CCA Bul­letin 14/08

May 8 , 2008

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.