November 2004
Australia and the USA have decided the terms of a free trade agreement. This may be of interest to INCD members because many fundamental issues for culture were negotiated. Further, the US regards each treaty as a precedent for negotiating subsequent treaties. This is a deal that could be coming to a country near YOU.
The agreement is a "negative list" agreement: i.e. all aspects of trade between the two countries are included excepting those that are "subtracted" through explicitly stated provisions. Negative list agreements are especially dangerous because they require infinite foresight to anticipate their consequences. Years later, governments can discover an unforeseen need to regulate an activity, but be prevented from regulating by the free trade agreement.
As it turned out, the US agenda in the cultural area was largely confined to audiovisual and Intellectual Property Rights. We had feared a much broader cultural agenda. The US position seemed to be instigated primarily by the Motion Picture Association of America and its long-time leader, Jack Valenti, and a newly formed industry association for audiovisual interests. Basically, the US wanted no obstruction by government regulation to totally free access to the Australian film and television market.
The Australian position initially was for a total cultural exemption. It had already negotiated such an exemption in its agreement with Singapore, devising there a definition of culture which was very satisfactory to the Australian cultural sector.
However, the US would not accept this, on the grounds that (against all its practice to date) Australia could then move to totally exclude US films and television from Australia through, for instance, local content quotas on television.
The Australian response to US pressure, as of last December, was to maintain the total cultural exemption, but then to add back in some concessions to the US demands. The effect was to have a sort of "positive list" in the cultural area.
If Australia was going to make concessions, this was quite an elegant way to do it because the concessions could be clearly stated and the cultural exemption pretty much excluded the possibility of future bad surprises in other areas of culture.
However, the US apparently still was not satisfied and somehow, in the tense last days of negotiations, the Australians were persuaded to abandon the cultural exemption. The concessions now have a different character. In a positive list agreement, they were concessions -- e.g. placing an upper limit on television quotas, in a context in which no other cultural concessions are made. In a negative list agreement, they represent a retention of rights to regulate -- e.g. by having a television quota at all. But the rights named here are the only rights Australia has.
The Australian negotiators seem to regard the outcome as a good one. They believe that they have retained the essential prerogatives for Australia for preserving an Australian presence in the audiovisual sector.
However, from the cultural sector's viewpoint, there is a different story. Prior to this agreement, the Australian government's rights to regulate in support of Australian culture were completely unfettered. Now, it has only very limited rights, defined in this agreement. To assert any other rights will be impossible, forever. We have nothing in return from the USA in the cultural sector. Given its system, it has nothing to offer. Australian culture only loses.
This was always going to be the case in these negotiations. Australian concessions in the cultural sector would be made only in order to achieve US concessions in non-cultural areas, notably in agriculture. Ironically, the US has offered almost no concessions in agriculture. The free-trade true-believing USA supports its agriculture through subsidies for producing, subsidies for not producing, export subsidies, tariffs on agricultural imports and quotas on agricultural imports. Are there any other possibilities? The US has offered some concessions in other areas. The negotiators were looking for what they thought of as a balance in the package as a whole. They must think they have achieved such a balance.
In order to come into play, the agreement has to be ratified, unchanged, by the US Congress. There is no requirement in Australia for ratification by Parliament, although where enabling legislation is required, the Parliament must agree to it. There is some ambiguity about whether, by refusing this legislation, the Parliament can prevent the agreement going ahead. Furthermore, if there is one change at the Australian end, presumably there is no point in pursuing passage in the US Congress.
Finally: it is difficult to see how the Australian government, having made this agreement, could with any consistency support the vote for the Convention for Cultural Diversity in UNESCO.
SOME DETAIL OF THE AGREEMENT
The government has released an account of the agreement for the "audiovisual" sector -- not, you will note, the cultural sector. Naturally, it gives only what it regards as the good news. Here is a part of the description, in the government's own words.
* The outcome on audiovisual takes the form of three reservations to the AUSFTA's [Australia US Free Trade Agreement] Chapters on Cross-Border Trade in Services (CBTS) and Investment. These reservations, included in two Annexes to the Agreement, allow Australia to maintain or adopt measures that are inconsistent with certain obligations of the CBTS and Investment Chapters (i.e. "non-conforming measures").
Under the AUSFTA, Annex I can be used to reserve the right to maintain existing nonconforming measures that are specifically identified in that Annex. [Generally, Annex I measures can be changed only by reducing them or eliminating them. The US attempts to introduce a "ratcheting" arrangement in Annex I, so that it is not possible to reverse any decision to reduce the scope of measures listed here. There is no mention of ratcheting in our government's statement.]
Annex II can be used to identify certain sectors, sub-sectors or activities where a Party reserves the right to maintain existing non-conforming measures, to make these measures more restrictive, or to introduce new non-conforming measures.
* The three reservations addressing the use of local content requirements in the audiovisual sector:
-- An Annex I reservation allowing Australia to maintain the existing 55% local content transmission quota on programming, and the 80% transmission quota on advertising, on free-to-air commercial TV on analogue and digital (other than multichannelling) platforms. Subquotas may also be applied within the 55% programming quota.
-- A general Annex II reservation allowing Australia to both maintain existing and introduce new measures in relation to:
* Multichannelled free-to-air commercial TV.
* Subscription TV.
* Free-to-air commercial radio broadcasting.
* Interactive audio and/or video services.
* Broadcasting planning, licensing and spectrum management.
* Taxation concessions for investment in Australian film and television production.
-- An Annex II reservation allowing Australia to both maintain the existing co-production arrangements with other countries and to introduce new ones.
* The general Annex II reservation preserves Australia's right to take the following
interventions:
-- Multichannelled free-to-air commercial TV:
* A 55% transmission quota on programming may be imposed on no more than 2 channels, or 20% of the total number of channels (whichever is greater), made available by an individual broadcaster. The quota cannot be imposed on more than three channels of any individual broadcaster. Subquotas may be applied within the 55% quota in a manner consistent with existing standards.
* An 80% transmission quota on advertising may be imposed on no more than three channels made available by an individual broadcaster.
-- Subscription TV:
* Expenditure requirements of up to 10% of program expenditure may be imposed on services providers making available services in the following formats: the arts, children's, documentary, drama, and educational.
* The expenditure requirement on drama channels may be increased up to 20% upon a finding by the Australian Government that the 10% requirement is insufficient to meet its stated goal for such expenditure. This finding will be made through a transparent process including consultations with affected parties. The increase will be non-discriminatory and no more burdensome than necessary.
-- Free-to-air commercial radio: transmission quotas of up to 25% can be imposed on individual stations.
-- Interactive audio and/or video services:
* Measures can be imposed to ensure that Australian content on such services is not unreasonably denied to Australian consumers, upon a finding by the Australian Government that Australian content is not readily available to consumers through such services.
* Any measures adopted will be implemented through a transparent process, be based on objective criteria, be the minimum necessary, be no more trade restrictive than necessary, and be applied only to enterprises carrying on a business in Australia.
-- Market access restrictions can be imposed on planning, licensing and spectrum management.
-- Taxation concession for investment in Australian film and television production will remain unaffected.
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1 The Government will consider the issue of whether to introduce free-to-air commercial TV digital multichannelling in the context of the review required under Schedule 4 to the Broadcasting Services Act to be conducted this year.
