A New International Instrument

on Cultural Diversity (NIICD)

 

Some Parameters of a Possible Instrument

 

Notes for a Presentation by

Peter S. Grant

Senior Partner

McCarthy Tétrault

 

Second Conference of the

International Network for Cultural Diversity

 

Lucerne, Switzerland

September 21-23, 2001

Introduction

            I have been asked to discuss some of the parameters that might apply in regard to a New International Instrument on Cultural Diversity (NIICD).

            One of the first places where the concept of a NIICD was put forward was in the Report of the Cultural Industries Sectoral Advisory Group on International Trade (SAGIT), Canada, which was published early in 1999.  I am a member of the SAGIT, and as a Canadian lawyer specializing in communications and copyright, I have been involved in discussions of the interface between culture and trade for many years. 

            However, my comments today are presented purely in a personal capacity, and do not necessarily represent the views of the SAGIT or those of the Canadian Government.

The SAGIT Report

            The SAGIT report described the NIICD in the following terms:

            “Canada could initiate a new international instrument, which would lay out the ground rules for cultural policies and trade, and allow Canada and other countries to maintain policies that promote their cultural industries.

“A new cultural instrument would seek to develop an international consensus on the responsibility to encourage indigenous cultural expression and on the need for regulatory and other measures to promote cultural and linguistic diversity. The instrument would not compel any country to take measures to promote culture, but it would give countries the right to determine the measures they will use (within the limits of the agreement) to safeguard their cultural diversity.

            “A kind of blueprint for cultural diversity and the role of culture in a global world, the instrument would clearly define what was covered, and stress the importance of cultural sovereignty.

“The new instrument would identify the measures that would be covered and those that would not, and indicate clearly where trade disciplines would or would not apply. It would also state explicitly when domestic cultural measures would be permitted and not subject to trade retaliation…”.

Building Support for the NIICD

            Since the idea was first proposed, the concept of a NIICD has received surprisingly broad support in a number of international fora. The idea has been raised in various meetings of UNESCO, La Francophonie, and, most directly, the International Network on Cultural Policy (INCP).

            The NIICD concept has also been supported at international meetings involving creators and the cultural industries themselves.  The Valencia Statement on Globalization and Cultural Diversity, issued in May 2000, for example, specifically supports the NIICD. 

            In the face of these developments, it is interesting to note that the U.S. has already decided that its best strategy is not to oppose the notion of cultural diversity, but rather to support it.  In its submission to the WTO earlier this year regarding the GATS negotiations on the audiovisual sector, the USTR recognized the legitimacy of concerns over the “special cultural qualities of the sector”.  However, it argued that these unique cultural qualities could still be protected within WTO rules, without taking the “all-or-nothing” approach of exempting the sector entirely. Clearly the U.S. does not want to be seen as opposing what it now sees as a motherhood concept.

            The Hollywood studios, in their response to the Valencia Statement, have also expressed support for the notion of cultural diversity.  They stated:

            “Cultural diversity is an important and understandably sensitive subject.  We generally support the notion that reasonable measures may be appropriate in order to promote diversity as a legitimate public policy objective.”

Although they go on to hedge their support with various caveats, it is clear that the studios do not want to be seen as opposing the general notion of cultural diversity.

            As we stand today, it is clear that a number of issues still have to be addressed in pressing forward with the NIICD.  These include the following:

1.         We are still at the early stages in convincing the international community that there is a need for the NIICD.  The notion of “cultural diversity” is garnering wide support but the idea of a NIICD to deal with the relationship between culture and trade is still far from accepted.  

2.         One of the key purposes of the NIICD is to provide guidance on how trade rules should interact with the distribution of cultural goods and services.  However, many of the cultural diversity declarations, particularly those emanating from creators, barely mention the trade issues, and fail to address the potential impact of present and proposed trade agreements on the cultural sector.

3.         It will be imperative to develop common goals, objectives and vision, so that as the discussion becomes more specific, it will be possible to gain consensus by relating the specific terms of the NIICD to the goals to be achieved.

Goals, Objectives, Vision and Principles in the NIICD

            In the INCD Santorini Statement, September 29, 2000, an “illustrative list of ten cultural principles” was set out, and described as being “an effective starting point for building consensus on the instrument’s vision and objectives.”  The Valencia Statement of May 2000 also contains a number of statements of principle that could be incorporated into the NIICD.

            Whether these goals or principles are included in the preamble to the NIICD or incorporated into its substantive provisions, they provide an important context for the instrument.   They should also be drafted so that the later provisions in the instrument are clearly seen as being appropriate means to achieve or reflect the goals, vision or principles. 

            In going through these principles, it is clear that further elaboration is required.  In particular, the following points should be noted.

1.         The illustrative principles in the Santorini Statement do not include any references to the relationship between cultural policy and trade agreements or trade law.  The Council of Europe Declaration, issued in December, 2000, contents itself by stating that “cultural and audiovisual policies, which promote and respect cultural diversity, are a necessary complement to trade policies.”  A key point of the NIICD is to allow trade policies and cultural policies to be harmonized, so that it is clear which prevails over the other and in what circumstances.  

2.         The notion of cultural diversity is frequently mentioned in the declarations issued to date, but primarily in the context of cooperation, exchange and respect for diverse cultures.  The concept that states have a unique role to support and promote local indigenous production and distribution, and that this contributes to cultural diversity, is nowhere highlighted.  This is an essential principle in the context of the NIICD in order to provide support for the measures outlined further below. 

3.         Another principle that needs to be highlighted is that there should be shelf space for local content and local production in the communications systems of each state.  The emphasis in many of the statements of principle issued to date tends to focus on the converse, i.e. that the system should be open to other cultural content.  In order to promote true cultural diversity, reference needs to be made to both.

4.         The link between cultural diversity and economic development also needs to be highlighted, with reference to economic studies on the relationship between trade liberalization and diversity.  In that regard, the importance of distribution systems in delivering local content needs to be emphasized.  The link between the potential for abuse of dominant position by distributors and other competition policy issues and the effect on local content distribution should also be explored.           

5.         The link between cultural diversity and fundamental democratic rights, including freedom of expression, needs to be made. 

6.         Taking the foregoing into account, the identification of goals needs to be put in a form that appeals to the widest number of states.  Accordingly, we need to tie NIICD to general principles, e.g. “Right of access to one’s own culture”, “promotion of cultural identity”, “preservation of cultural diversity”, “access to other cultures”, “international cooperation”, “recognition of interests of developing countries”.

Scope and Coverage of the NIICD

            To finalize the content of the NIICD, it will be important to determine its scope and coverage.  In that context, it will be necessary to define in the NIICD just what is meant by “cultural” goods and services, “cultural industries”, or “cultural measures”,  to the extent these terms are referred to in the instrument. 

            The task of agreeing on appropriate definitions is made more difficult because U.S. interests categorize much of what other countries consider to be their cultural industries as simply the “entertainment/leisure” industries.  There is also a dichotomy in the literature between popular culture and elite or “high” culture.

            Also contributing to the confusion is the fact that in many governments, cultural issues are often grouped with “heritage” issues.  There is already a provision in the GATT allowing states to protect their art treasures. The definition of culture for the purposes of the instrument should be cast in much wider terms.  Moreover, it has to be recognized that cultures are not fixed but are constantly changing.  As a recent UNESCO report notes, “we must now regard culture as a process rather than as a finished product.”

            In its proposal on the audiovisual sectoral negotiations, the USTR has suggested that “members need to review the different activities that constitute the audiovisual sector today to develop a clear, accurate and comprehensive understanding of where the different facets of the sector are classified...” The European Commission has also indicated that it is sensitive to the question of categorization, although it has expressed concern that any new definitions not open up audiovisual services to challenge under GATS. 

            In addressing the issue of scope and definitions, we must take account of the following:

1.         It will be important to include popular culture, not just elite culture, within the scope of the NIICD. 

2.         The test in the NIICD as to what constitutes indigenous culture should not turn on the cultural specificity of the work, but should be left to be determined by the country itself.   If a country chooses to define indigenous works solely by the citizenship or residency of the creators, this should be acceptable. 

3.         In that regard, we need to reinforce a point made by the European Commission that all electronic deliveries -- including digitized products -- should be categorized as services so that GATS applies, not GATT.

Relationship of NIICD to Other Sectoral Agreements

            This is clearly a key issue in regard to the NIICD, as it has been in the biodiversity area.  It is all very well to have a cultural diversity instrument, but the key question will remain, what is the relationship between that instrument and existing or proposed obligations under the WTO?  In the event of a conflict, which instrument prevails?

            Similarly, the NIICD needs to be compatible with international copyright treaties and obligations. 

            To be effective, the NIICD needs to be a binding instrument, which will hopefully “establish how trade disciplines would apply or not apply to cultural measures that meet the agreed upon rules.”   Thus, the NIICD will need at some point to interface with the WTO.  

            If the NIICD is not negotiated within the WTO, but exists as a free-standing document, there will need to be some subsequent process to incorporate it into WTO instruments, even if only by reference. 

            The U.S. film studios made the following comment on the idea presented in the Valencia Statement that the NIICD should be outside the WTO, and maybe under UNESCO: 

“...[W]e believe that the question of diversity should and can be recognized in the appropriate and competent international organization whose instruments apply to the film sector, namely the WTO.  Achieving a consensus on such recognition will not be easy because of the sensitivity of the subject and because it will also necessitate a clarification of the existing balance of rights and obligations at the international level.  The alternative would seem to be the status quo.  As a factual matter, a “New international instrument on cultural diversity”, could not affect the existing international “acquis” unless it were negotiated within the competent international organization by its members.  While UNESCO might conceivably have a certain role in such a process, its role would have to be defined in accordance with its competences and in light of those of other relevant organizations such as the WTO.”

            There are good arguments that we should try initially to develop and negotiate the elements of the NIICD outside the WTO, so that the wider artistic and political community can be engaged in the process.   The history of the biodiversity and land mine treaties is instructive in that regard.    At the same time, we should be well aware that the terms of the NIICD will ultimately have to be given force within the WTO, so that the latter organization has to be engaged at some point.  We will not accomplish our goal if the NIICD only has the status of a “soft” declaration.

Right of Countries to Implement Measures Supporting Indigenous Content

            The key purpose of the NIICD will be to recognize the right of states to implement measures to support the creation and distribution of indigenous cultural goods and services in order to maintain or enhance cultural diversity.   As part of this recognition, the NIICD would also need to provide that states agree not to challenge such measures under trade agreements.

            In order to clarify what would be permissible and what would not, the NIICD will need to list the types of measures that can be imposed at the discretion of a state if it deems it necessary or appropriate, without fear of trade retaliation.  The list would need to include the types of measures described below.  (Note that the measures below are not defined in “trade” terms, but rather in terms familiar to the cultural industries themselves.)

            (a)        Subsidies

            This is the form of cultural support that elicits the greatest consensus. Even the U.S. Government  recognizes that subsidies may be appropriate, noting that “Members may also want to consider developing an understanding on subsidies that will respect each nation’s need to foster its cultural identity by creating an environment to nurture local culture.”

            That being said, the U.S. is also careful to hedge its support for cultural subsidies. The kind of restrictions it would want are outlined in the following sentence in the USTR submission on the audiovisual sector:

            “There is precedent in the WTO for devising rules which recognize the use of carefully circumscribed subsidies for specifically defined purposes, all the while ensuring that the potential for trade distortive effects is effectively contained or significantly neutralized.”  (Italics added)

            With these kinds of restrictions, the use of subsidies could be severely constrained, depending on the wording of the measure. 

            The NIICD should explicitly permit subsidies to support local production.  In that regard, as noted earlier, it should be left to the countries themselves to determine what constitutes indigenous local production.  If a country chooses to define indigenous works solely by the citizenship or residency of the creators, this should be acceptable.  Using the cultural specificity of the film as the test would engender endless fruitless debate which would undermine the NIICD. 

            (b)        Tax Incentives

            The use of tax incentives to support local production is an increasingly common approach used in many countries. To the extent that they are tied to the income tax system and not to excise taxes, they appear to be legal even if the production is a good.  The NIICD should therefore permit the broad use of tax incentives for the production of indigenous cultural goods as well as for services.      

            (c)        Quota Requirements

            As detailed in the SAGIT report, broadcast quotas on exhibition time are very commonly used throughout the world to support local broadcast production.  They continue to be a fundamental part of the EU Television Without Frontiers Directive, and are also used in many other countries.   

            Even in the United States, where there has never been a domestic TV content quota because U.S. content already makes up almost all of their TV programming, the concept of a broadcast quota for under-represented programs is not entirely alien.  For example, a three-hour-a-week quota for educational children’s productions has been implemented by the FCC since 1996 for all TV stations. 

            Discriminatory quotas are not permitted for cultural goods under GATT except for the use of screen quotas in regard to the exhibition of films which are specifically permitted.  Discriminatory quotas for broadcast and audiovisual services are permitted under GATS because most countries declined to commit themselves to national treatment in these sectors.

            It must be realized that at a certain level, local content quotas can be prohibitory, e.g. if they were set an a level unreasonably high. That approach could be equally seen to be contrary to cultural diversity, since the aim of the NIICD is to promote an exchange of cultural products, not the prohibition of foreign products.  This aspect therefore also needs to be addressed in the NIICD.  

            (d)        Expenditure Requirements

            An alternative or complement to broadcast quotas that has received increasing favour in Europe is the imposition of local expenditure requirements on broadcasters.  These are viewed as “performance requirements” in trade law and if required of goods manufacturers could be a breach of national treatment under GATT.  Thus they should be referred to as a permissible measure in the NIICD.

            (e)        Restrictions on Market Entry/Investment

            The NIICD will need to make explicit provision for the licensing of content providers or other restrictions on market entry in regard to the cultural industries, including making room for requirements for local ownership or control.  That being said, it needs to be recognized that any rollback of current rules allowing foreign investment should not occur without provision for reasonable compensation.

            (f)        Public Broadcasting and other State Involvement

            One of the mechanisms for promoting cultural diversity, frequently referred to in the European context, is the support of public broadcasting.   At the same time, public broadcasting is seen in many quarters as under siege.  In 1997, concern about the status of public service broadcasting under the Maastricht Treaty (the Treaty of European Union) led to the adoption of a protocol on public broadcasting. 

            The importance of public broadcasting in contributing to cultural diversity is also picked up in the Valencia Statement.

            In order to maximize support for the NIICD, therefore, there should be a specific reference to the concept of public broadcasting, perhaps couched in similar terms to the Protocol referred to above. The reference might also be widened to embrace state institutions in other cultural sectors. 

            (g)        Independent Producers

            A frequently adopted mechanism to promote media pluralism and, indirectly, to promote cultural diversity, is to require a proportion of the productions broadcast by broadcast licensees (typically, other than news, sports or public affairs) to be independently produced by indigenous producers acting at arms-length from the broadcaster. A provision to this effect is in the European Television Without Frontiers Directive.

            In the United States, similar requirements were at one time required of the U.S. TV networks by virtue of consent decrees under the Sherman Act and under FCC rules (the “fin-syn” rules). Although these restrictions were removed a number of years ago,  the history of these restrictions makes it clear that even the U.S. has recognized the issue of independent production as a relevant part of public policy. 

            (h)        Other Measures to Assist or Promote Cultural Diversity

            Almost all of the measures applied around the world to assist or promote cultural diversity fall under one or other of the headings set out above.  However, some thought should be given to whether the list is in fact exhaustive.  If not, additional types of measures will need to be referred to.               

            At the same time, it must be realized that in any NIICD, it will be necessary to recognize some limits on possible measures to promote cultural diversity.  For example, the NIICD should recognize the need for transparency, and the right to freedom of expression.  The NIICD should also contain measures that support the notion of cultural exchange.  And as noted above, the NIICD needs to be compatible with international copyright treaties and obligations. 

Conclusion

            As we move towards implementing the notion of cultural diversity, the development of of a new international instrument in this area will be both challenging and inspiring.  I hope the discussion above will be useful in setting some of the parameters for such an instrument.