CCA Bulletin 14/08

May 8 , 2008

Trade Talks - From Agriculture to Culture, Let’s Make a Deal?

Just the Facts

In a surprising development, it would appear that international trade agreement talks through the World Trade Organization (WTO) have found a second wind. The talks, now in their sixth year, had been written off by many who felt that there was little prospect of reaching a deal on such contentious issues as agricultural subsidies and tariffs on manufactured goods.

Why should the arts and culture sector care?  One of the agreements being discussed is the General Agreement on Trade in Services (GATS)   , where there has been pressure to liberalize market access for broadcasting services and films, to reduce regulation of those and other cultural services and to eliminate other “barriers that impede international market access.”  All of these issues were on the table at a recent CRTC hearing (CRTC Public Notice 2007-10).  Canada’s cultural sector, the audiovisual one in particular, has been nurtured and developed through financial support and regulations and we may face a new environment for these policies.  We should all care about what that could be considering the size and importance of this sector for Canada.

In this push to conclude a deal, the Canadian government may have to agree to limit its regulatory ability to protect cultural industries.  This could occur through two GATS approaches that are under active consideration. 

The first is a general process where parties are considering a proposal to “freeze” existing levels of liberalization for all services sectors.  What that would mean for example is that Canada could not increase television and radio Canadian content regulations.  ”CanCon” regulations have led to the creation of our music industry (with admittedly less success in delivering abundant quality drama for television!) or may have to forego such tools as genre protection for specialty television services (one of the hot topics at last month’s CRTC hearing).  Canada might also be precluded by this “freeze” from introducing long-overdue regulatory requirements for the other distribution platforms which are changing the environment of Canadian culture so dramatically.  

The second GATS proposal is for rules governing “domestic regulations.”  If agreement is reached to have these rules apply to all services sectors, a wide range of Canada’s cultural policies could be questioned, since the agreement would require domestic regulations to be “no more burdensome” and “no more trade restrictive” than necessary. 

A similar situation occurred in the 90s when Country Music Television was displaced from the Canadian broadcasting system after a similar Canadian- owned service was licensed by the CRTC.

Using Section 301 of the American Trade Promotion Act,   the displaced American service brought action against Canada by assessing the market loss of every American broadcaster if they were to be similarly displaced from the Canadian broadcasting system, whether they actually were present in Canada or not. While this action was averted by a compromise, it demonstrates the serious impact such measures can have when American interests feel that they have been deprived of market access due to foreign domestic policies.

Tell Me More

Two main factors appear to have come together to give the negotiations a fresh impetus. The world food crisis has prompted developing countries with high tariffs on imported food to consider lowering these tariffs to ensure that they can reduce the cost of imported food for their hungry citizens.  If they push for a deal now, they may get something in return for these tariff reductions, such as agreement to further lower agricultural subsidies provided to domestic farmers by the U.S. and the EU.

The other factor appears to be the American election.  From the U.S. side, President Bush is concerned about his legacy and he would like to conclude a multilateral trade agreement before he leaves office.  From the other side, other states appear to prefer to deal with a free-trade administration, rather than waiting to negotiate with a new President who may be hostile to any new international trade agreements that do not strongly favour American interests.

While no deal can be completed before the November election, the thinking is that, if the new administration is faced with a fait accompli, there may be sufficient pressure to ensure passage of the deal.

It is the hope of the Chairman of the WTO Agriculture group that a sufficient consensus on the most difficult issues can be developed to convene a full Ministerial meeting in late June or early July to hammer out all the remaining unresolved elements of the negotiations, including the GATS issues which are of most potential concern for Canadian arts and culture.

If this Ministerial meeting takes place, there will be pressure in all areas, including for countries to put forward new “offers” in services.  While some countries may respond to this pressure by offering up new cultural commitments, it is highly unlikely that Canada will include any new offers for our sector.  However, Canada could still get caught by the peripheral discussions around a “freeze” and “domestic regulations.”

The CCA will continue to monitor these developments closely and will keep you informed.