between 1980 and 1998, annualworld trade of printed matter, literature, music, visualarts, cinema, photography, radio, television, games and

15

0

100,000

200,000

300,000

400,000 Developedcountries

Developingcountries

Total

19981995199019851980

sporting goods surged from $95,340 to $387,927 mil-lion.2 Yet most of that trade was between a relativelysmall number of countries. In 1990, Japan, the USA,Germany and the UK were the biggest exporters, with55.4% of total exports. Imports were also highly con-centrated with the USA, Germany, the UK and Franceaccounting for 47% of total imports. The high concen-tration of exports and imports of cultural goods amonga few countries diminished, but not substantiallychanged, in the 1990s. There are, however, new playersin the scenario: by 1998, China was the third mostimportant exporter, and the new ‘big five’ were thesource of 53% of cultural exports and 57% of imports.

Although we lack precise statistics of global culturaltrade, overall trade volumes of cultural products haveincreased dramatically since 1991. Indeed, the above fig-ures of cultural flows do not fully reflect the 1990sboom of multimedia, audiovisual, software and othercopyright-based industries. The $38,671 million globalretail sales of recorded music (LPs, MCs and CDs) in1998 compared with $27,000 million in 19903 reflectsthe growth of content-based industries and the size andmagnitude of the global cultural trade today. In 1996,cultural products (films, music, television programmes,

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2. Study on International Flows of Cultural Goods, 1980–98,Paris, UNESCO, 2000.3. Figures cover sales in over seventy countries surveyed onan annual basis by the International Federation of thePhonographic Industry (IFPI: see their website athttp://www.ifpi.org).

books, journals and computer software) became thelargest US export, surpassing, for the first time, all othertraditional industries, including automobiles, agricul-ture, or aerospace and defence. According to a 1998report by the International Intellectual PropertyAlliance, between 1977 and 1996, core copyright indus-tries in the USA grew three times as fast as the annualrate of the economy, achieving in 1996 foreign sales andexports of $60,180 million. The UK has followed a sim-ilar trend, where creative-industries exports reached$12,500 million in 1997.

World imports of cultural goods (in millions of dollars), 1980–98

Source: Study on International Flows of Cultural Goods, 1980–98, Paris,

UNESCO, 2000.

Despite the vast problems of statistical reliability,comparability and standardization of classifications,data suggest global trade in cultural services is growingvery fast, just as other commercial services are growing

17

0

50,000

100,000

150,000

200,000

250,000

Developing countries

The ’new big five’(USA, China, UK,Germany, France)

The ’big four’ (USA, UK, Germany,France)

Total

19981995199019851980

faster than traditional exports of merchandise goods.4

Available figures for the USA point in that direction: in1994, cross-border exports, including affiliated trade ofaudiovisual services, were about $16,120 million, whileimports amounted to only $136 million. It is importantto note that the biggest difficulty in consolidating andinterpreting trade figures for cultural services is the factthat much intra-firm trade is not registered, whether itis between overseas affiliates or foreign-owned affiliates.

Overall, the rapid expansion of international culturaltrade has responded to rising demand for cultural goodsand services. For example, in 1995, French householdsspent on average 3.5% of their budget on cultural prod-ucts. Changing consumption patterns in industrial anddeveloping countries, more leisure time and spareincome, together with cheaper products, have helpedgenerate this new demand and are the building blocks ofthe emerging information society.

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4. Definitions vary widely, even at the OECD level. In the‘films and television’ category of the OECD publicationServices Statistics on International Transactions 1970–1994, forexample, data for Japan are defined as ‘film rentals’, forGermany as ‘films and television’, for France as ‘audiovisualprogrammes’, for Canada as ‘films and broadcasting’ and forAustria as ‘culture and entertainment’. In addition, cross-border trade figures alone (for which data are extremelylimited) may be deceptive as this trade, and activities relatingto it, is often very substantial.

World exports of cultural goods (in millions of dollars), 1980–98

Source: Study on International Flows of Cultural Goods, 1980–98, Paris,

UNESCO, 2000.

4 What is the market structure of cultural industries?

Throughout the 1990s the structure of cultural indus-tries worldwide was dramatically reorganized with thedevelopment of new digital technologies and the arrivalof national, regional and international (de)regulatorypolicies. These factors have radically altered the contextin which cultural goods, services and investments flowbetween countries today. Cultural industries haveundergone a process of internationalization, realign-ment and progressive concentration, resulting in theformation of a few big conglomerates. This has raisedconcern about the creation of a new global oligopoly,which some analysts compare to the automobile indus-try at the beginning of the century.

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0

50,000

100,000

150,000

200,000

Developing countries

The 'new big five'(Japan, USA, China,UK, Germany)

The 'big four'(Japan, USA, UK,Germany)

Total

19981995199019851980

World culturalindustry markets 1995 2000 (estimated)

Source: Booz-Allen and Hamilton, 1999.

The following figures illustrate this point: in 1993,the total turnover of the fifty largest audiovisual com-panies worldwide was $118,000 million,5 but four yearslater, the seven major media conglomerates alonereached the same turnover figure.6 Furthermore, in1993, 36% of the companies were based in the USA, 36%in the European Union and 26% in Japan. In 1997, over50% of the firms were based in the USA.

Economies of scale and vertical integration strategies(starting from an original product, for example a fic-tional character, conglomerates handle the productions,the movie studio, the music, the merchandising, thetheme parks, the Internet site and the e-commercializa-tion of all derived products) seem to be paying off forUSA-based audiovisual and entertainment groups.

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5. Statistical Yearbook, 1995, Strasbourg, European Audio-visual Observatory, 1995.6. The Economist (company reports), 21 November 1998.

Europe

Asia

USA

Although there are other big film producers – Indiamakes seven times more films each year than the USA –the global reach of the North American film industry isunique. Hollywood today earns half of its revenues fromoverseas markets, compared to just 30% in 1980.Around 85% of worldwide screened films today aremade in Hollywood. It was, therefore, no surprise whenthe film Titanic broke box-office records in China,which boasts around 140,000 cinemas (compared to

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Turnover of the largest audiovisual companies

Sources: Statistical Yearbook 1999, Strasbourg, European Audiovisual Observatory,

1999; The Economist, November 1998.

AutreJapon

Europe

USA

1993Total turnover:$118 billion

Others

Japan

Europe

USA

1997Total turnover:$118.8 billionViacom

Time Warner

Disney

News Corporation

Seagram

Sony

BertelsmanIn just four years, the total turnover of the fifty largest audiovisual companieshas become that of the seven majormedia conglomerates

some 25,000 in the USA), or that Europe’s audiovisualtrade deficit grew from $3,500 million in 1993 to $6,000million in 1998. The African continent, which makes anaverage of just forty-two of its own films a year, is pro-portionally the largest importer of United States films,which also represent 95% of Chilean and Costa Ricanimported films.

However, cultural industries cover more than theaudiovisual sector and there are local niche markets towhich global cultural products and services cannotcater. Equally, new and original industries emerge notnecessarily from the use of new technologies, but fromcreativity, skills or traditional materials. This makescrafts- and tourism-related industries a springboard fordevelopment.

Recent figures of the culture sector’s contribution toGDP and employment illustrate well the economic andjob-creation potential of cultural industries. In OCDEcountries, the culture sector accounts for 4% of GDP,while it accounts for 1% to 3% in developing countries(e.g. 1% Brazil, 3% South Africa). In Canada, around 5%of the GDP labour force (1994–95) engage in culturalindustries, compared to 2.8% in the USA (1996) and17% in South Africa. Yet, with some exceptions, figuresfor developing countries are low and diminishing fortraditional cultural industries such as publishing andcinema, due to the loss of domestic production capacity.

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5 What do we mean by ‘free trade’?

In very simple terms, free trade can be defined as theabsence of tariffs and import quotas on goods. This def-inition is based on the notion that the market is the bestdevice to ensure that consumers can access good prod-ucts at the best price, and increase global wealth. Thefinal goal of eliminating tariff barriers and national pro-tection mechanisms is to allow the market to operatewith no constraints. However, this approach to freetrade takes no account of the fact that not all tradingpartners are equal, and neither are all products and ser-vices. Therefore, in an integrated global economy theconventional definition of free trade will no longer do,as trade in services is surging dramatically and new bar-riers are replacing conventional barriers such as tariffand import quotas.

There are three categories of obstacles to interna-tional trade:

† Tariff barriers (e.g. fiscal measures such as the imposi-tion of custom duties).

† Non-tariff measures (e.g. legal and practice barriers suchas screen quotas).

† Investment barriers (e.g. restriction or limitation of for-eign capital or equity participation, control of thenationality of company directors, or restriction on therepatriation of capital).

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6 What is copyright and why is itimportant for cultural industries?

Copyright protection grants authors the exclusive right tofreely exploit their work on a commercial/non-commercialbasis by enjoying moral rights protected by law. Copyrightlegislation is complemented by the so-called neighbouringrights, which protect performers (e.g. actors, singers andmusicians), phonogram producers (e.g. of sound record-ings) and broadcasting organizations.

The author’s rights over their literary and artisticworks (e.g. books and other written works, musicalcompositions, paintings, sculptures, software and cine-matographic works) are protected under copyright for aminimum period of fifty years after their death.

Under neighbouring rights, performers have theexclusive right to authorize reproduction and publiccommunication of their performances. Phonogram pro-ducers enjoy the exclusive right to authorize reproduc-tion, distribution and public communication of theirphonograms, and broadcasting organizations aregranted the exclusive right to authorize broadcast, satel-lite retransmission, recording and public communica-tion of their own broadcasts.

The main purpose of copyright and neighbouringrights protection is to encourage and reward creativework, ensuring that creators are remunerated for theproduct of their work – a key ingredient for the suc-cessful development of cultural industries. The popular-ization of reproduction equipment and, more recently,

24

the advent of digital technology, has largely contributedto increasing piracy (non-authorized reproduction ofprotected works), damaging cultural industries’ sales.Piracy is equally detrimental to authors, whose royaltieson sales are diminished accordingly. The publishingindustry and phonogram, audiovisual and software pro-ducers are the sectors most severely harmed by piracy.

Collecting societies are organizations created byauthors and other copyright and neighbouring right-holders, specifically mandated to authorize on theirbehalf the economic exploitation of their works.Collecting societies are responsible for collecting anddistributing benefits obtained from the commercialexploitation (reproduction and public communication)of protected works, whenever the rights cannot reason-ably be exercised by the right-holder, due to their com-plexity. Collecting societies were originally created inthe areas of music and theatre but nowadays also oper-ate in fields such as cinema, audiovisual, reprography,multimedia and, more recently, digital copying and elec-tronic transmission. Collective administration of rightsis crucial for copyright enforcement and also constitutesa useful tool for users by simplifying rights clearance.

7 What is the GATT?

After the Second World War, several institutions,intended to co-ordinate and regulate international econ-omic co-operation, were formed. They are referred to asthe Bretton Woods institutions, known today as the

25

World Bank and the International Monetary Fund. Theoriginal intention was to create a third institution tohandle international economic co-operation: the Inter-national Trade Organization (ITO). This body was nevercreated, but during the preparatory process, severalcountries started negotiations on the reduction andbinding of customs tariffs. This package of trade rulesand tariff concessions, accepted provisionally, becameknown as the 1947 GATT (General Agreement on Tariffsand Trade) and entered into force in January 1948.

From 1948 to 1994, in the absence of any other reg-ulating multilateral body, the GATT provided rules formuch of world trade. Until the World TradeOrganization (WTO) replaced it in 1994, the GATT wasa provisional agreement and organization. During thisperiod the GATT’s basic legal text remained much as itwas in 1947, through there were additions in the form of‘multilateral’ agreements as well as ‘plurilateral’ ones(i.e. voluntary membership concerning only a certainnumber of contracting parties) and efforts to reducecustom duties and other barriers to trade continued.Much of this was achieved through a series of eight mul-tilateral negotiations known as ‘trade rounds’, the mostrecent being the Uruguay Round. While the GATT nolonger exists as an ad hoc organization, the GATTAgreement lives on. The old text is now called ‘GATT1947’; the updated version incorporated into the newWTO agreements is called ‘GATT 1994’.

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8 What is the WTO?

The WTO (World Trade Organization) is a permanentintergovernmental body that deals with the global rulesof trade between nations through multilateral agree-ments. The 1986–94 Uruguay Round of world tradetalks led to the creation of the WTO and its replacementof the GATT. It was decided that the new organizationwould deal not only with trade in goods, as the oldGATT used to, but also with trade in services and intel-lectual property. The main functions of the WTO are tooversee the implementation of the trade agreementsadopted by member states, serve as a forum for tradenegotiations, handle trade disputes, and monitor andreview national trade policies.

Signed in April 1994, the Marrakech Declarationendorsed the results of the Uruguay Round and theestablishment of the new trade organization. The WTOwas officially created on 1 January 1995. Today it has 135member states, accounting for over 90% of world trade,and over 30 others are negotiating for membership.

9 What are the differences between the GATT and the WTO?

There are at least five main differences:† The GATT was a set of rules for conducting international

trade with no solid institutional basis (only an ad hoc provisional secretariat). The WTO is an inter-governmental organization, and has its own secretariat.

27

† Although it was in place for over forty years, the GATTwas a provisional agreement from a legal point of view.The WTO and its agreements are mandatory and per-manent.

† The GATT dealt only with trade in goods. The WTOcovers trade in services (under the General Agreementon Trade in Services, or GATS), trade-related aspects ofintellectual property (under the TRIPS) and continuesdealing with trade in goods through the so-called ‘GATT1994’ which is an updated version of the old ‘GATT1947’.

† A large number of agreements adopted under the GATTwere ‘plurilateral’, and therefore selective agreements.But WTO agreements are multilateral and all memberstates are concerned.

† Another major difference is the dispute-settlementsystem, which is faster and more automatic than in theold GATT system. Its rulings cannot be blocked.

10 What are the common goals of the WTO/GATT system?

The system’s overriding purpose is to help trade flow asfreely as possible – so long as there are no undesirableside effects. That partly means removing obstacles,ensuring that individuals, companies and governmentsknow what the trade rules are around the world, andproviding them with legal assurance regarding theirinternational commercial transactions.

According to the WTO/GATT philosophy, the inter-

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national trading system is based on five principles ormain orientations, which run throughout all the agree-ments:

† Trade without discrimination between trading partners(‘most-favoured nation’ treatment, see Question 11), orbetween national and foreign goods, services or nation-als (‘national’ treatment, see Question 12).

† Freer trade, with barriers progressively coming downthrough negotiation.

† Predictable policies ensured by the binding nature of thecommitments taken by the member states.

† Promotion of open and fair competition by discouraging‘unfair’ practices such as export subsidies and dumpingproducts at below cost to gain market share.

† Special provisions for developing countries, giving themmore time to adjust, greater flexibility and special privi-leges.

11 What does ‘most-favoured nation’ mean?

‘Most-favoured nation’ (or MFN) means that every timea member state improves the benefits that it gives to onetrading partner, it has to give the same ‘best’ treatmentto all other WTO members, so that they remain equal.Countries are to grant equal treatment – not morefavourable or discriminatory – to goods and servicesfrom all WTO members. This principle is found in thefirst Article of the GATT. It is also a priority in theGeneral Agreement on Trade in Services (GATS) (seeQuestion 13) and in the Agreement on Trade-Related

29

Aspects of Intellectual Property Rights (TRIPS) (seeQuestion 14), although in each agreement the principleis handled slightly differently.

Some exceptions are allowed. For example, coun-tries within a region can set up a free-trade agreementthat does not apply to goods from outside the group.Alternatively, a country can raise barriers against prod-ucts from specific countries that are considered to betraded unfairly. And in services, countries are allowed,in limited circumstances, to discriminate. But the agree-ments only permit these exceptions under strict condi-tions (see Question 13).

12 What is the ‘national treatment’principle?

The ‘national treatment’ principle means that importedand locally produced goods should be treated equally.The same should apply to foreign and domestic services,as well as to foreign and local trademarks, copyrightsand patents. This principle of giving others the sametreatment as one’s own nationals is also found in all thethree main WTO agreements (Article III of the GATT,Article 17 of the GATS and Article III of the TRIPS),although once again it is handled slightly differently ineach of these. National treatment only applies once aproduct, service or item of intellectual property hasentered the market.

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13 What is the GATS?

The GATS* was adopted by the Uruguay Round andcovers all internationally traded services. It is also thefirst multilateral agreement to provide legally enforce-able rights to trade in all services including culturalones.

The agreement defines four ways of providing aninternational service:

† Services supplied from one country to another (e.g.banking or architectural services provided throughtelecommunications or regular mail), known as ‘cross-border supply’.

† Consumers or firms using a service in another country(e.g. tourism, or aircraft or ship maintenance work),known as ‘consumption abroad’.

† A foreign company setting up subsidiaries or branchesto provide services in another country (e.g. insurancecompanies or hotel chains), officially known as ‘com-mercial presence’.

† Individuals travelling from their own country to supplyservices in another (e.g. auditors, physicians, teachers,etc.), known as ‘presence of natural persons’.

Both national treatment and MFN principles apply totrade of all services except those provided in the exerciseof governmental authority.

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* In English, GATS (General Agreement on Trade inServices); in French, AGCS (Accord Général sur leCommerce des Services).

† Governments can choose the services in which theymake market access and national treatment commit-ments and they can limit the degree of market accessand national treatment they offer. In short, every coun-try has the right to choose the sectors in which it wishesto make an offer of liberalization, and can also establisha list of specific commitments it wishes to make to pro-vide foreigners access to its services market.Furthermore, a country does not have to apply nationaltreatment in sectors where it has made no commit-ments. Even where commitments have been contractedthe GATS does allow some limits on national treatment.

† On the other hand, the MFN clause and the principle oftransparency are general obligations under the GATS, sothey will apply even if the country has made no specificcommitment to provide foreign companies access to itsmarket. ‘Members shall accord immediately and uncon-ditionally to services and service suppliers of any otherMember treatment no less favourable than that itaccords to like services and service suppliers of anyother country’ (GATS, Article II). However, special tem-porary exemptions to this MFN obligation have beenallowed alongside the commitments, and will normallylast no more than ten years. These temporary with-drawals of MFN commitments are an integral part of theagreement. They benefit, in particular, countries withinthe same region that have set up special trade zonessuch as custom unions (members apply a common exter-nal tariff and eliminate tariffs between them) or free-trade areas (trade within the group is duty free but

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members set their own tariffs on imports from non-members). However, they have to be sufficiently eco-nomically integrated, like the European Union, andunlike the Council of Europe.

† Finally there are special provisions to allow developingcountries to progressively adapt and implement thecommitments.

14 What is the TRIPS?

The TRIPS* is an instrument adopted by the UruguayRound to bring intellectual property rights (copyrights,trademarks, patents, etc.) under common internationalGATT/WTO rules. This is an increasingly important partof trade.

The agreement requires WTO member countries toadhere to minimum standards for protection of intellec-tual property rights – essentially the standards laid out inthe main conventions of the WIPO, the ParisConvention for the Protection of Industrial Property andthe Berne Convention for the Protection of Literary andArtistic Works. The agreement applies national and MFNtreatment to intellectual property rights and sets up pro-visions on how best to protect them through provisionsto enforce those rights and to repress counterfeiting andpiracy. Finally, it makes disputes between WTO members

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* In English, TRIPS (Agreement on Trade-Related Aspectsof Intellectual Property Rights); in French, ADPIC (Aspectsdes Droits de Propriété Intellectuelle qui touchent auCommerce).

concerning the respect of the TRIPS obligations subjectto the WTO’s dispute-settlement procedures.

The TRIPS confirms that computer programs will beprotected as literary works under the copyright regimeand not under that of trademarks and patents. It grantsauthors of computer programs and producers of soundrecordings (phonograms) the right to authorize or pro-hibit the commercial rental of their works to the public.

The TRIPS contains provisions related to industrialproperty as well, including the protection of trademarks,service marks, geographical indications, industrialdesigns and patents, integrated circuits layout designs,undisclosed information and trade secrets.

To provide sufficient time for member states to intro-duce the system and adapt their laws and practices toconform to the agreement, the TRIPS set up special tran-sitional periods. The deadlines for compliance are:1 January 1995 for developed countries, 1 January 2000for developing countries and (under certain conditions)transition economies, and 1 January 2006 for least-developed countries

15 What is the TRIMS?

The TRIMS* applies to any measure that discriminatesagainst foreigners or foreign products. Like the GATT, itapplies only to measures that affect trade in goods. It

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* In English, TRIMS (Agreement on Trade-Related Invest-ment Measures); in French, MIC (Accord sur les Mesuresconcernant les Investissements et liées au Commerce).

recognizes that certain measures can restrict and distorttrade, and states that no member shall apply any meas-ure that discriminates against foreigners or foreign prod-ucts (i.e. who violates national treatment). It alsooutlaws investment measures that lead to restrictions inquantities (violating another principle in the GATT).

An illustrative list of trade-related investment meas-ures, agreed to be inconsistent with these GATT articles,is appended to the TRIMS. The list includes measuresthat require particular levels of local procurement by anenterprise (‘local content requirements’). It also discour-ages measures that limit a company’s imports or set tar-gets for the company to export (‘trade-balancingrequirements’). Under the agreement, countries mustinform the WTO and fellow-members of all investmentmeasures that do not conform to the agreement.Developed countries had to eliminate these by the end of1996; developing countries had until the end of 1999;and least-developed countries were given until 1 January 2002. In addition, WTO members were to con-sider by 1 January 2000 whether there should also beprovisions on investment policy and competition policy.

16 What do we generally understand by ‘cultural exception’?

During the final negotiations of the Uruguay Round,some countries expressed concern that enforcement ofthe GATT principles – in particular MFN and national-treatment rules – on goods and services as well as on

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copyright-protected products would undermine theircultural specificity (and unique status) in favour of theircommercial aspects. Indeed, quite often cultural indus-tries (film and audiovisual ones in particular) survivedue to import restrictions and other support mecha-nisms facilitated by certain public administrations,which consider it a priority to preserve domestic cul-tural industries. If subject only to commercial consider-ations, many local cultural industries would be quicklyreplaced by those with greater financial muscle due totheir multinational presence and monopoly position.Negotiators felt mechanisms were needed to maintainand develop a viable degree of domestic production toreflect local cultural forms of expression and avoid thestandardization of tastes and behaviour.

After heated debates, these concerns were addressedin the Uruguay Round’s concluding negotiations, whichdid not insist on applying all the GATT rules to film andaudiovisual goods and services. Since then, this tacitunderstanding has been known as the ‘cultural excep-tion’. As a doctrine (it does not have any legal status, nordoes it exist as such in any agreement or treaty), the‘cultural exception’ is based on the principle that cultureis not like any other merchandise because it goes beyondthe commercial: cultural goods and services conveyideas, values and ways of life, which reflect the pluralidentities of a country and the creative diversity of itscitizens.

A few years later, in 1999, and following the recom-mendations of the Intergovernmental Conference on

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Cultural Policies for Development, held in Stockholm in1998, UNESCO brought together a group of experts todiscuss the issue ‘Culture: a Form of Merchandise Like No Other?’. The conclusions of this symposium wereinspired in the shared understanding that ‘culture wasnot only a matter for the economy or an economic con-cept’.

While the French were probably the first to intro-duce the concept of the ‘cultural exception’, the princi-ple underlying this doctrine was evoked by the USA inthe early 1950s when it adhered to the first multilateraltreaty of cultural goods: the Florence Agreement (seeQuestion 19).

17 How is the cultural exception applied?

The notion of cultural exception was ‘applied’ duringthe GATS negotiations: European member states did notoffer to liberalize services in certain cultural sub-sectorsand included a series of MFN exceptions to the agree-ment, five of them in the audiovisual field.

Due to the ‘sensitive’ nature and special characteris-tics of cultural industries, the European Union refusedto make an offer of liberalization on audiovisual services(e.g. films, radio, television), or on services related tolibraries, archives or museums. While market access andnational treatment rules do not affect these services,they apply to other sectors for which liberalization com-mitments were adopted, such as publishing, shows andarchitecture services. Most of WTO member states fol-

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lowed this approach; only 14 countries out of the 45 to50 negotiating nations made specific commitments inthis sector. Exceptions to MFN rule, as explained above,still allow the European Union to develop public poli-cies to support the audiovisual sector, such as broad-casting (TV and radio) quotas, financial aid (forproduction and distribution programmes like MEDIA),regional co-production agreements (like Eurimages)and the Directive ‘Television Without Frontiers’.

The doctrine of ‘cultural exception’ was also re-flected in the decision to maintain Article IV of Part II ofthe GATT agreement. That article relating to cinemato-graphic films permits screen quotas to require the ex-hibition of domestically made films for a specifiedminimum proportion of total screen time. The GATTalso maintains a general exception for measuresdesigned ‘to protect national treasures of artistic, his-toric or archaeological value’ (Article XX.f). All othercultural goods – except for developed films and home-recorded videos – are subject to the GATT disciplines.

18 What do we understand by ‘culturaldiversity’?

Over hundreds of millions of years, nature has devel-oped an astonishing variety of life forms which aretightly interwoven; the survival of all are necessary toensure the continued existence of natural ecosystems.Similarly, ‘cultural ecosystems’, made up of a rich andcomplex mosaic of cultures, more or less powerful, need

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diversity to preserve and pass on their valuable heritageto future generations.

This parallel between biodiversity and cultural diver-sity was first made in Our Creative Diversity, the 1995Report of the UN/UNESCO World Commission onCulture and Development. This report called for con-certed action to address development challenges and tosustain cultural diversity in a global world. Discussionson these linkages continued during the Inter-governmental Conference on Cultural Polices forDevelopment (Stockholm, 1998) and were reflected inthe recommendations of its Action Plan.

The idea of cultural diversity was evoked in thepreparatory phase of the WTO Seattle ministerialmeeting in relation to goods and services: just as policiesof biodiversity preservation are needed to guarantee theprotection of natural ecosystems and the diversity ofspecies, only adequate cultural policies can ensure thepreservation of the creative diversity against the risks ofa single homogenizing culture.

Cultural diversity is the positive expression of theoverarching objective to prevent the development of auniform world by promoting and supporting all worldcultures. The cultural exception is just one of the possi-ble means for achieving this objective of promoting cul-tural diversity. It must be acknowledged that thosecultural goods and services (books, music, multimediagames, films and audiovisuals) are different from othergoods and services, and deserve different and/or excep-tional treatment that sets them apart from standardized

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mass consumption. Obviously, this requires a differen-tial treatment in international trade agreements and pos-sibly effective strong regulatory frameworks to redefinecultural policies focusing on the promotion and devel-opment of cultural industries.

19 What are the Florence Agreement and its Nairobi Protocol?

To facilitate mutual understanding and internationalcultural dialogue, UNESCO has promoted the so-called‘Florence Agreement’, a legal instrument on the impor-tation of educational, scientific and cultural materialsthat aims to foster their free circulation.

Under this international instrument, ratified byninety-four states as of 2000, contracting states agree todismantle customs barriers for imported books; works ofart; audiovisual material of an educational, scientific andcultural nature; scientific equipment; and appliances andmaterials for the blind. The instrument also states thatconvertible currencies and import licences should begranted for the purchase of books to be used in publiclibraries.

The Florence Agreement, originally reached in 1950,was updated in 1976 through the adoption of theNairobi Protocol which extended the free-circulationprinciples to other cultural goods, particularly thoseusing the technologies developed at that time, such asaudiovisual materials.

Yet even though the Florence Agreement and its

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Nairobi Protocol clearly champion liberalization of mar-kets for cultural goods, both the Agreement and itsProtocol contain reserve mechanisms, allowing coun-tries to avoid importing cultural goods that may preju-dice the development of national cultural products (seethe reserve clause made by the United States at its adhe-sion to the Agreement – published as an annexedProtocol, it can be applied by all signatory parties intheir relations with this country (see Question 16) – andAnnex C-1 of the Nairobi Protocol with regard to com-mercial cinema). The practical effects of these texts are,in fact, similar to those of the ‘cultural exception’ evenbefore this notion was developed.

20 What was the draft MultilateralAgreement on Investments (MAI)?

Foreign investments are increasingly an important areafor international trade in general and for trade of cul-tural goods and services in particular. By the end of1996, the total stock of foreign direct investment ownedby companies outside their home countries was over$3 trillion and OECD members were the source of 85%of all foreign direct investment. During the UruguayRound there was strong interest in starting new negoti-ations of a free-standing, enforceable multilateral invest-ment agreement, but countries’ positions on the issuewere very different.

The lowest common denominator negotiators couldreach was the Agreement on Trade-Related Investment

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Measures (TRIMS), which only deals with investmentsrelated to trade in goods and does not cover many of theareas that were discussed in the Uruguay Round negoti-ations, such as export performance or technology trans-fer requirements. The WTO continued to pursuenegotiations to eliminate barriers against foreigninvestors, but no consensus was reached to proceed. In1995, the OCDE started to negotiate a new MultilateralAgreement on Investments (MAI). Its main objectivewas to apply the WTO deregulatory agenda to invest-ments by creating a set of global rules to replace a patch-work of 1,600 bilateral investment treaties (BITS). TheMAI was to be open to all OECD members and to acces-sion by non-OECD member countries.

The MAI proposed applying the MFN principle ofnon-discrimination and national treatment to invest-ment rules and foreign investors. In other words, foreigninvestors were to be treated as domestic investors, andall foreign investors were also to be treated equally,regardless of their country of origin. The proposal alsoincluded a ban on ‘performance requirements’, so gov-ernments would not be able to impose performancemeasures on investors. It also proposed to protect theliberalization of investment regimes with an effectivedispute settlement procedure. Like other treaties, itallowed for the application of reservations and exemp-tions.

However, mounting tension between negotiating par-ties and fierce opposition to the MAI project by globalpublic opinion (demonstrators organized a massive

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protest against the agreement) led negotiators in April1998 to decide on a six-month delay, to ostensibly givecountries time to seek domestic support and carry outnational consultations. After the moratorium, Franceannounced it was withdrawing from the negotiations.Too many issues were being questioned: the impact theMAI would have on the environment, on labour rights,and particularly on the ability of governments to applypolicies for the development and promotion of strategicsectors such as cultural industries. To a certain extent,the failure of the MAI has opened a new phase for multi-lateral negotiations. It has made evident that while thereare many points of conflict and disagreement, culturalissues are particularly sensitive and controversial.

In the absence of an MAI agreement, the only multi-lateral rules directly or indirectly governing investmentscontinue to be those laid down in three separateUruguay Round agreements: the GATS, the TRIPS andthe Trade-Related Investment Measures (TRIMS):

† GATS (see Question 13) recognizes commercial pres-ence (opening shops) as a form of trade in services,though it does not oblige WTO members to open alltheir services industries to foreign partners.

† TRIPS (see Question 14) obliges WTO members togrant minimum periods of protection for copyrightedworks, patents and trademarks and to fight unauthor-ized reproduction and public communication of foreignworks. Countries are also expected to prevent unauthor-ized use of inventions and trademarks owned by foreigninvestors.

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† TRIMS (see Question 15) deals with investments inmanufacturing.

21 What is pending on the WTO agenda?

There are two main components to the WTO’s work inthe coming years:

† The first is the work programme included in theUruguay Round agreements, which established sched-ules for concessions and commitments and for negotia-tions in different areas – new or old. This is normallyreferred to as the ‘built-in’ agenda, which in principleforesees, as of 1 January 2000, trade talks on servicesand agriculture.

† The second component touches upon a large number oftrade-related issues that remain open to negotiation,some new, some already dealt with by the GATT/WTOsystem, including investments, environment, subsidies,competition policies, and intellectual property, etc.

The WTO ministerial conference in Seattle, held inDecember 1999, was convened to decide on the contentand schedule for the next round of negotiations, knownas the Millennium Round. But after intense discussions,talks between the delegations of the 135 member statesbroke up, as their views were impossible to reconcile. Asa backdrop to the meeting, a heterogeneous globalmovement of opinion used old and new media (e.g. theInternet) to reject changes in the status quo.

Since the suspension of talks on the future trade-negotiating agenda during the Seattle ministerial meet-

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ing, the WTO General Council has decided to postponedecisions advancing further on new issues, while continuing with the built-in agenda of the UruguayRound agreements. Discussions are also being held on how to reform the WTO and its functioning mecha-nisms, how to facilitate greater consultation with specialized organizations and NGOs, and how toimprove WTO decision-making so developing countrymembers can participate more fully, in a more transpar-ent system. Finally, proposals to extend transition periods for developing countries to implement variousprovisions of WTO agreements (e.g. TRIPS and TRIMS),and other implementation issues, are being considered.

22 What are the guiding principles for afair development of international tradeon cultural products?

Ensuring cultural diversity in a global world has becomea fundamental policy principle. The goal is to continueto work towards an open, fair, participatory and trans-parent multilateral system.

Cultural industries face the challenge of interna-tional competition. There is a de facto monopoly frommultimedia conglomerates, which control an increas-ingly large share of the global consumer markets for cultural products. The guiding principles that can guar-antee fair commercial development for any product are access to markets, diversity of choice and competi-tiveness. The lack of appropriate policies hinders

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access to markets for cultural products from a largenumber of countries: lack of incentives for creators; lowlevel of investment; lack of confidence in their embry-onic cultural industries and training of their manage-ment; and the lack of promotion mechanisms for theirproducts.

Ratio of locally produced versus imported films, by region

Source: UNESCO Survey on National Cinematography (March 2000).

At the same time, diversity in cultural supply insidetheir domestic market is severely limited by the increas-ing presence of high added value and low-cost foreignproducts, for which return on investment has alreadybeen reached in their own domestic markets due to theirlarge size and high economic potential. Although this isparticularly true in the audiovisual sector, it is increas-

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0

1,000

2,000

3,000

4,000

5,000Imported films

Locally produced films

AfricaArabcountries

SouthAmerica

NorthAmerica

EuropeAsia

ingly noticeable in printed and new multimedia productpublishing as well. On the other hand, the availability ofcultural products from developing countries outsidetheir domestic markets is typically marginal.

In this context, it is difficult for companies to becompetitive. Differences in size, financial resources, costof materials and services related to production and dis-tribution, along with other limitations in terms of know-how and quality control (which are typical of anembryonic industrial development) and the lack ofappropriate legal and fiscal frameworks are key factorsthat hinder the competitiveness of domestic culturalindustries in many countries.

In this context, it is difficult to argue that self-regu-lation of markets alone will at some point guarantee afair development of international trade on cultural prod-ucts. So far, markets alone do not seem to be able toensure diversity of choice, access for everyone and faircompetition. Within this spirit, the thirtieth GeneralConference of UNESCO reminded states that the freecirculation of cultural goods and services ‘should not besubject solely to the rules of the international market-place’.

23 Which factors should be taken intoaccount?

Energies must be mobilized both locally and globally topreserve the plurality of cultural values, processes andproducts, an indispensable element for creating open

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societies in which all share the same rights, privileges,benefits and obligations. Access to cultural resources isa crucial policy question here. As a matter of ethics,nobody should be excluded from the potential benefitsof globalization.

Regulated internationally since 1950 by the FlorenceAgreement, the free circulation of cultural goods is apositive driving force for intercultural dialogue.However, in the same way that human dialogue requiressome form of exchange between sender and receiver,intercultural dialogue requires that cultural goods fromdiverse origins and destinations flow back and forth in abalanced and relatively equitable way. Domination inthis area might turn dialogue into a monologue, wherethe majority of citizens around the world are relegatedto the role of mere consumers of imported products, asdemand for cultural products grows. Moreover, even ifthe diversification of channels and products is expand-ing global cultural offerings, contents and narrativestyles are increasingly homogenized, mainly becausethey are losing contact with the immediate reality of theaudiences.

The challenge is how to establish international traderegulations that create spaces in which citizens (morethan just sheer consumers) are able to create culturalgoods and services, express themselves through them,and choose the ones they wish to buy, in fair and equi-table conditions. At stake is the capacity to create, toexpress oneself publicly and to have the ability tochoose.

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Current challenges go beyond the confrontationbetween traditional big producers of cultural goods andtheir struggle to defend their interests and control thecultural offerings globally. Rather they affect the wholeinternational community and in particular those devel-oping countries lacking the required cultural industries’infrastructure to channel and distribute their vibrantcreativity. Their cultures are the most threatened bytrade and technology. At stake is their identity, the con-servation and renewal of their symbolic references, thecultural offerings at the disposal of citizens, and what ismore, the social cohesion of these societies in themedium term. If, in the name of short-term intereststhey give up their right to produce and disseminate theirown cultural contents, they will not only be undermin-ing their national economic interests, (e.g. losses interms of foreign currency and potential skilled workers,as well as limiting the potential exports’ income), butthey would also impoverish humanity as a whole byreducing and limiting the cultural offerings available.

24 What accompanying measures should betaken at the national level?

Even if international trade agreements take into accountthe specificity of cultural goods and services, their effectwill be limited unless this effort of the internationalcommunity is backed up by strong supporting meas-ures. Trade agreements would have little value if therewere no goods or services to be consumed domestically

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or to be exported. Thus the need to reinforce the cul-tural-industry infrastructure in those countries that arestill heavily dependent on imported cultural goods andservices to meet their citizens’ educational and culturalneeds. The vitality and international presence of theircultures depends on it.

The current situation requires important changes innational policies. While defensive measures may still bepossible in certain cases, protectionism is a limited solu-tion from the economic point of view. Cultural policiesneed to adapt to globalization intelligently and providestrategic answers at the national, regional and sub-regional levels.

As far as national strategies are concerned, all coun-tries must carry out individual, in-depth analysis of the weaknesses and strengths of any national culturalindustry they want to promote. All ministries, depart-ments and other government bodies potentiallyinvolved in the development of the cultural sector mustparticipate in such an exercise; this will guarantee a co-ordinated and end-to-end approach, from sector-specific national policy definition to implementationand follow-up. Such actors may include different min-istries (Economy, Education, Culture, Foreign Affairs,Industry, Trade and Commerce, Tourism), and govern-ment bodies responsible for customs, post and telecom-munications, etc.

This strategic analysis is a government responsibility,and requires a strong political will to position the coun-try both as consumer and producer in the global market

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for cultural services and goods. It is generally useful tohave external technical assistance for the phase of sectoranalysis, since it is in this phase that the structure andmacro-economic dimensions of the market in which theidentified sector operates will be determined: factorsthat must be considered include foreign capital ratio andthe stage of development of the different actorsinvolved, such as authors, producers, wholesale andretail distributors, import companies dealing with simi-lar products, etc. This analysis must also take into con-sideration any existing international treaties orconventions binding the country in terms of copyrightand international trade.

The sector analysis for each industry must be carriedout openly and in strong co-operation with all involvedparties in order to identify their needs, their everydayproblems and come to find solutions jointly. Experienceshows that policies defined without the participation ofall involved actors (private sector, artists, authors, pro-ducers and consumers) will have limited impact. Theprivate sector must be aware of the government’s strate-gic objectives, including estimates of new job creation,concern for proper access to cultural goods at affordableprices, estimated export income, acceptable levels of for-eign investment, etc.

After such an analysis, the difficulties, strengths andweaknesses of each sector will be clearly identified. Thiswill help to define appropriate measures to overcomesuch difficulties and weaknesses by exerting leverage oneach sector’s potential strengths.

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Every cultural industry has its own specificity, whichmakes it impossible to provide ‘one-size-fits-all’ solu-tions. The important thing is to define a global develop-ment policy specifically for each sector (book andmagazine publishing, phonographic and audiovisualproduction, multimedia production, crafts and design,cultural tourism, etc.). Such a policy can be imple-mented either as a law voted by the Parliament or as aseries of measures taken by the government.

It is also important to be able to make choices andestablish clear priorities in the context of the whole cul-tural industry. With limited human and financialresources, countries must carefully identify and selectcultural sectors that can yield higher returns on invest-ment. And while certain areas require heavy governmentintervention, others simply require increased and betterregulatory frameworks.

In most cases, development policies for culturalindustries will take into account several of the followingaspects:

† Adoption or updating of national laws on copyright andneighbouring rights, in line with any binding inter-national agreement on the subject. The successfulimplementation of such regulations will depend heavilyon the existence of collecting societies, the creation ofwhich may need to be fostered by the government(Copyright Department).

† Analysis and potential review of regulations on foreigninvestment in cultural industries (Ministry ofEconomy).

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† Access to low-interest loans and convertible currencytogether with cross-guarantee systems suitable to thespecific sector being promoted (Ministry of Economy inco-operation with the finance sector).

† Fiscal incentives and tax reduction programmes for thesector, specifically for the export of products and ser-vices (Ministry of Economy and/or Finance).

† Incentives for technology renewal or improvements infacilities and infrastructure; this is typically achievedthrough low-interest loans (Ministry of Industry).

† Specific regulations applicable to:(a)post and telecommunication operators, such as

preferential postal tariffs (Public Post and Tele-communications Authority);

(b)public broadcasting (PBS) operators and other oper-ators in the audiovisual sector. Support policiesshould include preferential advertising tariffs fordomestic cultural products on state-owned televisionnetworks and radio stations, etc. It may also be pos-sible to enforce screen and content quotas for radio,television networks and cinemas for promotion ofdomestic music or films, as long as there are no bind-ing agreements for the state concerning the deregula-tion of the audiovisual sector (Ministry of Culture,Ministry of Telecommunications and/or other mediaand audiovisual regulatory instances).

† Institutional support for domestic cultural products caninclude :(a) the acquisition of material for the educational

system, public libraries, etc., with public funds or in

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the context of bilateral or multilateral co-operationprojects; domestic market regulation; establishmentof a legal deposit system; the preparation of referencematerials to facilitate the industry’s activity, such asdirectories, integrated product catalogues, compila-tions of all regulations applicable to the sector, etc.(Ministries of Education, Culture, Labour);

(b)other forms of support may include promotionalactivities such as prizes, general campaigns targetingnational public opinion, surveys on cultural prac-tices, national festivals and trade shows. They mightalso include the promotion of cultural routes anditineraries, encouraging dissemination of nationalproducts abroad (through cultural institutes,embassies and other institutions that promote exportactivities and trade). The following activities canserve as examples: encouraging national authors andbusinessmen to participate in international festivalsor trade shows; granting subsidies to commercialmissions to carry out professional updates and analy-sis of prospective foreign markets, etc. (Ministries ofCulture, Trade, Industry and Foreign Affairs, as welltrade and investment agencies).

† Professional training for relevant actors in the sector.This training can be based on the experience of nationalprofessionals, or be undertaken in co-operation withforeign specialized organizations. Funding for suchactivities can come from mixed public- and private-sector participation. Experience shows that prioritymust be given to marketing and copyright management

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skills, although needs may also be identified in areassuch as production, quality control, etc. (Ministry ofEducation and Culture in co-operation with the privatesector). Training can also be encouraged for judges,lawyers, customs officers and other authorities responsi-ble for the implementation of regulations concerningcopyright and neighbouring rights (Ministries of Justice,Interior, and Trade).

† Other actions to foster creativity and innovation mayalso be considered; such qualities are the basis of thecultural industry chain, and they can be encouragedthrough education in the arts, professional training, fel-lowships, funding for art institutions, etc. (Ministry ofEducation) and also through strengthening skills forcommercialization such as training in marketing andmarketing analysis (Ministry of Trade and Labour, etc).The effectiveness of any policy for cultural-industrydevelopment will greatly depend on the successfulcreation of mixed (public/ private) panels to define theimplementation regulations and follow-up of suchpolicies. Concerned ministries should also be repre-sented on such panels, which should see that negotia-tions with sector representatives take place whenevercorrective actions are deemed necessary on the basisof the achieved results. The creation of professionalassociations that truly represent the views of thesector may be encouraged in the beginning of thisprocess of policy development. It is also important toensure visibility of the reform process through themedia.

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UNESCO (http://www.unesco.org/culture/industries)and other regional intergovernmental and multilateralorganizations such as the International Labour Office orthe International Trade Centre (ITC) can providemember states with legal and technical assistance indefining national policies and strategies for culturalindustry development in their respective areas of com-petence. They often organize professional training activ-ities in these areas as well.

International NGOs can often be of great help tonational professional associations by providing inter-national contacts, information on current developmentpolicies in other countries and up-to-date assessmentsof the overall situation in the sector.

25 What co-operation strategies should beadopted at the international level?

The development and promotion of cultural industriesnowadays requires a parallel effort at supranationallevel. This is particularly so in the case of small or non-producing countries. The international nature of cul-tural production and distribution makes it evident thatnational measures on support of cultural industries,although necessary for their development, are not suffi-cient for their consolidation. It is essential to find com-petitive ways of production, new audiences and, mostcrucially, to ensure the ability to distribute. This canonly be accomplished through a mix of national, sub-regional and regional strategies to reach a global orien-

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tation (in terms of economies of scale and efficient dis-tribution channels) and which facilitates expansionbeyond the borders of national markets.

It is therefore necessary to define policies thatencourage, promote and regulate the production andcommercialization of cultural-industry products beyondnational markets. Whether they are sub-regional,regional or transatlantic. Such common policies maytarget:

† Establishing or implementing specific agreements con-cerning customs taxes, intellectual property, foreigninvestment and multinationals. This can particularlybenefit developing countries, since current multilateraltreaties allow them to create special trade areas.

† As in the national context, it is necessary to consider thespecific needs of each sector and utilize the strengthsnot only of the public sector, but also of the privatesector, including big corporations, small and mediumsize companies, and non-profit organizations. Policiesshould be based on the principle of negotiation and par-ticipation of all stakeholders.

† Co-ordinating investments based on specific sectorresearch and strategic analysis of opportunities andneeds in each area.

† Creating mixed funding schemes through funds con-tributed by member states and dedicated to supportingcommon projects.

† Defining common mechanisms to support and encour-age export activities and developing new markets (byestablishing permanent representative offices in prefer-

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ential markets, mixed-fund support agencies, commonfacilities for film and television programme dubbing andsubtitling, promotional campaigns, etc.).

† Developing common policies, strategies and incentivesfor co-production and co-distribution of projects.

† Identifying and supporting the creation of alternativedistribution channels (innovative strategies to enter sat-urated markets).

† Effective support to international initiatives concerningcopyright protection, anti-piracy action, training, etc.

† Defining and supporting common positions for globalnegotiations on trade and copyright.

Several key factors can be identified that enhancesuccess of such supranational policies and strategies,including structural similarities in the markets and thetarget audiences, language and cultural closeness, and apre-established tradition of cultural flows amongst par-ticipating countries. Yet, the most important prerequi-site is probably political willingness and support. Such aflexible approach can potentially provide a dynamiccontext, with variable dimensions, of supranationalalliances based not only on political and cultural inter-ests but also on market ones.

International organizations also have an essentialrole in balancing global asymmetries. They should helpbuild a transparent system of global trade that offersopportunities for all players, particularly developing andless-developed countries. International organizationsshould also facilitate access to worldwide markets andrespect the needs of all citizens and cultures.

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One of the key measures in this area is the develop-ment of anti-trust regulations to address monopolisticpractices in the context of cultural industries. Thus, theHuman Development Report (UNDP, 1999) proposedextending the mission of the WTO with anti-trust competency that would be applicable to multinationalcorporations. Another possible approach is creatingfunds dedicated to the development of cultures whichare under-represented in the worldwide scenario. Such a global fund for culture would be similar to the Global Environment Fund, created in 1991, whichdevelops environmental protection projects and activities with a total annual budget of $500 million(http://www.gefweb.org).

Developing and promoting truly competitive cul-tural industries requires global ‘rules of the game’ thatrespect the fundamental principles of access, diversityand competition, and which will foster the developmentof new market niches in the cultural arena. UNESCO,the only UN system organization with responsibilities inthe area of culture, will give top priority to the defenceand protection of cultural diversity and the re-establish-ment of balanced intercultural exchanges; it will alsoplay an active role in ensuring that the globalization ofproducts and messages result in richer exchangesamong different peoples.

Culture will surely become the driver of the economy inthe twenty-first century. Cultural diversity constitutes a global asset that the international community must

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capitalize on, not only for economic but also for ethicalreasons, as a matter of fairness and justice. There isnothing dearer to the human being than culture.Nothing requires more urgent attention than makingculture the central axis of global as well as sustainabledevelopment.

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Selected list of sources

http://www.afma.com/news/97sales.htmThe AFMA is an association set up in 1980 offeringmarket analysis services and statistics to independentNorth American, European and Australian producers anddistributors. Every year it publishes country-by-countryand market-by-market data concerning cinema,television and video.

http://www.netpar.com.br/hagihara/Association for the protection of phonographicintellectual property, Brazil.

http://www.austrade.gov.au/Austrade is the Australian Government’s internationaltrade and investment agency. It helps organizationsthroughout the world do business with Australia.

http://www.lib.berkeley.edu/GSSIData base GLADIS and MELVYL database of theUniversity of California at Berkeley Library.

http://www.culture.gouv.fr/documentation/docum.htmMNEMO database of the Département des Études et dela Prospective, French Ministry of Culture andCommunication.

http://www.pch.gc.ca/culture/investTrade and Investment Branch, Ministry of CanadianHeritage.

http://europa.eu.int/comm/dgs/trade/index_en.htmMarket access database of the European Commission’sDirectorate-General for Trade.

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http://www.europa.eu.int/comm/dg10/avpolicy/internat/intro_en.html

European Commission DGX. Information, communication,culture, audiovisual, media; international aspects ofaudiovisual policy; trade aspects and multinational fora.

http://www.obs.coe.int/European Audiovisual Observatory. Focal point forbusiness information on the audiovisual sector in Europe.

http://www.europa.eu.int/eurostat.htmlEUROSTAT, the Statistical Office of the EuropeanCommunities. Publishes International Trade in Services.

http://exportsource.gc.ca/ExportSource is Team Canada Inc.’s on-line resource forexport information. A single access point to all trade-related government departments and agencies on subjectssuch as market research, trade statistics and exportfinancing.

http://www.ALCA-FTAA.ORG./Free Trade Area of the Americas official home page. Itfollows the process initiated in the 1994 Summit of theAmericas to integrate the economies of the WesternHemisphere into a single free-trade arrangement.

http://www.culture.gouv.fr/culture/actualites/French Ministry of Culture and Communication. Culturalpolicy; cultural diversity file; press briefing on upcomingWTO negotiations.

http://gats-info.eu.int/This GATS ‘Info-Point’ is designed by the EuropeanCommission to help European service operators to providetheir services around the world.

http://www.entreimagenes.com.mx/Iberoamerican Space for Audiovisual Communication.

http://www.ictsd.org/The International Centre for Trade and Sustainable

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Development (ICTSD) was established in Geneva inSeptember 1996 to contribute to a better understandingof development and environment concerns in the contextof international trade.

http://www.intracen.org/services/hrds/itcguide/tradindx.htmInternational Trade Centre UNCTAD/WTO. Guide to theworld trading system, intended to help firms to betterunderstand how the multilateral trade system works andhow it affects the business of export and import (trading,strategy, products, pricing, distribution and promotion).

http://www.idate.fr/maj/welcome.htmlInstitut de l’Audiovisuel et des Télecommunications enEurope. IDATE 2000 (annual report on world film andtelevision markets).

http://www.ifpi.orgInternational Federation of the Phonographic Industry.

http://www.iipa.com/The International Intellectual Property Alliance (IIPA) isa coalition formed in 1984 to represent the US copyright-based industries (films, videos, recordings, music,business software, interactive entertainment software,books and journals) in bilateral and multilateral effortsto improve international protection of copyrightedworks.

http://www.ita.doc.gov/International Trade Administration, US Department ofCommerce. Federal Government export assistanceprogrammes; general export counselling; country andregional export market information.

httpwww.bibl.ulaval.ca/complet.htmlLaval University Library.

http://www.mpaa.orgThe Motion Pictures Association of America (MPAA)represents the American production and distribution

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majors (Walt Disney Company; Sony PicturesEntertainment, Inc.; Metro-Goldwyn-Mayer Inc.;Paramount Pictures Corporation; Twentieth Century FoxFilm Corp.; Universal Studios Inc.; Warner Bros.). Itdefends the international interests of these companies inforeign markets.

http://www.oecd.org/daf/investment/fdi/reports.htmMultilateral Agreement on Investments documentation,Organization for Economic Development and Co-operation (OECD).

http://www.homere.upmf-grenoble.fr/cgi-bin/abweb/L1/T3Cultural Policies Observatory. Odysée (catalogue of theDocumentation Centre of the IEP, Grenoble, France).

http://www.ustr.gov/reports/index.htmlReports issued by the Office of the United States TradeRepresentative.

http://www.sgae.es/The Sociedad General de Autores y Editores (SGAE) isan association of creators and artists constituted for theprotection and management of intellectual propertyrights of authors and editors. The main collecting societyin Spain and the fifth most important in the world.

http://www.unesco.org/culture/industries/index.htmlCulture Sector of UNESCO. ‘Culture: a Form ofMerchandise Like No Other?’ (symposium of experts onculture, the market and globalization).

http://www.itd.org/eol/index.htmInteractive guide to the WTO and developing countries;training packages; Trade and Development Centre (WTOand World Bank joint venture).

http://www.wipo.org/World Intellectual Property Organization.

http://www.wto.org/World Trade Organization.

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