[A2k] Wall Street Journal: Planned EU-U.S. Trade Deal Hits Snag on Cultural Issues

Thirukumaran Balasubramaniam thiru at keionline.org
Thu Jun 13 00:05:39 PDT 2013


	• Updated June 12, 2013, 7:15 p.m. ET

Planned EU-U.S. Trade Deal Hits Snag on Cultural Issues

BRUSSELS—Negotiating a trade and investment deal between the U.S. and the European Union, originally seen as largely a technical discussion over tariffs and regulations, has mushroomed into something far broader in Europe: a debate over the threat that American mass-market entertainment poses to European culture.

Brussels and Washington agreed to move ahead with trade talks in February, setting a June timetable to start them. Europe must first debate what mandate to grant the European Commission to negotiate the deal, which could be one of the most far-reaching trade and investment accords ever. The debate comes to a head this Friday, when ministers from the 27 EU member states gather in Luxembourg to vote on the mandate.

The hottest topic, officials say, will be the "cultural exception" to international trade rules that lets nations subsidize domestically produced movies, television shows and radio programs in order to preserve local culture.

European and U.S. officials had hoped that an agreement to start talks could be announced at a summit of the Group of Eight leading economies next week in Northern Ireland, where U.S. President Barack Obama will meet with European leaders. But that won't be possible if European countries can't end their squabble over the cultural exception, those officials say.

France, which wants to ensure that the current system remains untouched, has emerged as the most vocal opponent among the 27 EU governments of including any aspect of the cultural exception in the negotiations.

The country, which is a filmmaking powerhouse in its own right, requires a minimum of 40% of television programming to be made in France and provides around €800 million ($1.1 billion) annually for the film industry, mainly through taxes on movie theaters and TV channels and distributors. France also enforces rules that force TV channels to spend a percentage of revenue making movies.

As television and movies are increasingly delivered over the Internet, France particularly opposes talks that might limit how European governments impose taxes on technology companies to fund those subsidies.

"The feelings and imagination of each nation are expressed through these services," Henri Weber, a French member of the European Parliament, told reporters. "Each country has the right to support its creators and authors. This has nothing to do with trade and commerce."

The European Commission, the EU's executive arm and lead trade negotiator, and Ireland, which holds the rotating EU presidency, have proposed to exclude the current subsidies from the mandate.

However, the commission appears to be leaving open the possibility of talks on national-content quotas for movies and TV shows delivered over the Internet through services such as Netflix orApple Inc.'s AAPL -1.24% iTunes.

This possibility has aroused suspicion and opposition from European broadcasters and elsewhere.

"The European position is ambiguous," said Jean-Paul Philippot, the director general of RTBF, Belgium's French-language broadcaster, "and because it's ambiguous, we are afraid."

U.S. officials say that if EU officials insist on excluding the cultural exception from the talks then Washington could insist that sectors of much bigger importance, such as government procurement, be excluded as well. The EU is hoping a final deal, which could take years to complete, will end rules that require U.S. government entities to buy American-made products.

"Based on my experience, my sense is that in reaction to a restriction on [audiovisual] negotiations, folks in Washington will be pressed to pull back on issues of interest to Europe," said William Kennard, the U.S. ambassador to the EU.

In Europe overall, local culture now holds a distinct minority of the entertainment market.

U.S.-produced content accounts for more than 60% of TV and radio programs and movies across Europe, despite a patchwork of state subsidies that supports—and possibly protects from extinction—the kind of work that stands little chance of receiving Hollywood backing, becoming a global hit or even turning a profit.

Even in France, the most popular television shows are some of the same U.S.-made police fare that has become the meat-and-potatoes of American prime-time television, including the Mentalist, Criminal Minds and CSI: NY. Medical dramas—such as House and Grey's Anatomy—also rank near the top.

The European system of subsidies has produced a huge diversity of films and a far more vibrant independent movie scene than exists in the U.S., said Patrick Lamassoure, chief executive of Film France, a group that helps foreign production companies in France.

"These films would probably exist in much smaller numbers if it was only about free-market rules," Mr. Lamassoure said.

Many of the films shown at the Cannes film festival have received support through the French subsidy system.

Hollywood studios might be unlikely to back a good number of them, including this year's winner, La Vie d'Adèle, a love story that features an extended scene of graphic lesbian sex, Mr. Lamassoure said.

—Sam Schechner and Stacy Meichtry in Paris contributed to this article.
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