A World Trade Primer

Richard Letts
Music Forum 6/6 August 2000

The forces of globalisation are a mixed blessing for the advancement of the arts and culture. On the one
hand, they give us broader, easier and often cheaper access to the world’s cultures and their artifacts.
They allow us to disseminate our own arts to people throughout at least the affluent nations.
Conversely, more than ever our own cultures may be flooded with the arts and entertainment of
countries more powerful than our own.
This article looks at the international agreements on the regulation of trade under the World Trade
Organisation (WTO) and how those agreements might threaten local cultures.
It is generally agreed that membership in the WTO is to Australia’s advantage. It brings order and
transparency to the business environment and possibilities for peaceful and constructive dispute
resolution.
If there were no WTO, varying trade agreements would be made among smaller groups of nations;
some inevitably would be bilateral. As a small economy, Australia’s bargaining position in bilateral
negotiations with giants such as the USA would be very vulnerable. Concerning cultural trade, the US
has an aggressively "liberalising" agenda. Its apparent purpose is to remove all barriers to sale of its
audiovisual and musical products. Even without further trade liberalisation, it already is extraordinarily
successful in this area. Its products dominate the markets even in many non-English-speaking
countries. To call a spade a spade, it is the USA which is most feared around the world for what is
called its "cultural imperialism". This "imperialism" is more than aggressive corporate marketing . It is
executed by giant mainly US-based multinational production and distribution companies, backed by a
trade agenda of the US government which some characterise as, on occasion, ruthless. (See box p.26)
It is demonstrable that Australia’s chances of giving some protection to its own culture are much
greater in an alliance with like-minded allies (e.g. many European countries) under WTO auspices than
in bilateral negotiations where the US could barter our right to export, say, lamb into the US against its
right to unlimited export of cultural products into Australia, unhampered by reservation of radio and
television time for Australian product or Australian subsidies to Australian productions.
The WTO and agreements regulating international trade
Since 1948, world trade has been based on a system of rules, the General Agreement on Tariffs and
Trade (GATT). This had dealt mainly with trade in goods (excluding agriculture). The final round of
GATT negotiations in 1994 (the Uruguay Round) led to the creation of the World Trade Organisation.
Its rules cover trade in goods, and also agriculture, services and intellectual property. Most of the dollar
value of trade in music is in intellectual property (payments for use of copyright material) rather than
goods (such as sheet music or recordings). And music increasingly is delivered, as intellectual
property, through services such as broadcasting and the internet.
WTO rules are based on a number of simple, fundamental principles – that the multilateral trading
system should be:
without discrimination – a country should give all of its trading partners "most favoured nation" (MFN)
status, and should not discriminate between its own and other countries’ products or services (all are
given "national treatment")
free of trade barriers
predictable
more competitive – by discouraging "unfair" practices such as export subsidies.
The regimes set up by the Uruguay Round of GATT for the regulation of services and intellectual
property are formalised in two new agreements under WTO auspices: GATS – the General Agreement
on Trade in Services, and TRIPS – the Agreement on Trade Related Aspects of Intellectual Property
Services. The latter gives WTO a role in the international administration of intellectual property,
previously handled by such institutions as the World Intellectual Property Organisation. (8)
An attempt by the 26 OECD countries to establish a more liberal set of rules governing investment, the
Multilateral Agreement on Investment, failed. The heated negotiations over the MAI were important in
advancing the rationale for cultural protection. (4, 10, 13, 14)
GATS
"GATS operates on three levels: the main text containing general principles and obligations; annexes
dealing with rules for specific sectors; and individual countries’ specific commitments to provide
access to their markets. Unlike in goods, GATS has a fourth special element: lists showing where
countries are temporarily not applying the "most-favoured-nation" [MFN] principle of non-
discrimination". MFN applies to all services except one-off temporary exemptions. National treatment
applies only in the areas where commitments are made. (8)
There is a "GATS provision allowing reservations for the purpose of cultural preservation." (8)
It is important to note that GATS works on an opt-in or positive list treatment. This means that
governments nominate spheres of activity to be regulated under GATS. An opt-out treatment, which
was proposed for instance with the Multilateral Agreement on Investment, requires that all spheres are
included excepting those which a government seeks to exclude. The opt-in procedure seems
advantageous for cultural protection.
Although the ethos of WTO agreements is towards the maximum "liberalisation" of international trade,
the initial obligations under GATS (1994) thankfully fell short in a number of important ways. For
instance,
there were MFN exemptions in audiovisual services to allow continued operation of official
international film and television co-production arrangements;
member states were allowed to retain subsidies in service sectors;
commitments on national treatment and market access could be scheduled over time. (Australia and
most other countries did not opt in for regulation of audiovisual services). (5)
However, GATS requires further actions to negotiate progressive liberalisation of services, review
MFN exemptions, and review subsidies.
TRIPS
"The purpose of the WTO’s Agreement on …TRIPS … is to ensure that adequate standards of
protection exist in member countries. The Agreement lays down wide-ranging minimum standards for
intellectual property rights (IPR) protection, covering the grant, administration and enforcement of
rights." Not all countries have had effective IPR protection, but most developing countries which are
members of WTO were due to give effect to TRIPS standards by January 2000. (8) The aspect of IPR
most pertinent to the interests of music is copyright. TRIPS probably will include protection for
indigenous art and religious totems, and recognise the collective nature of ownership of indigenous
culture.
Special arguments for the exemption of culture from free trade agreements
In 1999, the French National Commission for UNESCO, with the support of the French and Canadian
Governments, organised a symposium of experts on culture, the market and globalisation, titled
Culture: A Form of Merchandise Like No Other? There seemed to be agreement that cultural goods are
at one and the same time commercial objects, and assets which convey values, ideas and meaning (7).
This is not in itself an argument for cultural protection. That argument generally rests broadly on an
affirmation of the importance of maintaining cultural diversity - an analogue of the similar argument
for biological diversity. The support for diversity is linked with a strong assertion of local cultural
identity, which paradoxically seems to be an aspect of globalisation. But diversity is also at risk from
globalisation and even further at risk if nations are prohibited from actions protecting their own
cultures.
There have been energetic campaigns to exempt culture from WTO agreements, led by France and
Canada and with support from many European countries.
Some Australian responses to GATS and TRIPS
GATS
There already exists an Australian alliance active in these issues: the Audiovisual Production Industry
Group (APIG). Its members are the Australian Guild of Screen Composers (AGSC), Australian Screen
Directors Association (ASDA), Australian Screen Editors Inc (ASE), Australian Writers Guild (AWG),
Media Entertainment and Arts Alliance (MEAA), and the Screen Producers Association of Australia
(SPAA). Also active on behalf of the audiovisual sector are the the Australian Film Commission
(AFC), and the Communications Law Center (CLC), which for instance wrote a submission to DFAT
on behalf of APIG. Note that there is no direct representation of the music sector except through the
rather narrow focus of the Australian Guild of Screen Composers.
APIG has taken this policy position: it "believes the Australian Government’s overriding goal in any
further multilateral trade negotiations should be to preserve its capacity to maintain, adapt and
introduce measures to sustain and develop Australia’s audiovisual industries and culture." The Music
Council of Australia has adopted a similar position regarding music and the arts.
According to the Communications Law Center, this goal was accepted, pursued and, to a large extent,
implemented in the Uruguay Round. (5)
APIG opposes further liberalisation of measures in audiovisual services because, it says, the Australian
industry is already very international and foreign companies do massive business here. Concerning
subsidies, it believes current assistance is essential and Australia will not be better off culturally or
economically without them. It notes that such assistance is part of an international practice that ensures
that the audiovisual sector is not completely dominated by Hollywood. It claims that the local
production and circulation of cultural goods is important not only for culture but for democracy.
APIG notes that in the changing circumstances of the audiovisual industry, old regulatory or assistance
measures will continually need updating and new ones will need to be introduced. There is a danger for
Australia in entering "standstill" GATS commitments that permit current support measures but
disallow change. It is especially important to retain the flexibility to deal with new media. (5)

TRIPS
The Australian Copyright Council has noted to DFAT a number of concerns with the TRIPS agreement
(12) which might also be of concern to the MCA. In brief summary, these as they apply to music
include:
effective protection for copyright owners in the digital environment
a blank tape royalty to compensate copyright owners for the private copying of music (Past efforts to
effect such a royalty in Australia were opposed by the tape manufacturers and are in suspension.)
the implementation of a number of rights for performers concerning their performances fixed on
recordings
concerning sound recordings, protection for distribution, right of making available by wire or wireless
means, and remuneration for broadcasting and communication to the public
control of parallel importation. (The EU and the US have taken a strong stand bilaterally against
parallel imports of copyright products. (8) The Australian Government, by contrast, legislated to allow
it with reference to sound recordings, despite the protests of the Australian recording industry.)

Australian government support to music

A broad summary of the modes of support to music from Australian governments, many potentially
vulnerable to intervention by the WTO.
Direct funding.
Commonwealth assistance directly from the Department of Communications, Information Technology
and the Arts to large institutions such as Opera Australia and the Symphony Australia concert
orchestras, through Festivals Australia to Australian arts festivals, especially regional festivals, and
through Playing Australia for the purpose of interstate touring.
Commonwealth assistance through the statutory arm’s-length authority, the Australia Council, to
smaller music companies and individual musicians and composers; also through the Australia Council,
some grants for the promotion of "contemporary music", new media projects (which may include
music), and through devolved funding, regional development projects some of which would include
music.
Commonwealth assistance through the Department of Foreign Affairs and Trade: via the Cultural
Relations Section for international touring; via Austrade for international touring and export
promotion.
Commonwealth direct funding to the ABC and SBS, perhaps vulnerable insofar as those networks give
preference to Australian music.
Commonwealth grants to or investments in audiovisual productions through a number of agencies;
these productions usually include a music component, although that component need not be provided
by Australians.

State government assistance via state arts ministries, primarily for local music production, but also to a
small extent for interstate or international touring or promotion.
Through indirect funding support
The Commonwealth Government foregoes tax income by allowing tax-deductible donations to not-for-
profit registered music organisations. This may not be vulnerable since it is the method by which the
US directs support to the arts domestically.
The Commonwealth offers certain tax concessions to the audio/visual industry and its investors, subject
to satisfaction of requirements for Australian control and content. There is no specific requirement that
the musical content of a film or television program should be Australian.
State Governments may forego such taxes as Payroll Tax from not-for-profit music organisations.
Through regulation
Through copyright laws and regulations, generally harmonised internationally.
Through Australian content rules determined by the Australian Broadcasting Authority under the
Broadcasting Services Act 1992. Under a self-regulatory regime overseen by the ABA, Australian
commercial radio broadcasters are required to devote specified minimum proportions of broadcast time
to musical performances by Australians. Under regulations established by the ABA, commercial
television broadcasters must broadcast specified minimum hours per year of Australian drama and
other productions, some of which include Australian musical performances and compositions. The
public broadcasters are not regulated by the ABA, but voluntarily establish Australian content minima.
The ABA also has regulatory power over the community broadcasting sector (almost entirely radio)
which, however, in effect self regulates and claims to achieve very high Australian content.
Pay television licensees broadcasting drama are required to spend 10% of program budget on
Australian productions; these productions may include a musical component. (This requirement has not
been effective in its current form, but will be revised.)
The Commonwealth regulates the temporary entry of musicians into Australia, limiting numbers and
requiring, for instance, that presenters of touring foreign musicians must also present a specified
number of Australian musicians.
The Commonwealth regulates foreign ownership in the television industry.

There is a comparable if not greater range of Commonwealth assistance to the audiovisual industry.
The Commonwealth Government’s policy position and actions
Some actions of the Government are consistent with a trade liberalisation philosophy and others with a
cultural protection philosophy.
Actions consistent with trade liberalisation
The Telecommunications Act of 1997 liberalised trade in this services sector further than required by
the GATS Telecommunications Reference.
Direct Commonwealth funding for the audiovisual sector has been reduced since 1994.
New Zealand television productions have been accepted as qualifying as Australian in fulfilment of
Australian content quotas for commercial television stations (due to a lack of foresight in drafting the
"opt-out" free trade agreement with NZ). (5)
Actions consistent with cultural protection, which would breech strictly formed free trade agreements
Overall, the Government has continued its funding to the cultural sector.
The ABA has amended its Australian Content Standard for television broadcasters to require higher
levels of local content.
The government established three new funding institutions for film, television and multimedia,
although only one still receives public funding: SBS Independent for production of innovative
documentary and drama programs (survives).
Passage of aspects of the legislation for digital TV which might be argued to infringe national
treatment and market access disciplines.
The Film Licensed Investment Companies (FLIC) scheme gives special tax concessions to two
Australian companies to invest in qualifying Australian film and TV projects.
The Government has committed itself to legislate that the special treatment for NZ television programs
will not extend to any other country.
The Government has committed itself to revising failed legislation to ensure that pay TV drama
broadcasters devote 10% of program expenditure to new Australian programs. (5) ?

References
Australia International Cultural Council. Promoting Australia’s Culture Abroad. Department of Foreign
Affairs and Trade, November 1999, Canberra
Australian Film Commission: Australia’s Approach to Further Multilateral Trade Negotiations.
Submission to the Department of Foreign Affairs and Trade May 1999, Sydney
The Impact of Digital Convergence on Local Culture in Media. Summary of the broad consensus on
strategies discussed by film and television industry organisations and agencies at a seminar organised
by the Australian Film Commission and the Communications Law Center. Unpublished paper. January
2000.
Comité de vigilance sur l’Ami: L’Ami, cet ennemi. Laudiovisuel, March 1998, Paris. (L’Ami is the
Multilateral Agreement on Investment)
Communications Law Center on behalf of the Audiovisual Production Industry Group. Submission to
the Department of Foreign Affairs and Trade on Multilateral Trade Liberalisation. June 1999, Sydney.
Council of Europe. WTO: Preparation of the Third Ministerial Conference – Council Conclusions.
October 26, 1999, Strasbourg
Culture, a Form of Merchandise Like No Other? General Conclusions of the Symposium of Experts,
UNESCO with the support of the Canadian and French Governments, June 1999, Paris, reported by
Jacques Renard, UNESCO
Department of Foreign Affairs and Trade. New Multilateral Trade Negotiations: Issues for Australia.
Issues paper, August 25, 1999, Canberra
Fraisse, Geneviève: Sleepless in Seattle. The WTO Ministerial meeting. European Information Service,
October 1999
Given, Jock. Approaching MAI deadline threatens domestic sovereignty. Communications Law Center,
1998, Sydney
The liberalisation of AV trade. Encore, August 13, 1999, Sydney
Morrison, Virginia. Submission to the Department of Foreign Affairs and Trade concerning the TRIPS
Agreement. Australian Copyright Council, May 17, 1999, Sydney
Pouhlès, Louis: Exception culturelle. D’une négociation à l’autre. Culture Europe, February 1999.
Trautmann, Catherine. Intervention de Catherine Trautmann, Ministre de la Culture et de la
Communication, Porte-parole du gouvernement devant la Commission des Affaires culturelles du
Sénat. French Senate, January 29 1998, Paris
UNESCO. Amendment to the Draft Programme and Budget for 2000-2001. Submitted by Canada and
France. October 5, 1999, Paris. Proposes a policy in support of cultural diversity, in the context of
globalisation and WTO negotiations.
UNESCO: Culture and Creativity in a Globalized World. Round table of Ministers of Culture.
Annotated agenda (Revised). October 18, 1999, Paris