Inside Story

Trading culture

Officials from Australia and eight other Pacific countries meet in Auckland on 6 December to begin their fourth round of negotiations for a trans-Pacific free-trade agreement. Jock Given looks at the potential impact on culture and information industries

Jock Given 18 November 2010 2785 words

Multipolar world: the planned trade agreement reflects a post–financial crisis order in which the G20 (above) has displaced the G7. James Cridland/Flickr

THE free-trade agreement Australia signed in 2004 seemed like the last one that would ever matter for culture and information industries. Negotiating with the global superpower of these sectors, the United States, it was inevitable that concessions would be made beyond those included in Australia’s other trade deals. But once that deal was done, future agreements would be easier. In bilateral negotiations, the other side would never be as strong. In multilateral negotiations, Australia would never be alone.

Things might not be so straightforward. Australia’s trade negotiators are now back at the table doing the job all over again with an unusual group of countries in a changed global economic and political environment. They have met three times already this year with counterparts from the United States, New Zealand, Singapore, Chile, Brunei Darussalam, Peru and Vietnam to develop a Trans-Pacific Partnership Agreement, or TPP. Malaysia joined in October.

Australia’s goal is “a high-quality, comprehensive 21st century Free Trade Agreement (FTA) that increases economic integration in the Asia-Pacific region, particularly as membership expands over time.” Four of the aspiring partners – Brunei Darussalam, Chile, New Zealand and Singapore – already have an agreement with each other that entered into force in 2006. Australia has agreements with several of the partners – the United States, New Zealand, Singapore and Chile – and wasn’t much interested in the idea of joining Brunei, Chile, New Zealand and Singapore in yet another agreement until the United States declared that it was. Australia is now very interested.

Because the TPP partners are already the most open economies in the region, the proposed trade agreement is best seen as part of a wider strategy for dealing with a multipolar world – a world in which it was the G20 rather than the G7 that was energised by the global financial crisis. As World Bank president and former US trade representative Robert Zoellick said, “The old world of fireside chats among G7 leaders is gone. Today’s discussion requires a big table…” Asia, which tripled to 21 per cent its share of the global economy between 1980 and 2008, is a huge part of that political and economic transformation.

For American industry, the TPP is an opportunity to connect more deeply to that prosperity and to resist any decline in its importance as a trading partner for Asian countries as China continues to rise. Even if the new export opportunities in the small economies are “relatively modest,” it is “an important geostrategic group,” according to Myron Brilliant, the senior vice president for international affairs with the US Chamber of Commerce. It is a potential foundation for a Free Trade Area of the Asia-Pacific that has so far been beyond APEC’s reach. At a time when Washington-consensus capitalist countries have found themselves uneasily dependent on the economies of nation states choosing different ideological routes to economic growth, the TPP provides an opportunity to lay some political bedrock beneath the trading practices of the Asia-Pacific region – a “western” far-eastern bloc.

Announcing the TPP negotiations, US trade representative Ron Kirk said Washington was engaging with “an initial group of seven like-minded countries… to craft a platform for a high-standard, comprehensive agreement – one that reflects US priorities and values.” For the other countries, it will be no small test to secure their own cultural interests and values, while accommodating both the American giant at the table and the Asian one waiting outside.

The idea behind trade agreements is that countries agree to give up some of their capacity to implement policy measures at home in exchange for other countries giving up some of theirs. You surrender some ability to regulate and support your own businesses and in return you get better access to your partners’ markets. It has always been an unlikely agenda for culture and information industries. In the negotiations with the United States in 2002–03, these were among Australia’s main “defensive interests” – sectors where negotiators tried to give away as little as possible, knowing they were crucial “offensive interests” for the United States. What concessions were made were designed to lever better access to American markets in unrelated sectors like agriculture.

In Sydney on 15 November, Lori Wallach, director of the Global Trade Watch division at Public Citizen in the United States, said that before the November Congressional elections, the chances of getting better access to US markets through the TPP negotiations was “slim to none.” Since the election, she said, “slim left town.”

FRUSTRATED about the lack of progress in reducing government assistance for audiovisual services through the World Trade Organization, the United States has had more success over the last decade-and-a-half in bilateral and regional negotiations. Finalising agreements with several countries that had made no commitments to liberalise audiovisual services in the WTO, the United States secured bilateral concessions from all, including aspiring TPP partners Australia, Chile, Peru and Singapore. But these concessions have been limited, especially in television and radio, where restrictions like content quotas remain “the norm rather than the exception,” according to the WTO’s Martin Roy, Juan Marchetti and Aik Hoe Lim. In film production, distribution and projection, and sound recording, concessions have been less restricted – that is, the United States’ partners have been more prepared to constrain their capacity to retain, modify and introduce new policy measures.

The real success of these bilateral negotiations for the United States has been the very different treatment of “old” and “new” media sectors. Chapters covering “electronic commerce” have been included in all its bilateral free-trade agreements, requiring very liberal treatment of trade in “digital products.” The goal has been to fence off established media sectors like television, radio and film where governments have so many assistance schemes in place and beneficiaries that resist their removal. As audiovisual commerce shifts to new formats and forms of distribution and exhibition encompassed by “digital products,” the share of trade affected by traditional cultural policy measures should shrink.

THE GOAL for the United States in the TPP negotiations will be to improve upon the gains made in these bilateral agreements and to “multilateralise” them – that is, to get all the TPP partners to accept the most US-friendly position already adopted by any one country. Comments submitted to the US trade representative make this agenda clear. Representing the major Hollywood studios, the Motion Picture Association of America supports agreements that “protect intellectual property, lower market access barriers to US audiovisual products and services, and promote legitimate electronic commerce.” Noting that its industry is “one of the few… that consistently generates, even in these difficult economic times, a positive balance of trade” for the United States, the association wants the TPP to:

avoid “cultural exceptions,” and rely on the flexibilities built into FTAs to promote economies’ cultural interests. Such exceptions are an unhelpful precedent and suggest that cultural promotion and open markets are incompatible, fostering protectionist inclinations that rear their heads in the other international fora.

It wants the TPP to replicate the US free-trade agreement with Australia by prohibiting tariffs on both tangible and electronically delivered digital products, and to improve on it by avoiding the kind of broader reservations for audiovisual products that Australia took out under the services, investment and electronic commerce chapters. While the Motion Picture Association of America concedes the reservations are “not wholly problematic given Australia’s obligations under the services chapter,” it opposes them because it believes they are “incompatible with the reality that open markets fuel cultural diversity and consumers’ access to diverse content and ideas.”

The association also wants incorporated into the TPP some machinery provisions that were included in most of the United States’ free-trade agreements, but not the one with Australia: an obligation to publish new final regulations before they take effect, along with “investor-state” provisions allowing US corporations to argue their cases direct to overseas regulators rather than through the US government. Further provisions are also sought targeting “cam-cording,” a practice used to produce bootleg copies of movies, and the pirating of encrypted cable TV signals.

Australia’s reservations to the services, investment and electronic commerce chapters of its free-trade agreement with the United States affect its ability to maintain and adopt local program requirements in established and new media. With established media services, it can retain the existing “transmission quota” of 55 per cent for all programs broadcast on commercial TV stations between 6 am and midnight and the program-specific quotas for adult and children’s drama and documentaries. Similar quotas can be imposed on at least one, and a maximum of two, further free-to-air digital multichannel services provided by each of the three commercial broadcasters. Local music quotas are also permitted for commercial radio and the 10 per cent local drama expenditure requirement for pay TV drama and general entertainment channels can be increased to 20 per cent.

With new media services, Australia’s right to introduce local content requirements (though not all other policy measures) is tightly circumscribed. Measures can be imposed on “interactive audio and/or video services,” but only so as to ensure Australian content or genres are “not unreasonably denied” to Australian consumers, and only on companies that carry on business in Australia. This was a small but significant victory, given the United States’ determination to keep “digital products” free from the kinds of assistance measures it has fought against for so long in film and television. So far, Australia has not used the powers reserved for established or new media services.

These reservations are not the only source of Australian policy-making capacity under the Australia–United States free-trade agreement. The services, investment and electronic commerce chapters provide considerable capacity to retain, modify and introduce measures to support domestic production and distribution of cultural material and information. Tax concessions, international co-production agreements providing more favourable treatment to projects co-produced with partner countries, Indigenous programs, spectrum allocation processes and universal service policies in telecommunications can all continue. Australian government representatives also argued strongly at the time the free-trade agreement was finalised that it did not constrain public cultural agencies like the ABC and SBS or limit grants, subsidies and investments in cultural activities and enterprises.

Inevitably, these and other reservations in bilateral free-trade agreements with the United States will be targeted in the TPP negotiations. The United States will try to minimise any reservations taken out by other countries. Those other countries that already have bilateral free-trade agreements with the United States will probably try to maintain similar reservations in the TPP. Since each reservation is unique to one country, the United States’ aim will be to isolate them, contrasting the singular protectionism of the parties maintaining them with the preparedness of the other parties to concede in equivalent agreements.

An obvious example is Australia’s local TV program quotas. Australia allows New Zealand programs to count towards these quotas, but not programs from any other trading partner. New Zealand has no local program quotas and has agreed never to introduce them, through a commitment made in the WTO. Having already compromised its policy-making capacity, New Zealand might see nothing to gain from opposing the inevitable US pressure on Australia’s quotas. But paradoxically, New Zealand’s preferential access to Australia’s TV quotas gives it a good reason to support Australia’s continued capacity to maintain and perhaps even broaden them.

BECAUSE trade agreements are difficult to renegotiate, they tend to last. Deals done are generally much more durable than those expressed in domestic legislation. The audiovisual economy in 2010 is unrecognisable from the one that prevailed when the General Agreement on Tariffs and Trade, or GATT, was concluded in 1947, yet its rules still apply to trade in audiovisual goods. This is the reason some are so wary of compromising nation states’ ability to implement measures in the future.

The TPP negotiators will need to think well beyond the inevitable squabbles about TV quotas and contemplate longer-term trends in cultural and information trade. They will need a more sophisticated understanding of their uncertainties than the rhetoric that so often presents these sectors as places where perfectly informed consumers in every part of the world will get whatever they want, wherever and whenever they want it. At least four issues seem especially relevant.

First, emerging global digital distribution systems are proving remarkably concentrated. Google’s dominance of search, Facebook’s in social networking, Apple’s power in the markets for music downloads and smartphone applications, and Amazon’s online bookselling strength all challenge the expectation that global digital media would end scarcity and distribution bottlenecks. None of these dominant positions is necessarily timeless, and new fronts are opening up, as the current battle about the future of reading and bookselling among Google, Apple, Amazon, Sony and others demonstrates.

But network effects are real and the prospect of a very small number of globally dominant sources of supply for audiovisual content is not far-fetched. It need not only be undemocratic nations that worry about the influence wielded by such global behemoths and seek flexible powers to implement measures ensuring their citizens are makers, as well as takers, of their outputs. A good current example is the Google Books settlement, under which decisions of US courts will have immense significance for authors and publishers around the world.

Second, the global financial crisis has encouraged significant new state interventions in western countries. Of particular note for cultural and information trade are the broadband networks being built with large government subsidies in several TPP countries, including Singapore, New Zealand and Australia, and the national broadband plan submitted to the US Congress by the communications regulator. These represent major reversals of the trends towards liberalisation and privatisation that have dominated telecommunications policy and been reflected in trade agreements over the past twenty years. They involve complex new partnerships between private and public enterprises, new structural relationships across network, wholeales and retail activities, and novel access and other regulatory arrangements. These might be difficult to reconcile with trade commitments, especially if the networks being built are targets for full privatisation in the future.

Third, global debates about internet censorship are acquiring at least as much heat as those about culture and local content did during the Uruguay Round of trade negotiations in the late 1980s and early 1990s. The US secretary of state, Hillary Clinton, firmly linked these concerns to economic policy in a speech about internet freedom at Washington’s Newseum in early 2010: “We feel strongly that principles like information freedom aren’t just good policy, not just somehow connected to our national values, but they are universal and they’re also good for business.”

Where some thought global digital media and the fall of the Berlin Wall would undermine the ability and the desire of nation states to censor information products, both the technical capacity and the will have survived. Indeed, the intimacy of online and mobile media for both corporations and individuals has given them special significance. The corporations that citizens trust for their goods and services have not always been as robust in their defence of free speech during commercial negotiations as they have asked their representatives to be in trade talks. Yet those seeking to defend the capacity of nation states to implement policy measures about culture and information are going to find themselves grouped with net censors and corporate cyber warriors.

Finally, although it has resisted the United States’ position on measures like TV program quotas, the local industry has tended to acquiesce in its positions on intellectual property, on the premise that rights-holders are better served by tougher intellectual property protection. Even if one accepts the basic premise, it is not clear that every element of the United States’ aggressive promotion of rights-holder interests is always in the best interests of producers in Australia and elsewhere, who properly understand their dual roles as both users and creators of intellectual property. A more sceptical attitude to some US demands in this area might help to clarify that the overall goal of cultural policy is to encourage tomorrow’s creativity, not just to secure a perpetual revenue stream from last century’s. •