Cultural Products in the International Trading System
P. Lelio Iapadre, University of L’Aquila, Italy, Johns Hopkins University, SAIS Bologna Center, Italy, UNU-CRIS, Bruges, Belgium
Abstract
Debate about the linkages between globalization and cultural diversity is not limited to the well-known dispute about the effects of international economic integration in promoting or reducing the plurality of cultural expressions, but extends to the possible role of cultural diversity in explaining comparative advantage and trade or in generating market access barriers that can reduce the intensity of bilateral economic interactions. This chapter presents an overview of recent theoretical contributions, aimed at better understanding the linkages between trade and culture. The main common insight is that imperfect competition and network externalities in consumption define a framework in which international economic integration can lead to market concentration and cultural homogenization. In some cases, and under specific qualifications, some forms of ‘efficient protection’ of the cultural sector may increase economic welfare. In other cases, free trade remains the optimal policy, even if it entails some costs in terms of cultural diversity. Heterogeneous cultural preferences may be considered among the exogenously defined determinants of market equilibrium. Alternatively, their evolution may be modeled as the endogenous result of market adjustment to trade liberalization. The normative sections of this chapter discuss from different perspectives the options faced by the international community to improve the governance of cultural policies. Although bilateral and regional preferential trade agreements are becoming more relevant, a comprehensive and consistent solution of the trade-and-culture controversy is needed at the multilateral level. The 2005 UN Educational, Scientific and Cultural Organization (UNESCO) Convention on Cultural Diversity is an important achievement, but cannot solve this problem. A coherent and credible balance between the different positions can only be found by improving the World Trade Organization (WTO) regime. In the context of the digital revolution, the complementarity between the two global public goods of cultural plurality and international economic integration, and their role in sustaining the progress of societies, is hopefully becoming more evident.
Keywords
Cultural trade; Cultural diversity; World Trade Organization; GATT; GATS; TRIPS agreement
JEL Classification Codes
Z18; F10; F53; K33
15.1 Introduction
International economic integration has often been thought to collide with the pursuit of other social objectives such as the enforcement of environmental and labor standards, showing the need for a more effective governance in the system of international relations. The perceived tradeoff between globalization and cultural diversity is a major example of this tension, due to the fact that many cultural activities produce valuable economic goods that can be traded across borders. The opening of domestic markets to international flows of products related to cultural identities, such as films and music, is often considered as a threat to local cultures. On the other hand, domestic policies and regulations that a number of countries have adopted in order to preserve and develop the plurality of cultural expressions are under scrutiny for their explicit or unintended restrictive effects on international economic transactions.
The status of cultural products has proved to be a most contentious issue in negotiations at the World Trade Organization (WTO), where many countries refuse to open their markets, arguing that protecting domestic cultural industries is needed in order to preserve their local identity. At the same time, initiatives for establishing a specific international regime for cultural diversity outside the multilateral trading system have intensified, leading in 2005 to the approval of the Convention on the Protection and Promotion of the Diversity of Cultural Expressions at the UN Educational, Scientific and Cultural Organization (UNESCO). This has triggered a large debate and new concerns as to the possible coordination of instruments that pursue goals perceived as clashing with each other.1
A comprehensive survey of the literature on culture and trade, with particular attention to the manifold international dimensions of arts and cultural industries, is offered by Acheson and Maule (2006). Other general overviews include Bernier (2005), Voon (2007), Throsby (2010, chapter 9), Schulze (2011), and Doyle (2012). This chapter, after describing the main aspects of the tension between international economic integration and cultural plurality, aims at presenting some relevant economic models and discussing the available policy options.
Section 15.2 outlines briefly the main themes of the debate on the linkages between globalization and cultural diversity, considering not only the well-known quarrel about the effects of international economic integration in promoting or reducing the plurality of cultural expressions, but also the possible role of cultural diversity in explaining comparative advantage and trade or in generating market access barriers that can reduce the intensity of bilateral economic interactions. Section 15.3 presents a survey of theoretical models aimed at explaining the specific features of international economic transactions in cultural products, including the home market effect and consumption network externalities. Section 15.4 discusses the economic arguments used to justify public intervention in the markets for cultural products, with particular reference to the case for protecting domestic cultural activities against foreign competition. Section 15.5 shifts the analysis to the international level. After presenting briefly the current global regime of cultural policies, structured around the WTO system, the 2005 UNESCO Convention, and a network of bilateral and regional integration agreements, this section offers a discussion of the main competing proposals for the global governance of cultural policies, under the perspective of the interdependence between international economic integration and cultural plurality. Section 15.6 concludes by summarizing the chapter and pointing to possible directions for future research.
15.2 The Debate on Trade and Culture
Cultural activities represent an important economic sector, whose relevance tends to increase with the rate of development, but is significant even in developing countries. Reliable and comparable data about the size of the sector across countries are not available. Some estimates are proposed with considerable caution by Howkins (2007) and point to a share of about 6% of global production in 2005. In many countries the growth of the cultural industry has been more rapid than the average, even during the global crisis (UNCTAD-UNDP, 2010). However, according to UN Conference on Trade and Development (UNCTAD) data, world exports in creative goods and services have expanded more slowly than total world trade in the last decade.2 This is mostly the result of the slower price growth in the cultural sector, thanks to the digitalization of many goods, as compared to the rapid increase in the price of many primary products. Recent forecasts for the entertainment and media industry, published by Pricewaterhouse-Coopers (2012), confirm that the global nominal growth rate of the industry’s turnover will be slightly lower than the average growth of GDP in the 2012–2016 period due to the shift towards lower-priced digital products.
The nexus between culture and economy is reciprocal (Throsby, 2001). On the one hand, economic ideas and activities are strongly influenced by their cultural context, and contribute to the creation of cultural values. On the other hand, cultural activities and assets have a substantial economic value and can be studied with the lens of economic disciplines, which are pertinent not only to analyze production efficiency and market structure, but also to understand the social mechanism through which resources used in production can be reproduced, making the process sustainable over time. This delicate interdependence has often aroused concerns and debates. A negative view about the social role of the ‘culture industry’ was expressed by the Frankfurt School (Adorno and Horkheimer, 1947) and has inspired many criticisms of the commercialization of culture. A more optimistic view about the ability of the market mechanism to nurture the development of cultural activities has emerged recently (Cowen, 1998). The increasingly widespread awareness of the role of cultural activities in fostering innovation, growth, and societal progress has led to a flourishing literature on creative industries (Caves, 2000; Howkins, 2007; Potts, 2011), which has considerably extended the traditional borders of the cultural sector, to include areas such as advertising, fashion, and software that are characterized by a high intensity of cultural capital. Recognizing the economic value of cultural activities does not detract from their intrinsic specificity with respect to other productive sectors. This explains why distinct regulations and policies are generally adopted for the cultural sector, aimed not only at promoting its economic growth, but mostly at achieving specific cultural targets.
The tension between different aspects of cultural activities is evident also in the international arena, where it appears as a conflict between the benefits of economic globalization and the protection and promotion of the plurality of cultural expressions. The underlying fear is that free international circulation of cultural goods and services might lead to the homogenization of their contents, and to the disappearance of national and local cultural identities, as a result of technological convergence and market concentration (Footer and Graber, 2000). Trade liberalization, although expanding the total volume of consumption possibilities and enriching the range of available product varieties, could lead to a gradual disappearance of specific local varieties perceived as ‘vectors of identity, values and meaning’, in the language of the UNESCO (2001) Universal Declaration on Cultural Diversity, Article 8.3 The weakening of cultural identities, in turn, could increase uncertainty and anxiety about the future, threatening the stability of democratic systems (Habermas, 1998). The idea that international economic integration can induce cultural homogenization is widespread not only among public opinion and the manifold social movements opposing globalization,4 but also in policy circles and international institutions,5 and even among economists supporting free trade.6
On the other hand, it has been argued that national and local cultural identities have always been built and strengthened through the movement of people, ideas, products, and assets across different communities (Pool, 1977). So, international economic integration, far from endangering cultural plurality, can create conditions amenable to its further development and Cowen (2002) offers plenty of examples of this positive connection. More generally, the persistence of significant differences across countries in the context of globalization is highlighted by Berger and Dore (1996). From a different perspective, the diversity of cultural identities can be seen as one of the factors contributing to the growth of international economic activities. In traditional theories, trade depends on comparative advantages, generated by differences in technologies, factor endowments, or consumer tastes, which in turn may be nurtured by cultural differences across countries.7
In a world of imperfect competition and intra-industry trade, cultural diversity plays a different but still significant role. In a gravity framework the intensity of bilateral trade is positively affected by proximity factors, including the similarity of cultural patterns. So, other things being equal, cultural differences translate into barriers to international transactions, whereas preferential trade networks emerge more easily among countries sharing a common culture. Yet, proximity and distance must be interpreted in relative terms, meaning that the intensity of transactions between two countries depends positively on their reciprocal similarity and negatively on their similarity with third countries. Thus, bilateral similarity of cultures between a pair of countries generates preferential trade and investment linkages inasmuch as their common culture is different from those prevailing in other possible trading partners. Stated differently, in a culturally homogeneous world, relative bilateral similarities would vanish and there would be no role for culture-driven preferential trade networks. Empirically, the strong impact of cultural proximity on bilateral trade and investment has been shown, among others, by Guiso et al. (2009).
15.3 International Trade in Cultural Goods and Services: a Survey of Theoretical Models and Empirical Studies
The idea that international economic integration threatens the plurality of cultural identities is based on the assumption that unfettered market forces reinforce the dominant culture at the expense of domestic cultural expressions. In other words, cultural homogenization can be the result of market concentration. The reverse is not necessarily true. Even when an adequate degree of competition is achieved in international cultural markets, this can enrich the range of differentiated products available to consumers, but does not necessarily translate into an effective plurality of local cultural identities.
Most of the concerns surrounding the effects of globalization on cultural diversity have been framed by the fear that the US cultural industry might expand its dominant position in the world market, particularly in the audiovisual sector. So, we will review here some theoretical models aimed at explaining why cultural markets might be prone to a process of concentration. A common feature of this literature is the assumption that consumer preferences are heterogeneous (across countries, but also within each country) and often exhibit a home bias. On the production side, it is generally assumed that technologies are characterized by increasing returns to scale and products are differentiated. Imperfect competition is therefore the prevailing market structure, although some models assume perfectly competitive markets in order to simplify welfare analysis.8
15.3.1 Scale Economies and the Cultural Discount: The Home Market Effect
A first strand of literature is based on the ‘home market effect’, which is often invoked to explain why economies with large domestic audiences, such as India and the United States, tend to assume a dominant position also in export markets. The main ingredients of these models are a home bias in consumer preferences and scale economies in production or distribution technologies.
The assumption that consumers prefer home products, other things being equal, can easily be explained in terms of cultural allegiances, even if it can be found also in other sectors. In the literature about trade and culture it is known as the ‘cultural discount’ assumption, because it implies that when domestically rooted products are offered on foreign markets, their value to consumers is lower and they must be sold at a discount, in order to offset the higher appeal of local products (Hoskins and Mirus, 1988). Economies of scale characterizing cultural productions can be internal to the firm, associated with the high fixed costs of some specific inputs, or external to the firm but internal to the industry, if they take the shape of agglomeration economies in ‘creative clusters’. In both cases larger markets allow home firms to better exploit increasing returns to scale and gain a competitive edge over foreign producers. This explains why larger markets have the potential to sustain higher-budget productions made with better-quality inputs, which can then be distributed abroad at very low marginal costs (Wildman and Siwek, 1987, 1988; Waterman, 1988).9
In the international trade literature the home market effect is generally the combined result of scale economies and trade costs (Krugman, 1980). Production tends to concentrate in the largest countries, because this allows firms to benefit from scale economies without incurring an excessive increase in trade costs to serve foreign markets. In the cultural sector transportation costs are normally very low and so, in principle, the concentration of production could occur in any country. However, as noted by Hoskins et al. (1997), trade costs can be replaced by the cultural discount,10 which generates the incentive to serve foreign markets from the largest countries. The cost and quality advantages that home producers draw from scale economies facilitate the global diffusion of their products, offsetting their worse matching with foreign cultural preferences.
Heterogeneous consumer preferences between domestic and foreign cultural products, together with scale economies in production, are used by Francois and van Ypersele (2002) in a model showing that trade protection may be beneficial to all countries. Market concentration in this model can emerge as products targeted for the global market, such as Hollywood movies, reach more easily the optimal scale of production. On the contrary, cultural goods in the model have no export potential, which implies an extreme form of cultural discount. Moreover, whereas the valuation of Hollywood movies is quite homogeneous across individual consumers in each country, cultural goods are valued differently by each consumer and this may lead to an inefficiently low level of production. This problem can be addressed with a protective policy, aimed at reducing the market for homogeneous goods and making the production of cultural goods viable in both countries.
15.3.2 Interdependence of Preferences and Cultural Identities
An alternative strategy to model the home bias of the demand for cultural products is based on the concept of network externalities or group externalities in consumption, sometimes presented as demand-side economies of scale. The basic idea is that consumer preferences can be interdependent, in the sense that each individual’s utility is affected also by the consumption choices of other individuals. So, the benefit that an individual draws from a product depends not only on the quantity consumed, but also on the number of other consumers using the same product (Katz and Shapiro, 1985). Examples of this situation are manifold, including telecommunications, software, production standards, and currencies.
In principle, preference interdependence may shape markets in different ways, as shown by Grilo et al. (2001). Individuals may prefer exclusive patterns, so that an increase in the number of consumers making the same choice entails a negative externality, similar to a congestion effect. In this case, product differentiation prevails and price competition is weakened. On the other hand, if the wish to conform with the dominant pattern prevails, competition becomes more intense and even a small initial advantage of a producer may lead to the complete monopolization of the market. This can be the result of collective passions, as in Grilo and Thisse (1999), or of informational cascades generated by the incentive to observe the behavior of other agents, in order to extract the information needed to make a choice (Bikhchandani et al., 1998). The relevance of preference interdependence is particularly evident in the cultural sector, where network externalities can be used to model how different identities emerge and interact with the market process. In this case, the fact that other individuals consume the same good raises each consumer’s utility by reinforcing the sense of belonging to the same community and facilitating social exchange (Akerlof and Kranton, 2000).
Janeba (2007) adapts the Ricardian model to study the welfare effects of trade in the presence of consumption network externalities. The choice of a simple traditional framework does not allow consideration of scale economies or differences in country size as in the model of the home market effect, but draws attention to the possible role of network externalities in building and sustaining cultural identities. Trade changes relative prices and consumption patterns in each country and the resulting welfare effects are determined by the tradeoff between the benefits of maximizing the size of the network, which implies uniformity in demand, and those of complying with intrinsically heterogeneous consumer tastes. The welfare effects of trade liberalization are ambiguous, depending on the number of possible trade equilibria and on the homogeneity of consumer preferences in each country. Its distributional effects tend to favor individuals consuming the imported cultural good.
Suranovic and Winthrop (unpublished)12 adopt a similar framework, showing that trade liberalization may be harmful when consumption network externalities are important. In addition, they consider the possibility that cultural affinity stems from the non-pecuniary benefits associated with working in an import-competing cultural industry. If trade liberalization leads to the contraction of this industry, its benefits are lower than in the standard theory.13
Rauch and Trindade (2009) extend Janeba’s model by combining network externalities with the home market effect under imperfect competition. Cultural preferences remain exogenous, but in contrast with Janeba, are homogeneous across consumers in each country, which does not allow consideration of the competition between different cultural networks. In their model, dynamic aspects are crucial. New cultural products are created drawing from the existing stock of ideas and so the current degree of cultural diversity affects the quality of production and consumer welfare in the future. Producers of cultural goods have access to ideas associated with past cultural goods from all countries, but foreign and domestic goods are imperfect substitutes. Trade liberalization leads to cultural homogenization, due the home market effect. In the short run welfare is improved, but lower cultural diversity affects negatively the quality of cultural goods and welfare in the long run. However, trade protection, in a context of low communication costs, may not be of help, since it may only favor domestic imitations of the dominant style, and subsidies to the fixed costs of traditional cultural production should be preferred.
A different kind of interdependence among consumers arises if changes in market size affect the number of available product varieties. If technology implies economies of scale and consumer preferences are heterogeneous, an increase in the number of consumers sharing similar preferences results in a wider range of product varieties meeting their tastes becoming viable for production. These preference externalities have been studied by Waldfogel (2003) in the US radio market and play a crucial role also in a model proposed by Durbin (unpublished),14 where trade liberalization, although harming some consumers by shifting production patterns towards their less favored varieties, is nevertheless welfare-improving.
All the above papers share the assumption that cultural preferences are exogenously given and aim at understanding how they influence the welfare effects of trade. Conversely, a second group of papers deals with the role of trade in determining the endogenous evolution of consumer preferences.
Bala and Long (2005) show that when two countries are substantially different in size, trade can lead to the dominance of the larger country’s consumption pattern. Preferences are defined exclusively at the individual level, with no role for network externalities. Taking inspiration from the literature combining economics with biology,15 Bala and Long model the dynamics of preferences as an evolutionary process, driven by changes in relative prices. They acknowledge that factors affecting the evolution of preferences are manifold, including the relative abundance of alternative goods, imitative behaviors, social or informational network externalities, learning-by-doing processes, and habit formation, but focus on relative prices to simplify the analysis of the effect of trade on preference evolution in a general equilibrium framework. Preferences are transmitted across generations and the ‘fitter parents’ tend to influence a larger number of cultural ‘children’, according to a simple ‘replicator dynamics’ pattern, where the preference share of a product depends positively on its previous level and negatively on relative prices. Cultural homogenization is therefore the result of the larger country’s preference pattern prevailing over that of the smaller country, due to the price change brought about by trade liberalization.
Bala and Long do not model the activities carried out by parents to influence the preferences of their children. In contrast, Olivier et al. (2008) base their model of preference evolution on cultural transmission, conceived as a micro-founded socialization process.16 The relative size of a cultural community depends on the competing efforts made by (limitedly) altruistic parents to transmit their different cultural preferences to their children (Bisin and Verdier, 2000; Francois, 2002). Under autarchy, the interdependence between this process and market adjustment leads to a strong home bias in each country. Trade liberalization enacts a divergence process, reinforcing the home bias in each country until the foreign culture disappears. However, social integration, defined as a technology-driven process facilitating social exchange with foreign residents, can offset this trend, stimulating a process of cultural convergence that safeguards cultural diversity in each country. This model does not attempt an analysis of the welfare effects of trade liberalization and social integration, and so cannot be used immediately to draw policy implications about cultural protection.
15.3.3 Empirical Studies on Trade in Cultural Products
The empirical literature on trade in cultural products has been growing rapidly in the last few years, including contributions from the perspectives of economics, management, and communication sciences.17 Schulze (1999) is one of the first studies applying the gravity model to international trade in art and pointing to a possible research agenda in applying economic theory to the empirical analysis of trade in cultural products. Waterman (2005) offers a survey of the literature using political and cultural arguments to explain the dominance of the United States in the world audiovisual industry. Lee and Waterman (2007) discuss the theoretical specification of the home market model and find strong empirical support for its main predictions, showing in particular that the declining shares of European and Japanese products in international markets can be explained with the slower growth of their domestic demand for movies. Another application of the home market model has been recently provided by Hanson and Xiang (2009), whose empirical estimates confirm the relevance of the cultural discount to explain the dominant position of the US movie industry. Further empirical evidence is offered by Lee (2009), who shows that the cultural discount is higher for drama productions, as well as by Fu and Govindaraju (2010), who detect signs of a process of international cultural homogenization in the box office acceptance of Hollywood movies. Marvasti and Canterbery (2005) adapt the gravity model to explain the dominance of the United States in motion picture trade. Disdier et al. (2010a,b) study the determinants of cultural trade at bilateral level, finding that cultural proximity plays an important positive role. On the other hand, Chan-Olmsted et al. (2008) find that, other things being equal, cultural differences can stimulate the demand for US audiovisuals.
15.4 Should the Cultural Sector be Protected From International Integration? Normative Issues at the National Level
The literature surveyed so far shows different situations in which reducing the exposure of the cultural sector to international competition seems to increase economic welfare. As in other cases, departing from the simple assumptions of perfect competition models, while revealing additional gains from trade, weakens the standard case for liberalization policies.18 Yet, this does not imply that any form of cultural protection is welfare improving. In many real-world situations government failures and collective action problems related to information asymmetries and the risk of regulatory capture can prevent the identification and adoption of appropriate and effective policies.
However, the subtleties of economic theory seldom enter the public debate. Much of the quarrel about trade and culture is still conducted as a battle between contrasting principles, with few margins for compromise. On one side, the banner of cultural diversity is used as one of the possible arguments to express a more general distrust of globalization, often related to disapproval of the market system. On the other, the confidence in the economic benefits of international integration is reinforced by wariness about any attempt to limit individual freedom in the cultural domain.19 The digital revolution shapes the battlefield by demonstrating the transformative power of social exchange and eroding the effectiveness of protection measures used in the past (Burri-Nenova, 2008, 2010).
Put in this way, the trade-and-culture dilemma may appear as an example of the possible tension between international economic integration and non-economic objectives of public policies or even, following Hirschman (1995), as a ‘non-divisible’ conflict between two social targets that cannot be assessed with a common value metrics and therefore impose an either/or choice. Yet, to the extent that pursuing the non-economic objectives of cultural policies entails the use of scarce resources, the economic perspective can be useful to assess their opportunity cost and devise a socially optimal intervention.20 It would even be possible to go one step beyond traditional welfare analysis and assign a lower weight to the efficiency losses generated by cultural protection, adapting to this purpose the conservative social welfare function proposed by Corden (1997).
Actually, when the debate boils down to the details of cultural protection policies and their specific objectives, instruments, and results, what often emerges is an explicit attempt to weigh their expected cultural benefits against their possible trade-restrictive effects, as shown for several policy areas by Trachtman (1998). Here economic and international law perspectives find a common ground, offering guidelines to policy makers and international institutions. The concept of ‘efficient protection’, proposed by Sykes (2001), can be used to identify a set of policy measures able to achieve their cultural targets, minimizing adverse effects on international trade and investment, as suggested by Sauvé and Steinfatt (2000).
One of the recurring concerns in the literature is the ability of cultural policies to achieve their specific targets, justifying forms of trade protection that would be considered harmful in other sectors. Mas-Colell (1999, p. 89) suggests distinguishing between the ‘protection of national cultural production’, which is aimed at sustaining domestic creative industries regardless of the content of their production, and the ‘protection of the production of national culture’, which targets specific domestic cultural contents regardless of the nationality of their producer. At first sight, the former policy would be subject to the same criticisms pertinent to any kind of protectionism in other industries, whereas the second could be more easily justified on the basis of market failures and imperfect competition. Yet the most important problem faced by the second approach lies in the arbitrariness of the selection criteria that policy makers would use to identify cultural contents deserving protection. This risk is so high, also for its political implications, that it could lead to a preference for the first approach, in which consumers are left free to choose the cultural contents they prefer, but the range of available varieties includes also those produced by the protected national industry. Moving from the normative level to the actual process of designing, adopting, and implementing cultural policies raises of course additional challenges, often related to the risk of policy capture by vested interest groups, and made more difficult by technological innovation and market concentration. As a result, the cultural and economic effectiveness of these policies is questioned by many observers.21
Other chapters of this Handbook and Throsby (2010) present and discuss the wide range of cultural policy instruments used in every country by several institutions at different jurisdictional levels. Their alleged objectives can refer exclusively to the cultural domain or be framed in the context of industrial policies and target the growth of cultural production. Their international dimension may be explicit, as when they aim at limiting imports, supporting exports, regulating foreign direct investment, or promoting international cooperation. In other cases, external effects may be the deliberate or unintentional byproduct of domestic support measures.
The main policy tools affecting international trade and investment include market access restrictions on goods and services, local content or ownership requirements, licensing and qualification procedures, technical standards, intellectual property (IP) protection, competition rules, public ownership, fiscal and financial support measures, and international cooperation agreements. A survey of these instruments is offered by Footer and Graber (2000). Guerrieri et al. (2005) present a collection of country studies (Canada, Egypt, France, Germany, India, Italy and the United Kingdom) aimed at assessing in detail the trade and foreign investment impact of national cultural policies. UNESCO (2006) adopts a similar approach for a group of developing countries, including Burkina Faso, China, Colombia, Costa Rica, El Salvador, India, Mexico, Nigeria, Peru, Philippines, Senegal, South Korea, Thailand, and Venezuela. A comprehensive analysis of European film policies from the perspective of their international impact and their compatibility with the WTO regime is provided by Herold (2010).
15.5 The Global Governance of Cultural Policies: Normative Issues at the International Level
The international regime of trade in cultural products is complex and has not reached a stable equilibrium yet, reflecting the strains that continue to impair international cooperation in other fields, including in multilateral negotiations on trade and IP rights. Here, we start with an overview of the current regime, considering the main institutions and agreements at different levels, and then discuss some of the policy options open to the international community. Since cultural issues related to the protection of IP are analyzed in detail in other chapters of this Handbook, we will mention them only briefly, when necessary to understand their implications for the trade regime.
15.5.1 The International Trade Regime for Cultural Products: An Overview
The global governance of the interaction between cultural policies and trade is structured around three main pillars: the WTO multilateral regime, bilateral and regional preferential trade agreements, and the UNESCO Convention on Cultural Diversity. Here we will review briefly each of them, leaving an analysis of their linkages to Section 15.5.2.
15.5.1.1 WTO Agreements and Trade in Cultural Goods and Services
In the WTO regime, rules on international trade in cultural goods and services can be found in a number of different agreements. Many cultural activities fall under the jurisdiction of the General Agreement on Trade in Services (GATS), which will be discussed below in more detail. Relevant provisions are also embodied in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), which establishes minimum levels of protection that each government must give to contents and authors in order to reduce potential tensions in international trade relations originating from a different extent of protection and enforcement of IP rights in national laws. As trade in cultural services cannot be completely disentangled from trade in goods, the General Agreement on Tariffs and Trade (GATT) is to be taken into account as well. Moreover, a series of other WTO Agreements have a potential bearing on the sector, such as the Agreement on Subsidies and Countervailing Duties, the Agreement on Implementation of Article VI of GATT 1994 (the Anti-Dumping Agreement), the Agreement on Safeguards, the Agreement on Trade-Related Investment Measures (TRIMs Agreement), and the Ministerial Declaration on Trade in Information Technology Products (also known as the Information Technology Agreement (ITA)).22
The main features of the GATS are as follows. Services may be exchanged through four modes of supply: cross-border supply (mode 1), consumption abroad (mode 2), commercial presence (normally implying foreign direct investment; mode 3), and presence of natural persons (mode 4). The GATS sets both general obligations and a framework for specific commitments undertaken by Member States. The most-favored nation (MFN) treatment and transparency are general obligations, which apply automatically to all sectors and modes of supply. However, Members are allowed to list temporary MFN exceptions in any sector. GATS-specific commitments concern market access and national treatment. Members negotiate in which sectors and modes to undertake commitments, and the scope of such commitments. The commitments appear in schedules that list the sectors being opened, the extent of market access being given in those sectors, and any limitations on national treatment. This is the so-called ‘positive list’, preferred to the ‘negative list’ approach because of the difficulty of determining all the measures that applied to each service sector in order to decide which to exempt (Hoekman and Kostecki, 2001).
Each Member is required to have a schedule of specific commitments, but there is no obligation on their extent or coverage. Thus, Members are free to tailor their schedule in accordance with the features of their domestic service sectors and with national policy objectives. There is no doubt that the GATS allows Members a high degree of flexibility, but it is questionable whether this has really helped to attain greater liberalization. In fact, in the Uruguay Round most Members opted for a minimal initial schedule of commitments and the first subsequent round of negotiations has not been concluded yet. It started on time in 2000, notwithstanding the failure of the Seattle Ministerial Conference, and was then included in the negotiations of the Doha Development Agenda, which, however, has not yet achieved any significant outcome.
Cultural services, particularly in the audiovisual sector, have proved to be one of the main contentious areas in the process of trade liberalization. During the Uruguay Round the tension between national audiovisual policies and international economic integration, which dates back to the 1920s (Footer and Graber, 2000), erupted with particular intensity. Canada and the European Union, although in different forms, tried to carve out an exemption for cultural products and policies from WTO rules, based on their specificity. The United States claimed that a cultural exception would have allowed for implementing broad protectionist measures and advocated deep liberalization of market access in the audiovisual sector.
The GATS reflects the inability to strike a balanced compromise between these positions (Voon, 2007). Audiovisual services were not excluded from the general obligations envisaged in the agreement, but the European Union and several other countries took exemptions from the MFN principle in this sector. More importantly, Members did generally abstain from undertaking specific commitments in audiovisual services. As of 31 January 2009, only 30 countries had included this sector in their GATS schedules, as documented in the WTO website.23 Among the large audiovisual producers, only the United States has taken substantial commitments at the various stages of production, distribution, and transmission, while other countries have limited the opening up of their audiovisual sector to very specific cases.24 In the preparatory phase of the Doha Round of GATS negotiations, only the United States, Switzerland, and Brazil had made new proposals in the area of audiovisual services, without any concrete effect. During the first years of the round, only seven bilateral requests had covered new or improved commitments on audiovisual services.25 In order to give new impulse to negotiations on trade in services, the 2005 Hong Kong Ministerial Declaration called for groups of Members to present plurilateral requests focused on a specific sector or mode of supply to other Members, in addition to bilateral request-and-offers. This new approach to negotiations in services was generally felt as an improvement, but persisting problems in other sectors, and particularly in agriculture and manufacturing, continue to stall the round. The last plurilateral meeting on audiovisual services was held in February 2011 and confirmed the very limited progress achieved so far (WTO, 2011).
15.5.1.2 The Cultural Sector in Bilateral and Regional Preferential Trade Agreements
Over the last decade the number of preferential trade agreements (PTAs) has considerably increased, especially at bilateral level (both between two countries and between regionally integrated areas and single countries). In parallel, there have been several attempts to extend their coverage to a wider compass, including political, social, and cultural matters. As negotiations are not progressing at the multilateral level, preferential agreements seem to allow for new solutions, driven by a narrower agenda, fewer participants, and by the specific features of the cultural sector in some regional contexts. The treatment of the cultural sector in these PTAs is very heterogeneous, varying between an integral exemption (de jure or de facto) and the opening of cultural markets to international competition, at different degrees and in different ways. Some PTAs envisage only the promotion of cultural cooperation, while others cover different regulatory aspects concerning cultural products and the related industries, which may include the liberalization of trade in services (where notably the audiovisual sector plays a main role) as well as other aspects, such as the regulation of e-commerce and IP rights.
As documented by Formentini and Iapadre (2007) and Roy (2008), PTAs have introduced in many cases rules that clearly go beyond the current multilateral discipline, where several controversial issues remain unresolved. Moreover, the recourse to preferential agreements seems to be motivated also by the possibility of regulating issues linked with rapid changes in the technological environment, which represent increasingly important aspects for the international trade of cultural products, but fail to be addressed at the multilateral level.
Regional and bilateral PTAs clearly reflect the two main approaches competing in the international arena: on one hand, the pressure from the United States for deeper trade liberalization; on the other, the tendency to exclude cultural activities from trade agreements, favored particularly by the European Union. Another distinction refers to the negotiating model: one is the positive list bottom-up approach26 based on the GATS, the other is the negative list top-down approach of non-conforming measures first introduced in the North American Free Trade Agreement (NAFTA) and adopted in all US PTAs. This latter model is often considered more transparent and ambitious in producing liberalization, as it implies that anything that has not been listed in the annexed schedules is intended to be liberalized. In other words, one important consequence of the negative listing is that if new and previously unforeseen services are introduced, they will automatically be covered under the agreement (Sauvé, 2003). Arguably, this may represent a disadvantage for trading partners lacking adequate negotiating capacity, in particular for developing countries that may feel themselves committed ‘by default’ (Bernier, unpublished).27
Overall, PTAs promoted by the United States have achieved a deeper integration than has occurred within the GATS. In the audiovisual sector, the United States usually asks their trade partners to ‘freeze’ existing regulations, and does not require the elimination of measures discriminating against foreign content nor the dismantling of existing financial support schemes for culture and content production. These kinds of measures mainly apply to traditional technologies like broadcasting or cinema. Conversely, the United States requests GATS-specific commitments on new audiovisual services like interactive audiovideo services and other new forms of content distribution permitting a higher consumer control over the content. Deeper and broader commitments in the field of both basic and value-added telecommunications are also requested (Wunsch-Vincent, 2003; Bernier, unpublished). On the other side, the European Union tends to carve out the audiovisual sector from its preferential agreements on services trade and to include specific sections to promote cooperation on cultural matters. This approach has been recently reinforced in the view of implementing the UNESCO Convention on Cultural Diversity (see below). To this purpose, the European Union has defined a model of ‘Protocol on Cultural Cooperation’ to be included in trade agreements in order to protect and promote cultural diversity, encompassing also the exchange of goods and services.28
A different vision underlies audiovisual policies within the European Union, where the tradeoff between economic integration and cultural diversity seems to fade away, as the former is seen as a tool for promoting the latter by enlarging market access for national audiovisual products (Formentini and Iapadre, 2009). This apparent contrast between the internal and external aspects of EU audiovisual policies is difficult to manage. On one hand, at the internal level, audiovisuals are a major example of the imperfect stage of EU integration in the services market (Langhammer, 2005), and the Commission strives to remove trade barriers, arousing the opposition of countries and interest groups that see EU integration as a threat to their cultural identity. On the other hand, at the international level, the search for European identity leads the European Union to protect the audiovisual sector, at the cost of disputes with other countries interested in trade liberalization.
Many PTAs contain a chapter on electronic commerce. This clearly represents the introduction of a WTO-plus regulation, as no multilateral arrangement has been achieved so far through the WTO work program on e-commerce, as will be seen in Section 15.5.2.
Another important set of provisions that is increasingly found in PTAs and that is relevant for the cultural industries refers to the regulation of copyright and related rights. In particular, preferential agreements involving the United States and some other recent PTAs contain norms that are clearly TRIPS-plus and reflect the recent trend towards stronger IP protection. Both the United States and the European Union are actively encouraging their trade partners to strengthen copyright regimes and to provide effective measures facilitating their enforcement.
15.5.1.3 The UNESCO Convention on Cultural Diversity
As we have seen, the status of cultural products is a major controversial topic in most trade negotiations, but the trading system is not the only element of the global governance for cultural plurality and controversies arise as to which international jurisdiction is the fittest to rule on this issue.
The idea of a specific international instrument on cultural diversity, proposed by Canada’s Cultural Industries Sectoral Advisory Group on International Trade (SAGIT, 1999), gained growing consensus among governments and social organizations. Negotiations for an international agreement on cultural plurality were undertaken under the aegis of UNESCO, and in 2005 resulted in the approval of the Convention on the Protection and Promotion of the Diversity of Cultural Expressions, which entered into force in 2007.29 Essentially, the Convention encourages cooperation among States and the adoption of all appropriate measures and policies in order to promote and protect cultural plurality, sets guiding principles to establish the framework in which national sovereignty in the cultural field should operate, and provides for a dedicated mechanism for the settlement of disputes (Von Schorlemer and Stoll, 2012).
The major supporters of the Convention have been countries such as Canada and the European Union – the same countries that most strongly opposed the inclusion of cultural products in the WTO regime. Their viewpoint marks a significant change in the international governance of the cultural sector, based on the idea that the discipline on cultural policies should not be provided by trade rules, not even under an exception regime, but by a culture-related institution. In the same way, the tough opposition to the Convention led by the United States, which has not signed it, can be interpreted more as a negative stance on the attempt of setting a cultural institution as the playfield to solve the trade-and-culture dilemma, rather than as a disagreement on its specific content.30
Since its first drafts, concerns have been aroused as to the capacity of the Convention to provide effective governance for international cultural policies (Acheson and Maule, 2004). As a matter of fact, due to the lack of enforceable obligations and to the possibility for Member States to opt out from the dispute settlement mechanism, the Convention has a declarative nature, rather than being the intended binding standard-setting instrument.
Moreover, the UNESCO Convention does not clarify its relationship to other international instruments. This issue was controversial during the negotiations and a clear-cut solution was not reached. The Convention affirms that it is not to be subordinated to other treaties, but at the same time fails to establish itself as a credible autonomous source of international legitimacy for cultural policies.31
15.5.2 Trade Liberalization and Cultural Diversity: Policy Options for the International Community
At first sight, the status of the international policy debate on trade in cultural products seems still polarized on the same issues that have stalled its progress in the last decades. On one hand, proponents of trade liberalization continue to scorn any form of ‘cultural exception’, claiming that international economic integration is a better way to promote cultural diversity. On the other hand, supporters of the need to recognize the specific nature of cultural activities oppose any attempt to extend and deepen their exposure to economic globalization, as well as to strengthen the protection of IP rights. Yet, the situation is different now from what it was in the early 1990s, when the trade-and-culture conflict appeared able to overthrow the Uruguay Round of multilateral trade negotiations. The debilitating stalemate of the Doha Development Agenda arose essentially from conflicts in agriculture and manufacturing, whereas negotiations on services appear less contentious, even if not more productive. The apparent tempering of the quarrel in the WTO could be partly due to the fact that both contenders might be satisfied with the partial results achieved in other areas. The United States, which leads the small group of countries favoring trade liberalization, has concluded and is negotiating a series of bilateral preferential agreements that extend the degree of liberalization of trade in cultural products achieved in the WTO, particularly in the most relevant area of digital services, as we have seen in Section 15.5.1. Canada, the European Union, and the other countries that fear the deepening of international economic integration in the cultural sector, have succeeded in establishing the new UNESCO Convention on Cultural Diversity, which is in itself an important result and could exert some indirect effects on the trade regime. Actually, the European Union has already started to introduce the same approach into its expanding network of preferential trade agreements.
However, tensions remain high in the sensitive area of IP protection, as demonstrated by the European Parliament’s rebuttal of the new plurilateral Anti-Counterfeiting Trade Agreement (ACTA). Here the dividing line is not so much between the US administration and the EU Commission, as between business interests and many organizations of civil society. The digital revolution, which could have helped soften the conflict in the trade regime by showing the irrelevance of some traditional barriers, is in this case playing the opposite role, intensifying the fears about a possible restriction of the public domain for cultural products.
Turning back to the WTO regime, only some of the policy options discussed in the past seem still relevant and feasible.32 A progressive liberalization of trade in cultural services following the approach envisaged in GATS Article XIX does not appear in the cards. Even if the international community might finally find a decent way to conclude the Doha Round, the very limited progress achieved so far in audiovisual services in terms of specific commitments and plurilateral request/offers described in Section 15.5.1 confirms the limitations of what can be obtained at the multilateral table. Symmetrically, a full recognition of a general exemption of cultural products from the WTO discipline, already excluded in the Uruguay Round, is even less credible now.33 Intermediate options proposed in the past, such as the GATS Sectoral Annex for audiovisual services suggested by Acheson and Maule (1999), or the Reference Paper recommended by Messerlin (2000) to distinguish between ‘art’ and ‘entertainment’ cultural services, are in principle still open, but only in the context of a currently far-fetched resurgence of the Doha Round. The same applies to the detailed proposals articulated by Voon (2007, Chapter 6) to modify the GATT and the GATS in order to reach a better balance between the goals of trade liberalization and cultural diversity.
As argued above, cultural policies are affected not only by rules set in multilateral trade agreements but also by other areas of activity of the WTO. Particularly important is the work program on electronic commerce, given the increasing role of digital products in the cultural sector. However, even on this issue it has so far been impossible to reach an agreement going beyond the simple reiteration of the moratorium on the imposition of customs duties on electronic deliveries.34 More progress has been reported in the negotiations for the renewal and extension of the plurilateral ITA, which covers trade in manufactures of fundamental importance for the circulation of cultural products (WTO, 2012).
Another option lies in leaving the current WTO regime unchanged, and hoping that the judicial activity of its Dispute Settlement Mechanism (DSM) will gradually clarify existing uncertainties and strike a balance among conflicting interests. Costs and benefits of this option, in which the DSM fills the vacuum left by the inability of governments to change the rules on trade and culture, are discussed by Sauvé and Steinfatt (2000) and by Voon (2007, Chapter 4). A recent important example, impinging on issues related to personal freedom and public morals, is the dispute between China and the United States over certain Chinese restrictions on imports of cultural goods and services, analyzed by Conconi and Pauwelyn (2011).
The lack of motion in WTO negotiations does not mean that the process of international economic integration is stalled as well. On the contrary, even official documents such as WTO (2011) acknowledge that the actual degree of unilateral trade liberalization in services goes beyond the obligations set in GATS-specific commitments. In other words, similarly to what happens for the difference between bound and applied tariffs in merchandise trade, a certain degree of ‘water’ in GATS commitments signals the policy space that some governments wish to retain for their domestic measures.35 Part of this margin can be used in the negotiation of bilateral trade agreements, where it is traded against preferential access to the markets of partner countries. According to Roy (2008) this explains why persistent problems in multilateral negotiations could encourage a further extension and deepening of preferential trade agreements covering audiovisual services, even if this should imply lower possibilities to protect their cultural specificity.
To what extent this bargaining game will be influenced by the UNESCO Convention on Cultural Diversity is an open question. As anticipated by Acheson and Maule (2004), the enforceability of its commitments appears weak, given the indeterminacy of the resulting expected benefits for member parties and the lack of a credible dispute settlement mechanism. Moreover, its relationships with other international agreements, including in the trade area, have not been specified. Thus, regardless of its possible benefits in the cultural domain, the Convention does not appear able to establish a solution for the global governance problems of the trade-and-culture nexus (Burri-Nenova, 2008, 2010) that would necessarily require a change in WTO rules. However, its existence is not irrelevant for the future evolution of this regime. As argued in Iapadre (2004), since future liberalization commitments in any sector are the result of a bargaining game among different interest groups within each country that underlies the exchange of reciprocal concessions at the international level, supporters of cultural protection could try to use the Convention to strengthen their position with respect to other services sectors resisting liberalization. In fact, according to Voon (2007, Chapter 5), instead of stimulating a proper solution of outstanding problems in the WTO regime, the Convention could exacerbate the tension and reduce the possibility of reaching an agreement.
15.6 Conclusions and Suggestions for Future Research
After being for years a source of divisive political debates in the international community, the topic of the interactions between globalization and cultural diversity is gaining wider attention in the academic economic literature. This chapter has offered an overview of a set of recent contributions aimed at better understanding the linkages between trade and culture using the lens of economic theory. The main common insight is that imperfect competition and network externalities in consumption define a framework in which it is possible to show that international economic integration can lead to market concentration and cultural homogenization. In some cases, and under specific qualifications, some forms of ‘efficient protection’ of the cultural sector may increase economic welfare. In other cases free trade remains the optimal policy, even if it entails some costs in terms of cultural diversity. Heterogeneous cultural preferences may be considered among the exogenously defined determinants of market equilibrium. Alternatively, their evolution may be modeled as the endogenous result of market adjustment to trade liberalization.
This literature is part of a more general trend toward recognizing the cultural roots of many economic phenomena, as well as acknowledging the great economic relevance of many cultural activities. Its dominant flavor is obtained by blending some assumptions used for years in communication studies, such as the concept of cultural discount, with the modern theory of trade under imperfect competition based on increasing returns to scale and product differentiation. Consumption network externalities have been used to give a more rigorous foundation to the assumption of differentiated cultural preferences, paving the way to an economic understanding of the dynamics of cultural identities.
Following Melitz (2003), trade theory is currently characterized by a new change of paradigm centered on the assumption of heterogeneous agents. It is therefore natural to point in this direction when looking for promising avenues of future research on trade and culture.36 Selection effects among producers characterized by different levels of productivity, which are at the core of these models, reveal additional dynamic gains from trade liberalization but could be used also to better model its possible adverse effects on cultural diversity.
Empirical research on trade and culture lags behind theoretical developments, hampered by the difficult problems of measuring the evolution of cultural preferences. However, new sources of data and directions of research are emerging in this area as well.37 An empirical approach that looks promising is based on the application of the statistical tools developed in social network analysis to the study of trade in cultural products. The network analysis of the world trade web is producing important insights into its structural features and patterns of change (De Benedictis and Tajoli, 2011). Its application to the cultural sector can help understand the topology of its specific networks and the presence of preferential linkages and/or core–periphery patterns.38
The normative sections of this chapter have discussed from different perspectives the options faced by the international community to improve the governance of cultural policies with the aim of striking a better balance between the benefits of market integration and the social value of cultural diversity. Building on the notion of public goods, Kaul et al. (1999) develop a theory of ‘global public goods’, which can be applied to the concept of cultural diversity.39 In fact, cultural plurality, defined as the existence of a number of diverse cultural identities, can be seen as a pure global public good as its benefits are non-excludable, non-rival, and cut across countries, population groups, and generations. This definition can be applied both at the national level within each country, where it calls for the protection of cultural minorities, and in the world system. It is based on a vision of cultural dialog as part of a process of building the social capital of a community (Baker, 2000). Cultural plurality is a supply-side concept, not to be confused with the simple differentiation of cultural preferences, which in principle could be satisfied by a range of differentiated cultural products made by a unique producer. Moreover, cultural plurality should not be confounded with competition in the cultural industry that, although important, does not necessarily ensure a plurality of cultural identities.
The supply of global public goods starts at the national level, but national policies on their own cannot adequately provide for these kinds of goods, and international cooperation is required. According to Kaul et al. (1999), an increase in international cooperation is needed to close the three ‘gaps’ – jurisdictional, participation, incentive – that undermine the provision of some global public goods. As these gaps are present also in the case of cultural plurality, coordination of policies among countries is required. However, the global arena is not the only level at which global public goods such as cultural diversity and economic integration are supplied. The regional dimension is becoming more relevant in the governance of international relations. Neighboring countries facing similar cultural concerns establish agreements and organizations to cope with them. In civil society, a broad range of regional associations operating in specific fields are including the protection and promotion of cultural diversity among their goals.
Preferential trade agreements, which are increasingly perceived as powerful although controversial tools to promote international integration, deal with the trade-and-culture dilemma as well, establishing different regimes for the governance of cultural diversity, going from an integral ‘cultural exemption’ to a broad liberalization of trade in cultural products. While GATS negotiations in audiovisual services in the Doha Development Agenda have not reached substantial progress, the different two-level game of trade negotiations at regional level seems to allow for new solutions. However, even if PTAs can partially act as a laboratory suggesting better practices to address the international governance of cultural policies, a comprehensive and consistent solution is needed at the multilateral level in order to avoid dangerous clashes between coalitions led by hegemonic players. The UNESCO Convention on Cultural Diversity is an important achievement of the international community, but it cannot solve these problems. A coherent and credible balance between the different positions can only be found by improving the WTO regime.
The digital revolution is displaying daily the great cultural and economic value of social exchange, reinforcing the traditional belief that international integration is a powerful engine of cultural diversity. This does not detract from the need to consider carefully its possible adverse effects on some cultural production, and to adopt appropriate protection policies. Yet, it is possible to hope that the public debate on these issues has reached a phase in which the complementarity between the two global public goods of cultural plurality and international economic integration, and their role in sustaining the progress of societies, are becoming more evident.
Acknowledgments
The author wishes to thank Americo Beviglia Zampetti, Cristina Castelli and Silvia Formentini for their valuable help in various phases of this research project.
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1For a discussion of the relationships between the UNESCO Convention, copyright, and cultural diversity within the world trading system, see Macmillan in Chapter 16 of this volume.
2Data on international trade in creative goods and services, as well as in related industries, is readily available at: http://unctadstat.unctad.org/ReportFolders/reportFolders.aspx?sRF_ActivePath=P,10&sRF_Expanded=,P,10.
3Disdier et al. (2010a,b) show that exposure to foreign media actually changes cultural choices, as reflected in the naming behavior of parents.
4Mayda and Rodrik (2005) analyze large-scale opinion polls, showing that strong communitarian or patriotic feelings tend to be associated with protectionist attitudes.
5See, for example, UNESCO (1995).
6Examples include Bhagwati (2000) and the well-known textbook International Economics: Theory & Policy by Krugman et al. (2012, p. 284).
7The relationship between cultural and institutional differences across countries, comparative advantage, trade, and factor market integration is explored by Belloc and Bowles (2009).
8A more detailed analytical survey of the literature on trade and cultural diversity is provided by Bisin and Verdier in Chapter 17 of this volume.
9This cost advantage may be exploited also with price discrimination practices across different markets, taking the shape of a ‘cultural dumping’ (Bernier, 1998).
10The cultural discount can also be related to the addictive character of art consumption, as highlighted by Schulze (1999).
12http://home.gwu.edu/~smsuran/Suranovic-Winthrop.PDF.
13Culture-related arguments have also been used to explain why, when social networks are relevant, trade liberalization may worsen welfare by disrupting interactions among family members in rural areas (Pandey and Whalley, 2009).
14http://ssrn.com/abstract=308484.
15See, among others, Hirschleifer (1977, 1978).
16The distinction between evolutionary selection and cultural transmission is discussed by Bisin and Verdier (2001).
17A general survey of the literature on transnational media management is offered by Strube (2010).
18Baker (1997, 2000) discusses the economic reasons justifying public intervention in cultural markets, related to externalities and public-good properties of cultural products in a context of monopolistic competition, as well as to the market valuation of preferences, and concludes that international trade exacerbates these problems, justifying some form of protection. See also Sauvé and Steinfatt (2000) and Voon (2007, Chapter 2).
19In the view of Cowen (2002), the exchange of cultural products can be seen under the same perspective as other forms of free trade, whose beneficial nature is revealed by the simple fact that they are carried out voluntarily.
20On the economic theory of non-economic objectives, see, among others, Bhagwati and Srinivasan (1969). Winters (1990) applies this framework to the so-called non-economic objectives of agricultural policies, which entail an important cultural dimension.
21Serious doubts on the effectiveness of cultural policies in achieving their specific objectives are expressed by Acheson and Maule (1999) in the case of Canada, and by Messerlin and Cocq (2004) for the European Union. In the case of France, Lalevée and Lévy-Hartmann (2007) show that most of the public support to the movie industry goes to a handful of large firms producing entertainment movies conforming to the Hollywood culture.
22Comprehensive and detailed presentations of the WTO system for cultural products are offered by Beviglia Zampetti (2005), Van Grasstek (2006), and Voon (2007).
23See http://www.wto.org/english/tratop_e/serv_e/audiovisual_e/audiovisual_e.htm.
24Another culturally relevant sector is that of printing and publishing services, in which specific market access and national treatment commitments are more significant than for audiovisual services. In addition, as reminded by Voon (2007), books and periodicals are generally considered as goods, which are subject to the less flexible GATT discipline.
25A detailed analysis of the first years of WTO negotiations on trade in audiovisual services is provided by Roy (2005).
26In fact the positive list (GATS-based model), found, for example, in Association of Southeast Asian Nations (ASEAN), MERCOSUR (Southern Common Market), and in EU bilateral agreements, follows a mixture of a positive list of commitments, for each sector and for each of the four modes of supply, together with a negative list of non-conforming measures that limit market access and national treatment (Marconini, 2006).
27http://www.coalitionsuisse.ch/doss/unesco_ccd/bernier_us_ftas_and_av_sector1.pdf.
28A Cultural Cooperation Protocol was agreed upon in 2007 with countries of the CARIFORUM (Caribbean Forum) in the context of the EU–CARIFORUM Economic Partnership Agreement (Beviglia Zampetti and Lodge, 2011).
29UNESCO has adopted over the years a series of ‘soft law’ instruments in the field of cultural policies on several aspects, including the promotion of cultural diversity: the Declaration of the Principles of International Cultural Co-operation (1966); the Recommendation Concerning the International Exchange of Cultural Property (1976); the Universal Declaration on Cultural Diversity (2001); the Convention for the Safeguarding of the Intangible Cultural Heritage (2003); and the Recommendation concerning the Promotion and Use of Multilingualism and Universal Access to Cyberspace (2003). Other relevant provisions addressing cultural products and industries within the UN framework refer to the protection of IP rights. This issue is addressed by the UNESCO Universal Copyright Convention (UCC, 1952, revised in 1971) and by a series of conventions administered by the World Intellectual Property Organization (WIPO).
30The implications of the UNESCO Convention for the US movie industry are analyzed by Chiang (2007).
31The relationships between the UNESCO Convention and other parts of international law, including not only the trade regime, but also heritage law, human rights law, and development law, are analyzed by Kono and Van Uytsel (2012).
32See Formentini and Iapadre (2009).
33See the Communication from Hong Kong, Japan, Mexico, Taiwan, and United States, Joint Statement on the Negotiations on Audiovisual Services, stating: ‘… We express great concern over efforts by some key participants in the negotiations to create an a priori exclusion for such an important sector. This is inconsistent with the Negotiating Guideline for the services negotiations of the DDA and with the full and open dialogue on which this institution is based’, Council for Trade in Services, 30 June 2005, TN/S/W/49.
34The complex issues concerning the WTO regime of electronic commerce and their relationships with the ‘digital agenda’ of the United States are analyzed by Wunsch-Vincent (2003, 2005).
35On the role of ‘water’ in GATS commitments, see Iapadre (2005).
36A recent unpublished paper adopting this perspective is by Cole and Davies; http://ideas.repec.org/p/ucn/wpaper/201024.html.
38See Chung (2011) and Moon et al. (2010).
39Francioni (2012) presents an interpretation of cultural heritage as a global public good and discusses its linkages with cultural plurality as well as its implications for the governance of international relations.