EU and US set for Seattle culture clash

Date: 18/11/1999

By Peter Chapman

IN the run-up to the World Trade Organisation meeting in Seattle later this month, the debate is focusing as much on what members of the 134-member club do not want to discuss during the next round of global trade talks as on what should be on the table.

Most attention in Europe has so far focused on whether the EU will succeed in getting competition and investment rules onto the agenda. Far less has been paid to one of the topics it wants to avoid - namely, the 'sacred lamb' of culture.

An intense French lobbying campaign on the issue won the day at the end of the Uruguay Round in 1993. Fearing that the entire deal stitched together after seven years of painful negotiations was close to collapse, the US caved in and agreed to exclude the audiovisual and cultural sectors from the General Agree-ment on Tariffs and Trade (GATT), which formed the lion's share of the rule-book for the newly-created WTO.

Instead, it was agreed that the audiovisual sector would be included in a separate General Agreement on Trade in Services (GATS), signed shortly afterwards in April 1994.

This accord, which is also policed by the WTO, was far more to the Union's liking as it offered signatories scope to identify areas in which they did not want to make commitments on market-opening.

Experts of the European Commission warn that if these opt-outs are ever lost, the EU would have to dismantle a raft of measures in the audiovisual sector which discriminate against foreign companies.

These include the 1989 'television without frontiers' directive which imposes a 50% quota on the volume of foreign television programmes which can be broadcast by European channels and the Union's Media programme, which provides subsidies for EU film-makers and broadcasters.

Scenting a lust for blood in Washington, the French, Italians and a handful of other cultural protectionists insisted last month that the EU must mark its trading partners' cards ahead of Seattle. They got what they wanted in the form of a declaration on the Union's negotiating stance which spells out the bloc's determination to preserve the status quo.

"The Union," asserts the statement agreed by member states, "will ensure that the Community and its member states maintain the possibility to preserve and develop their capacity to define and implement their cultural and audiovisual policies for the purpose of preserving their cultural diversity".

US government sources insist publicly that this does not close the door to their hopes of getting a deal which would bring audiovisual products within the WTO fold at the end of the millennium round. But many trade diplomats acknowledge privately that there is unlikely to be much scope for major changes to the regime for the audiovisual sector.

Instead, a row is brewing over the way the fledgling online audiovisual sector should be treated when the new world trade rule-book is drawn up.

Washington is pushing hard for an indefinite extension of a moratorium on customs duties for products sold and delivered over the Internet. US President Bill Clinton would love to kick off the Seattle talks with a symbolic deal on e-commerce.

The Commission and the Union's 15 member states say they are broadly in favour of such an accord. But they fear that the EU's audiovisual opt-outs could be a casualty of the rush to strike a deal.

That is because the US also wants to classify products such as films and music delivered over the Internet as 'virtual goods', along with computer software and other 'products' which are bought and sold in cyberspace.

An apparently innocuous clause classifying them as goods, of sorts, would potentially bring every single audiovisual product traded over the Web within the scope of existing WTO rules on trade in goods, from which they are currently excluded in any shape or form.

The EU's negotiators have already launched a rearguard action to prevent this from happening. They want to define goods that can be delivered over the Net and which have a "physical equivalent" in the off-line world as a "service" - at least for the purposes of the trade negotiations.

This would mean that films and music sold and delivered over the Web would remain within the scope of the GATS deal covering trade in services - thereby benefiting from the raft of opt-outs from that agreement which the Union has already secured for its audiovisual sector.

Sources close to Trade Commissioner Pascal Lamy insist that Europe has no ulterior motive for its stance and is not ready to try to erect barriers to online trade in films and music. They say the Union simply wants to retain the hard-won opt-outs it already enjoys, regardless of how products are distributed.

"This is an issue of substance for us," said one EU expert.

"The exemptions we negotiated would be under threat if we agree to classify these 'services' as goods."

But this does not mean that the Union will oppose Washington's move to ensure that customs duties are not levied on e-commerce. "In substance we are not opposed to the US," said one Brussels-based official.

American industry, which has learned to live with the EU's current form of protectionism, is pushing hard for a swift agreement on e-commerce.

"It offers the prospects of more efficient distribution to everyone and should have a major benefit for smaller producers while bringing more choice and easier access for consumers to specialised niche films," argues Harvey Rouse, EU affairs director of the Motion Picture Association.

Walt Disney trade lawyers also argue that barriers to e-commerce would "put EU companies at a competitive disadvantage and deprive consumers of the benefits that the Internet has to offer".

Trade experts are already predicting that this could be one of the hottest issues of the millennium round and dismiss suggestions that significant progress will be made in Seattle. As in so many areas to be tackled during the forthcoming talks, the battle is only just beginning.

Major feature. In the run-up to the World Trade Organisation meeting in Seattle, the debate is focusing as much on what members of the 134-member club do not want to discuss during the next round of global trade talks as on what should be on the table. Most attention in Europe has so far focused on whether the EU will succeed in getting competition and investment rules onto the agenda. Far less has been paid to one of the topics it wants to avoid - namely, the 'sacred lamb' of culture.