Cultural Industries in the Age of Free-Trade Agreements

Hernan Galperin

Abstract: This paper examines how cultural industries have been integrated into different free-trade /regional integration agreements. The cases of NAFTA, the EU, MERCOSUR, and GATT are compared. Each of these trade agreements has combined liberalization, co-operation, and exemption in unique ways, resulting in different policy outcomes. Industry structure, domestic communication policies, and cultural factors are explored in order to account for each country's trade agenda and the achievements of regional initiatives in the audiovisual sector. The conclusion identifies several common issues for audiovisual policies in free-trade /regional integration agreements and proposes a framework to renew the debate over cultural trade that goes beyond the free flow of information versus cultural protectionism deadlock.

Résumé: Cet article analyse le traitement accordé aux industries culturelles dans différents accords de libre échange régionaux. Il compare l'ALENA, l'Union européenne, le MERCOSUR et le GATT. Chacun de ces accords commerciaux présente une combinaison particulière de libéralisation, coopération et exemptions, et mène à des politiques différentes. La structure industrielle, les politiques de communication et les facteurs culturels servent à expliquer les différences entre les objectifs de ces politiques, et les résultats des diverses politiques régionales dans le secteur audio-visuel. La conclusion identifie les problèmes communs confrontés par ces politiques audio-visuelles dans le cadre des accords de libre échange régionaux, et propose un cadre permettant de renouveler le débat sur le commerce des biens culturels afin de dépasser les blocages résultant de l'opposition actuelle entre libre échange et protectionnisme culturel.

Introduction

The globalization of cultural industries is hardly a new phenomenon. International trade in films and television programs largely precedes the recent wave of free-trade and regional integration agreements. Even before the first major international trade liberalization accord was signed in 1947 (the original General Agreement in Trade and Tariffs, GATT), foreign markets accounted for roughly half the revenues of Hollywood's "major" studios (Wildman & Siwek, 1988). Nonetheless, audiovisual industries are one of the most controversial issues in regional integration processes. Tensions between cultural products or services and these integration initiatives are readily observable in free-trade agreements. No other industry has been the subject of more exceptions and qualifications to free-trade principles, despite the present unchallenged reign of the neoliberal dogma among policymakers of most quarters. Annexes and side-agreements abound in references to communication industries, limiting trade liberalization and investment across borders.

The reason audiovisual industries raise so much controversy about the scope and legitimacy of integration processes is because trade in cultural goods brings to light different conceptions about the nature of economic development, cultural artifacts, and issues of collective identity. In other words, international trade in audiovisual industries stands at the crossroads of multiple intellectual and policy cleavages. Should free-trade principles be extended to the film, publishing, or broadcasting sectors, or should cultural industries be granted special treatment in trade liberalization agreements? Is it possible to draw a line between legitimate and illegitimate cultural trade? Should national governments or regional bodies be allowed to protect or subsidize these industries? If so, on which grounds, to what extent, and with what policy instruments?

This paper investigates how these questions have been answered, and the policies and legal formulas implemented accordingly, in different regional integration as well as international free-trade agreements. It analyzes audiovisual industries policy within the trend toward trade liberalization and regional co-operation between countries, and the ways in which different actors (national governments, audiovisual producers, and audiences) have responded and adapted to these changes in the global economy of communication. The analysis focuses on three regional trade agreements, the North American Free Trade Agreement (NAFTA), the European Union (EU), and the Mercado Común del Sur (MERCOSUR), as well as GATT and its most recent offsprings: the General Agreement of Trade in Services (GATS) and the Agreement on Trade-Related Intellectual Property Rights (TRIPS).

This paper contends that three factors define the way in which the tension between economics and culture intrinsic to audiovisual trade has been reconciled in each of the agreements. These are: industrial profile, domestic communication policies, and "cultural distance." The first refers to the distribution of economic and political resources among the trading partners' audiovisual industries. The second concerns the domestic regulatory framework for communication industries within each country, which comprises audiovisual, telecommunications, and cultural policies. The third, cultural distance, refers to barriers in language, viewing habits, and genre preferences that hamper cultural products flow between two given nations. It is based on the assumption that, given equal quality choices, audiences tend to prefer programs rooted in their own culture because, otherwise, "viewers find it difficult to identify with the styles, values, beliefs, institutions, and behavioral patterns of the material in question" (Hoskins, Finn, & McFadyen, 1996, p. 68). However, it is important to note that cultural distances do not coincide with national borders. As Collins (1991) puts it, audiences "are constituted as often horizontally, across national boundaries, as they are constituted vertically, within national boundaries" (p. 231). In addition, these barriers are not given once and for all, but are historically dependent on a variety of socio-economic factors (i.e., industry structure, demographic changes) bearing on viewers' day-to-day choices (Straubhaar, 1991). In other words, cultural distance refers not to essential traits separating peoples but to a set of cultural practices relating to the constitution of audiences within as well as across borders.

In the first section, the characteristics of audiovisual products and the impact of recent changes in communication technologies, market structure, and regulatory regimes on the international film and television markets are briefly recounted, laying out the theoretical and historical framework for the following sections. Then, each agreement is analyzed separately. The conclusion attempts to integrate these analyses comparatively, bearing in mind that although the agreements share the goal of liberalizing trade, each is different in terms of scope, institutions, and historical development. It should be noted that while occasional references will be made to other sectors, this study primarily focuses on the television industry, which is not only the most important in economic terms but has arguably raised the most controversy.

Audiovisual products and the commodity fiction

At the heart of the discomfort between free-trade and cultural industries are the difficulties in extending what Polanyi (1957) called the "commodity fiction" -- the subjection of all production activities to the supply and demand mechanism -- to the production, distribution, and consumption of symbols in capitalist societies. Audiovisual products bear distinctive -- although not unique -- economic as well as socio-cultural characteristics that explain the plethora of regulations and extra-market arrangements characterizing media industries.

First, audiovisual production cannot be fully serialized. Films and television programs require a proper mixture of novelty and repetition within established genres, but even in the most rigid of those demand is unpredictable. Every product is, in a sense, a prototype carrying substantial R&D costs; cultural commodities thus have high first-copy costs and minimal reproduction costs, a situation in which audience maximization is the most rational strategy for profit-driven producers (Hoskins, Finn, & McFadyen, 1996; Wildman, 1995). In addition, audiovisual products bear public-good characteristics (non- depletability in consumption and difficulty in excluding consumers), demanding a number of arrangements, such as control of access, built-in obsolescence, and the creation of property through copyright laws, in order to secure the realization of their exchange value (Garnham, 1990). This public-good character, coupled with the increased availability of reproduction technologies, explains why international enforcement of copyright laws has become such a central concern to audiovisual producers and, as discussed below, has now been incorporated into international trade legislation through TRIPS.

Second, audiovisual industries carry manifold socio-political implications. Cultural products are central to the reproduction of identities and the forging of social bonds, whether at the individual, group, national, or regional level. As many scholars have argued, media industries were instrumental in creating the "imagined communities" we live by today (Anderson, 1983). Communication industries also carry lofty political implications because it is through them that public discourse circulates in modern societies. Questions of media access, diversity, ownership, and content regulation define the type and quality of public sphere at work within a nation or region.

In sum, while the economic characteristics of audiovisual products drive producers toward audience maximization strategies, of which foreign sales are an integral part, their socio-political implications raise manifold controversies to cross-border trade in the sector. It is as if at both ends of the supply chain audiovisual products and services are irreducible to the commodity fiction logic (because, on one end, production cannot be fully serialized and, on the other, consumption has, in economics jargon, several "positive externalities"). As a result, their incorporation into free-trade agreements becomes a delicate policy matter. Before turning to the case studies, I will first examine recent technological, industrial, and regulatory changes that have radically altered the context in which cross-border trade and investment in cultural industries takes place, changes that are creating new scenarios for both media companies and regulatory bodies, national and regional.

New scenarios in audiovisual trade

If, as noted above, globalization is an old game for audiovisual producers, it must be recognized that the rules of this game have undergone major transformations since the days of the old Hollywood studio system. International trade in film and television programs has grown exponentially in recent years: foreign sales of U.S.-based media companies, the leading audiovisual exporters, doubled in only four years, from U.S.$3.5 billion in 1987 to U.S.$7 billion in 1991, generating a trade surplus second only to aerospace (U.S. Department of Commerce, 1993). In addition to the growing stakes at play, technological innovations, industry realignments, and regulatory changes have overhauled the dynamics of this game, creating new trade patterns and scenarios in the sector.

Technological developments in audiovisual production and telecommunications have worked in two directions. On the one side, as a result of innovations in distribution and digital compression technologies, the number of outlets available for audiovisual products has increased dramatically, thus increasing the demand for content to fill in these new distribution channels. This mushrooming of channels through cable television, Direct Broadcast Satellite (DBS), or Multichannel Multipoint Distribution Service (MMDS, also known as wireless cable) technologies has shifted the market from a situation of spectrum scarcity to one of content scarcity (Hoskins, Finn, & McFadyen, 1996). This change has, by and large, favoured U.S.-based companies since they not only are better positioned to undertake new content productions (due to economies of scale and established distribution networks) but also own enormous libraries of readily available products marketable at relatively low costs. On the other hand, costs for low-budget productions have fallen sharply due to the use of video technologies, allowing a plethora of small producers to compete in highly fragmented markets of programming for segmented or specialized channels.

Partly cause and partly consequence of these technological innovations, media regulation policies have also seen major changes in recent years. Driving these changes is a general process of deregulation and diminishing public intervention in audiovisual markets. This trend has taken various forms and has been implemented through different policy instruments across countries, reflecting differences in the existing regulatory environment and structure of audiovisual markets. In the U.S. case, where a commercial media system was already in place, recent regulatory changes have eased ownership restrictions and performance requirements, thereby invigorating the trend toward industry concentration and convergence of the media, computer, and telecommunications sectors. In the case of Western Europe, deregulation has broken up public monopolies through privatization of public networks and the entrance of new competitors, particularly in the new distribution outlets such as cable television and Direct Broadcasting Satellite (DBS). In Latin America, deregulation has progressed at different paces across countries, combining the privatization of public networks (for example, telecommunications and television networks in Argentina and Mexico), the opening of market entry (pay-television in Brazil), and fewer regulations on ownership and performance requirements.

Finally, industrial realignments have created a new organizational structure in audiovisual markets, characterized by three interrelated phenomena: internationalization, concentration, and convergence of sectors. The most obvious result of these realignments has been the consolidation of multimedia conglomerates with interests in multiple countries and industries, through both vertical and horizontal integration. These corporations and their lobbying associations are now powerful players in communication policy, often working hand-in-hand with governments to either curb or enforce regulations on international audiovisual trade (Ferguson, 1995). As the case studies below reveal, conflicts over cultural industries in free-trade agreements, whether in regional or international forums, often amount to little more than corporate wars via other means, namely, intergovernmental arbitration.

As a whole, these transformations have resulted in new national, regional, and international competitive scenarios in audiovisual markets. The multiplication of outlets, the new regulatory environment, and the emergence or expansion of media conglomerates (based in developed as well as Third World nations) has both fostered the existing trade and investment flows and created new ones. As Sinclair, Jacka, & Cunningham (1996) describe it, the picture today, particularly in the television industry, is not of a single worldwide market dominated by a few American players, but rather of dynamic geolinguistic markets with their own centre-periphery as well as their own global ties. It is with this background in mind that the issue of audiovisual industries in regional integration and free-trade agreements is analyzed in the next sections.

Balancing integration and diversity: The case of the European Union

Of all regional integration agreements in place to date, the European Union (EU) is clearly the most ambitious. Trade liberalization is only one among many of its goals, which include full monetary, and partial political and cultural, integration. Under such a program, audiovisual industries raise the question of squaring trade liberalization with cultural diversity. As we shall see, the interaction between economic integration and local cultural consumption patterns has proven more complex than many policymakers imagined, hindering many of the EU's audiovisual policy goals.

"The community shall contribute to the flowering of the cultures of the Member States, while respecting their national and regional diversity and at the same time bringing the common cultural heritage to the fore." This is the mandate enshrined in Article 128 of the Maastricht Treaty (1992) that guides the cultural dimension of the EU's audiovisual policies. On the other hand, the economic objectives of these policies could be summarized as follows: to protect and develop European audiovisual industries through the so-called "Fortress Europe" formula, namely, open frontiers within, protectionism from outside. According to the Television Without Frontiers Green Paper (Commission of the European Communities, 1984), balancing economic integration and cultural diversity was far from problematic because liberalization of audiovisual services within the EU would bring the "common European heritage" to the fore and thus create a single European Audiovisual Space in which pan-European broadcasters would compete for the attention of a regional audience. This unified market would in turn provide the economies of scale needed by audiovisual producers to compete with the U.S.-based media conglomerates, both within and abroad.

This premise is imbedded in the 1989 Directive on Broadcasting (Commission of the European Communities, 1989), one of the key documents in the EU's audiovisual policy. This Directive sets forth two main goals: (1) to abolish restrictions to the free flow of broadcasting services within the EU and (2) to harmonize national regulatory frameworks. It basically liberalizes broadcasting services and encourages the commercialization of national broadcasting systems and the formation of large multimedia conglomerates within the Community, without imposing public-service obligations on broadcasters -- obligations that have historically characterized media policy in Western Europe. By integrating markets, the Directive seeks to enhance the global competitiveness of large European audiovisual producers.

Among the few obligations laid down by the Directive are the controversial content quotas for European works stipulated in Article 4, which were the subject of substantial controversy among European policymakers. It was finally established in the Directive that "Member States shall ensure, where practicable and by appropriate means, that broadcasters reserve for European works ... a majority proportion of their transmission time." This feeble wording infuriated the more protectionist front led by France and the European Parliament, which, since then, has been fighting to modify the provision without success.1 Other obligations include a 10% quota for independent productions (the definition of which was introduced by the 1997 amendment to the Directive) and a number of provisions regulating time and content in television advertising.

The 1989 Directive has substantially changed the competitive environment in European audiovisual markets. First, it has, as intended, fostered the formation of pan-European media conglomerates with interests in various industries across national borders. As shown in Table 1, many of these companies (such as Havas or Bertelsmann) now rank among the largest media conglomerates worldwide, rivaling in size and market power those of the U.S. By increasing competition within national markets, the Directive has also eroded the dominant position of public-service broadcasters and created new trade dynamics in the industry. The break-up of public monopolies and the new distribution outlets made available by telecommunication innovations have produced a sharp increase in broadcast volume in Western Europe -- from 205,000 hours in 1985 to 720,000 in 1993 -- as well as in the number of national stations (up from 40 in 1981 to 205 in 1995).2 In contrast, within that same period, available European program supply increased by a mere 60% (European Commission [EC], 1996). The content scarcity created by these changes has increased the incentives to buy inexpensive entertainment material from U.S.-based companies, particularly for the new, privately owned ventures because of their need to offset high start-up costs (Dupagne & Waterman, 1997). For example, Hollywood majors' sales to pay-television channels grew by an average of 32% a year from 1986 to 1996 (EC, 1997b). Finally, the Directive has created a regional regulatory framework, which many national governments find difficult to harmonize with their domestic communication policies.3

Table 1 Top 10 Private Audiovisual Companies (1996)
1995-96 Revenue (U.S.$ millions)
1. Walt Disney Co. (U.S.) 18,949
2. Time-Warner (U.S.) 17,696
3. Bertelsmann AG (Germany) 13,700
4. Viacom Inc. (U.S.) 11,688
5. News Corp. (U.S. / Australia) 9,882
6. Havas (France) 8,800
7. Sony Entertainment (Japan) 7,696
8. TCI (U.S.) 6,851
9. Polygram NV (Netherlands) 5,530
10. EMI Group (U.K.) 5,453

Source: "The Global 50," 1996.

However, the EU's audiovisual policy has been ineffective in overcoming the fragmentation of audiovisual markets in Western Europe. In other words, although the 1989 Directive has changed the competitive scenario within national borders, it has failed to forge a unified market with economies of scale comparable with those available to U.S.-based audiovisual producers. It is important to note that, in theory, a single European market would be almost as large as the American in terms of volume. Yet the idea that the free flow of cultural products would bring to the fore the "common European identity," thus creating a pan-European audience, has proven overly simplistic. As a recent report by the European Commission acknowledges,

the impact of the Single Market has not caused major changes in the television industry. Even though there has been a boost in demand for TV programs, supply of truly European products has been puny due to national markets' fragmentation: the main focus has been placed on satisfying national audiences rather than increasing circulation of European films. (EC, 1996, p. 27)

As Collins (1995) puts it, a naïve technological determinism informs the reasoning that "social and cultural relationships are necessarily shaped by technological change and, specifically, that satellite television will create transnational publics and cultures" (p. 488). It ignores first and foremost the cultural distances that separate European audiences. "Europe" is in fact a patchwork of publics with different languages, viewing habits, and genre tastes. The diversity of languages serves as a good example. Moeglin (1992) reports that in 1991 there were more than 13 national or regional broadcast languages in the EU, although 2 languages, French and English, prevailed. Films lead the ratings in France, dramas do so in the U.K., while Italians prefer sports and variety shows. As a German industry executive puts it, "European audiences tend to tune in to either homemade or US programs, not to other European shows" (Meza, 1996, p. 26).

Cultural distances are also apparent in figures for audiovisual trade within the EU. A report by the European Commission (1996) estimated intra-EU trade in film and video in 1992 at ECU 150 million, a tiny fraction of the U.S.$5 billion that flowed from the U.S. to the EU in the same year (see Table 2). The share of market of European films varies from 22% in France and Spain to as little as 3% in the United Kingdom, while an estimated 80% of the films produced every year in the EU never leave their country of origin (EC, 1997a). In sum, the project of a single European audiovisual market has been hampered by the diversity of cultural patterns within the region. The 1989 Directive has been ineffective to overcome fragmentation into national markets, while programs such as MEDIA (Measures to Encourage the Development of the European Audiovisual Industry) have failed to strengthen the circulation of European works within the continent.

Advocated by the more protectionist front led by France and the European Parliament, the MEDIA plan is the other side to EU's Janus-faced audiovisual policies. Established by the European Commission in 1987, this program attempts to: (1) create transnational synergies to develop the European audiovisual industry, (2) sustain small and medium-size producers through financial and technical support, and (3) promote linguistic and cultural pluralism in the audiovisual offer. The budget of the MEDIA program increased from a modest U.S.$29 million during its pilot stage (1987-90) to U.S.$270 million in the second phase (1991-95), and was later doubled to U.S.$510 million for the current period (1996-2000).

Table 2 EU Trade in Audiovisual Industries with the United States (U.S.$ millions)
1988 1989 1990 1991 1992 1993 1994 1995
Imports 2,337 3,028 3,719 4,200 5,000 5,776 6,036 6,795
Exports 359 404 464 279 300 429 585 532
Balance 1,978 2,624 3,255 3,921 4,700 5,347 5,451 6,263

Source: European Audiovisual Observatory, 1996.

Achievements of the MEDIA program have been, to date, only modest. As shown in Table 2, the European trade deficit with the U.S. in audiovisual industries grew exponentially in the 1988-95 period. In the film industry, where, despite the quotas, the share of European productions has declined steadily in the last decade, the program has somewhat invigorated production, which was up 7.8% in the last year (EC, 1997b). Yet this comeback of the European film industry is only incipient, and probably more a result of the wave of co-production agreements between European producers and the Hollywood majors, and the increased presence of television companies in the film business, than of EU initiatives. With a budget of roughly U.S.$100 million per year (which, for the sake of comparison, is what many Hollywood studios spend on a single blockbuster production), the program, as Bustamante (1994) describes it, suffers from an "absolute lack of resources to make a difference in the audiovisual sector" (p. 240).

The 1989 Directive and the MEDIA program bear witness to the difficulties involved in balancing economic integration and cultural diversity in regional audiovisual policies. While the former attempts to consolidate the global competitiveness of European producers, the latter is aimed at fostering diversity within the media landscape. Yet it is apparent that the EU's audiovisual policy has been more preoccupied with strengthening its audiovisual producers in the face of rapid structural changes in media markets than with promoting a culturally diverse audiovisual offer to its citizens. This is best exemplified by the lack of attention to issues of media concentration, a trend that was actually promoted by the 1989 Directive. Although in a recent document the European Commission acknowledges that industry realignments might negatively impact diversity in the audiovisual offer, it asserts that "safeguarding pluralism of the media is neither a Community objective nor is it in the Community's jurisdiction as laid down by the Treaty of Rome and the Treaty of the European Union" (EC, 1992, p. 59). Whereas some provisions are currently under discussion (see Schlesinger, 1997), European legislation to date contemplates no specific restrictions to media ownership, nor does it lay down regulations to ensure diversity of content at the regional level (Kaitatzi-Whitlock, 1996).

With the apparent failure of the unified audiovisual market project, the EU's audiovisual policy is taking a new orientation. The turn is premised on the idea that with the coming of age of the "information highway" and interactive audiovisual services, Europe's "linguistic and cultural diversity, which has long been seen as a handicap, may turn out to be an advantage in tomorrow's audiovisual environment" (EC, 1997a, p. 4). Technological innovations are expected to shift the industry from massive broadcasting to narrowcasting or customized television. In this new market structure, goes the reasoning, audience diversity turns into a competitive advantage comparable to economies of scale through audience maximization in the old broadcasting era.

This new policy orientation is problematic in a variety of ways. Basically, like the unified market project, it assumes that cultural practices are to a large extent shaped by technological change. The mushrooming of channels has certainly produced audience fragmentation, yet demand for mass-oriented entertainment products remains high. In other words, economies of scale through audience maximization and massive distribution will still be of great importance to the industry. It is therefore unclear how this new orientation will strike a better balance between industry development and cultural diversity. And of these two in-many-ways-contradictory policy vectors, it is the former that has, by and large, defined the shape of the EU's audiovisual policy to date.

Commodifying fiction: The NAFTA

Despite the prevalence of industrial goals over cultural concerns, the EU has set forth a regional audiovisual policy that recognizes the peculiar character of cultural products and its implications for the reproduction of group identities and political allegiances. While in practice economic goals become overriding, there seems to be a consensus among member states for granting a separate treatment to the sector. In this sense, NAFTA stands in sharp contrast to the EU: lack of consensus amongst member-states has left cultural industries, by and large, out of the agreement, although the implicit formula is to treat cultural products like any other commodity.

Negotiations over audiovisual industries in NAFTA revealed the partners' different agendas. As noted previously, audiovisual industries annually bring over U.S.$7 billion in foreign trade to the U.S. The country is host to the two largest private multimedia conglomerates worldwide (see Table 1), leading international trade in cultural products. Several scholars have investigated the reasons for this dominance (e.g., Hoskins & McFadyen, 1991; Wildman, 1995), citing among other factors: economies of scale, first-mover advantages, a competitive environment that favours production for audience maximization, and the fact that English-speaking audiences are, by far, the world's wealthiest (Collins, 1994). In addition, the share of imported films and television programs in the U.S. market is rather minimal and, in fact, has been declining steadily in recent years.4 As a result, the U.S.'s trade balance in cultural products is largely positive, and its trade agenda is thus clear-cut: to eliminate all barriers to the flow of trade and investments in the audiovisual sector. As a report by the U.S. Department of Commerce elegantly phrases it,

By implementing policies that either foreclose competitive entry or raise its costs, governments can, under certain conditions, skew the globalization [of the media] process in favor of firms to which they play host. The United States should work with the governments of other countries to eliminate such policies for the long-term benefit of all countries. (1993, p. 10)

In contrast, Canada's cultural producers hold a relatively weak position in their own domestic markets. Table 3 shows that, when not regulated by content quotas, the percentage of imported products in Canada is above 80% in most sectors, with the notable exception of Quebec, where language and cultural barriers, coupled with strong provincial policies, keep imports lower. With 80% of the population living within 100 miles of the American border, no language barriers (again, excepting Quebec), and minimal cultural distances, U.S. products flow smoothly to the northern neighbour. Although heavily subsidized by a proactive cultural policy, and in some cases protected by content quotas, local productions have a small market share in most Canadian audiovisual markets (Tremblay, 1997). In short, the unrelenting flow of American products into its cultural markets (fueled by similarities in language, genre preferences, and viewing habits among audiences), coupled with a long-standing public-service-oriented broadcasting policy, explains Canada's cultural protectionism agenda in trade liberalization negotiations.5

In contrast to Canada, the issue of cultural industries only ruffled some feathers among Mexican negotiators. When asked whether his country feared that the inclusion of cultural industries in the agreement would affect Mexico's national identity, Mexico's chief NAFTA negotiator replied rather arrogantly that the issue "has little relevance for Mexico" and that, given Mexico's cultural heritage, "there is no cause for concern" (cited in García-Canclini, 1996, p. 143). Three factors help understand the difference between Mexico's and Canada's agenda over cultural industries in NAFTA: industry profiles, recent changes in Mexico's communication policies, and issues of cultural distance between Mexico and its northern neighbours.

To begin, Mexico is, compared with Canada, less inundated by foreign cultural products, particularly in the broadcasting sector (see Table 3). Furthermore, a few Mexican companies have consolidated into large multimedia conglomerates, controlling a large share of the domestic audiovisual market, and are well positioned as content exporters. The best-known example is the Televisa group which, through its close ties with Mexico's ruling party, has developed into the second-largest media conglomerate in Latin America. Integrated both vertically and horizontally, with interests in television broadcasting (four national networks), radio, DBS, cable television, film, video, publishing, and investments in the U.S., Chile, and Peru, Televisa exports to more than 55 countries and is the world leader in telenovelas production, the staple genre of Latin American television (Paxman, 1997a).

Table 3 Percentage of Imported Content in Cultural Markets
U.S. Mexico Canada Quebec
TV Networks 2 30 50a 27a
Film 1 80a 95 95
Books (bestsellers) 14 n.a. 80 60
Records n.a. n.a. 89 75
Video n.a. 80 95 n.a.

a Content regulated by quotas. Sources: Hoskins, Finn, & McFadyen, 1996; Martin, 1996; Sanchez-Ruiz, 1996.

Issues of cultural distance also affect the agenda of Mexican officials in trade negotiations. As argued above, audiences are many times constituted horizontally, across national boundaries. In this sense, the U.S.-Mexico relation is a case in point. While American television products face not only language but also content and genre barriers in Mexico, where audiences prefer telenovelas and other local productions (Alva de la Selva, 1996; Lozano, 1996), there are over 30 million Hispanics in the U.S. who maintain strong cultural ties to their countries of origin and are far wealthier than Mexican audiences. Televisa was a pioneer in this market, both as direct investor and content provider. The company controlled the U.S. Spanish-speaking broadcasting business through a subsidiary (Spanish International Network) until 1986, when the FCC found Televisa in violation of foreign ownership rules and forced it to divest. Today, Televisa is a minority shareholder in the leading Spanish-language network, Univisión, providing 51% of the programs broadcast (Paxman, 1997a), and offers its pay-television channel Galavisión in most U.S. markets through cable television and DBS services.

Mexico's media regulatory environment has undergone major transformations in recent years, under the neoliberal turn adopted by the ruling Mexican party, the PRI. As Crovi-Drueta (1997) points out, NAFTA is not a starting but rather an endpoint to Mexico's new communication policies, which are based on three pillars: privatization of national networks, deregulation of audiovisual markets, and diminished public intervention in the production and distribution of audiovisual products. Before the signing of NAFTA, the national telephone company and two national television networks were privatized (in 1990 and 1993 respectively), and new film legislation was passed (in 1992) that reduced public intervention and regulation over the industry. In addition, a year after NAFTA went into effect, Article 28 of the constitution was modified allowing foreign investments in Mexican media companies up to 49%. Finally, in 1997 the federal law on intellectual property was modified, aligning the legislation with that of the U.S. and Canada.6

In short, a combination of relatively strong domestic industries, the limited appeal of American products in some sectors due to cultural distance factors, and the neoliberal orientation of its communication policies explains Mexico's agenda regarding cultural industries in NAFTA. Canada's overall cultural exemption did not make sense to Mexican negotiators, who thought not only that the country was rather resistant to the inflow of American products, but that, given the opportunities offered by the U.S. Spanish-speaking market, it could even benefit from trade and investment liberalization.

As a result of these different agendas, a double standard was set within NAFTA. Annex 2106 establishes that, between the U.S. and Canada, cultural industries are exempted from the agreement, an exemption that dates back to the 1988 Free Trade Agreement between the two countries (Mosco, 1990). Canada also keeps the right to review any investment (regardless of its amount) "relating to Canada's cultural heritage or national identity" (chap. 11, annex I). In the case of Mexico, cultural industries are regulated by NAFTA provisions, though this country takes minor exemptions such as a 49% limit to foreign investments in audiovisual industries (which required the above-mentioned change in Article 28 of the Mexican constitution) and a 30% content quota in theatres for Mexican films (which not only was never enforced but, as established by the new film legislation passed in 1992, gradually decreased to 10% in 1997).

The long-term viability of this double standard in NAFTA is unclear, particularly because Canada's cultural exemption is under heavy crossfire both from within and outside. Recent cases of cultural protectionism affecting U.S. interests have created increased pressure on the American government to retaliate. And given that the U.S. accounts for 80% of Canada's overall exports, retaliation threats are not taken lightly within the Canadian front. There is also legitimate concern that Canada's protectionist rhetoric predominantly serves the economic well-being of domestic media companies rather than its citizens (Raboy, Bernier, Sauvageau, & Atkinson, 1994), a point I will resume in the conclusion.

In retrospect, NAFTA has not significantly altered the structure or functioning of audiovisual markets in the region. While Canada succeeded in carrying over the cultural exemption negotiated with the U.S. in 1988, Mexico evolved into the agreement as part of a larger restructuring of its media and telecommunications industries. What should be noted, in contrast to the EU, is that neither regional bodies nor co-operation projects to stimulate audiovisual industries can be found in the NAFTA agenda, mainly because its general purpose was limited to the creation of a free-trade zone. It is in this sense, and mostly by omission, that NAFTA legitimizes the commodification of culture, largely ignoring its socio-cultural implications.

Cultural industries in the MERCOSUR agreement

In economic terms, MERCOSUR represents the most successful regional agreement in the long and winding history of less-than-successful integration projects in Latin America.7 Begun in 1986, when long-time rivals Argentina and Brazil signed the Economic Cooperation and Integration Program (PICE), the project later expanded to include Uruguay and Paraguay, and finally consolidated when these four countries signed the Asunción Treaty in 1991.8 According to the text of the treaty, the main goals of MERCOSUR are: (1) to create a free-trade zone by eliminating tariffs and non-tariff barriers, (2) to establish a common external tariff, (3) to co-ordinate macro-economic and sector-specific policies, and (4) to harmonize national regulatory legislations. In pursuit of these objectives, an institutional structure was established (and later expanded by the Ouro Preto Protocol in 1994) consisting of two main organs: the Consejo del Mercado Común (CMC) -- the ruling, legislative organ -- and the Grupo del Mercado Común (GMC) -- the executive organ. Decisions of both the CMC and the GMC are binding to member-states.

Few references to cultural industries exist in MERCOSUR legislation. One of them appears in the agreement to liberalize cross-border investment, the Colonia Protocol (1994). In this Protocol, partners agree to give national treatment and open markets to other member-states' investments and investors. Yet, as in the case of NAFTA, cultural industries were largely excluded from investment liberalization. Article 2 of the Annex specifies each country's exemptions to the protocol: Brazil excluded its radio, television, and telecommunications industries; Paraguay and Uruguay both exempted their radio, television, publishing, and telecommunications sectors; Argentina, whose government has embraced a more open policy toward foreign investors, did not make any exemptions in the communications sector.

Co-ordination of cultural policies, on the contrary, has been the subject of considerable debate within MERCOSUR. The Cultural Integration Protocol, approved by the CMC at the end of 1996 (CMC, 11 / 96), seeks to provide the legal framework for cultural integration within the bloc. Like EU legislation, this document recognizes that "culture constitutes a fundamental element of integration processes" and establishes that "member-states will seek to promote cooperation and trade between their cultural institutions and agents" (Article 1), with priority given to those ventures that "express the historical traditions, the common values and the diversity of member-states" (Article 2).9 The main initiatives carried out in the context of the Cultural Integration Protocol were: (a) a special customs treatment for cultural goods (the so-called "MERCOSUR Cultural Seal"), which allows the free circulation of goods destined to exhibition at cultural events (basically favouring exhibition and performing arts); (b) a fellowships program; (c) an exchange program for young writers; (d) itinerant photograph and cartoon exhibitions; (e) co-financed editions of writers from the four partners; (f ) the "MERCOSUR Cultural House" in Colonia, Uruguay; and (g) other initiatives relating to the preservation of the "common cultural patrimony."

While the Protocol explicitly mentions the audiovisual sector as one of its focus areas, the above review of the projects undertaken to date suggests that mass-produced audiovisual products -- the real locus of cultural integration in the region -- have been, by and large, left unattended. This is symptomatic of the cultural policies that have characterized Latin America for decades, which focus either on the so-called "high arts" (painting, literature, art-cinema, or performance arts) -- for the most part consumed exclusively by a small "educated" minority -- or on preservation of the "cultural patrimony," hence neglecting the bulk of mass-media production carried out by the private sector (Miceli, 1987). Interestingly, it was precisely this disregard for private cultural producers that led to the failure of a number of previous pan-Latin integration initiatives in the audiovisual sector.

In the late 1970s, fueled by the UNESCO-sponsored debates on the so-called New World Information and Communication Order, a plethora of co-operation projects such as ASIN (a pool of national news agencies), ALASEI (a pan-Latin news agency created with the support of UNESCO), and ULCRA (an entity grouping Latin American non-commercial broadcasters) were started in the region. As Roncagliolo (1996) asserts, "the majority of these efforts have had little relevance in the long term, or have failed altogether, because they privileged the role of the states and supranational entities" (p. 48, author's translation). In other words, in a region where, for better or worse, the American model of commercial broadcasting has, by and large, prevailed from the outset, audiovisual policies hinging on the financial and political support of governments, and which fail to include the private sector, are doomed to have limited impact on the region's media landscape.

Despite the lack of attention to audiovisual industries in MERCOSUR legislation so far, a look at the three explanatory factors used in this study (industry profile, domestic cultural policies, and cultural distance) reveals the obstacles and challenges that an agenda for audiovisual policies in MERCOSUR is likely to face. With regards to industry profile, what first strikes the observer is a broad disparity between Brazil and Argentina, on the one side, and Paraguay and Uruguay on the other. Brazil and Argentina have developed complex cultural industries, particularly in the television sector. Both countries have shifted from net importers of television content in the 1970s and early 1980s to net exporters, locally producing most of their prime-time programming (Marques de Melo, 1995; Roncagliolo, 1995; Straubhaar, 1991). Brazil had an earlier start, as illustrated by the case of TV Globo. This network was founded in 1964 by newspaper-magnate Roberto Marinho and developed under the benevolence of Brazil's military regime (1964-85), which paid for much of the communication infrastructure needed to create a national audience. TV Globo is today part of the largest media conglomerate in Latin America, with interests ranging from newspapers to radio, magazine and book publishing, records, cable television, and DBS.

In comparison, Argentina's audiovisual producers evolved more recently. It was only in 1989, with the sweeping changes brought by President Menem's neoliberal policies, that modern media conglomerates started developing in the country. Among these changes were the privatization of two national networks and the elimination of the prohibition of publishing company entry into broadcasting. The beneficiaries of these privatizations were Grupo Clarín -- publisher of Clarín, the world's largest-circulation Spanish-language newspaper and, at present, the third largest media conglomerate in Latin America after Globo and Televisa -- and Telefé, a consortium that included, among other partners, Editorial Atlántida, a leading magazine publisher. With renewed capital availability, these networks have since grown rapidly, expanding their production and distribution facilities. Currently, local productions have almost completely displaced imported programs from prime-time slots and both networks are successfully exporting their telenovelas, comedies, and variety shows, particularly to neighbouring countries such as Chile, Paraguay, and Uruguay, with which cultural and language barriers are minimal.10

However, as in the case of Mexico, the strength of the television sector is not representative of all audiovisual industries in Brazil or Argentina. Film production remains particularly weak in both countries, with imported productions accounting for more than 85% of the films shown in theatres and over 90% on television (Boletin IC, 1996). Yet the local industry seems to be regaining momentum in both markets, revitalized by new legislation and tax incentives for domestic productions, and a new relationship between the film and the television sectors.

Audiovisual production in Paraguay and Uruguay is, by contrast, highly limited. This is hardly surprising since economic analyses of cultural production consistently demonstrate that the capacity of domestic cultural industries is directly related to audience size, GDP, and overall resources allocated to the audiovisual sector (Waterman & Rogers, 1994). What is interesting to note is that in both markets the inflow of American products has been decreasing steadily since the early 1980s, gradually being replaced by Latin American imports, while the share of domestic products has remained small. With limited domestic markets, relatively few protectionist barriers, and scarce public subsidies, Paraguay's and Uruguay's cultural industries are of an artisanal character when compared with those of Argentina or Brazil, particularly in the television industry where imported programming accounts for 70% of the total broadcast volume (Boletin IC, 1996).

The flow of Argentinean and Brazilian audiovisual products into Paraguay and Uruguay is also nourished by negligible cultural distances between the four MERCOSUR members. Of the three trade blocs analyzed here, this is the region where national audiences are most similar in terms of viewing habits and genre preferences. In the case of Argentina, Uruguay, and Paraguay, there are minimal language barriers. A shared cultural ethos and regular immigration flows have also played a role in bringing their popular cultures closer. The language barrier certainly imposes a competitive handicap on Brazilian audiovisual producers. Yet first-mover advantages, the high quality of its products, and an aggressive pricing policy have secured demand for Brazilian productions throughout Latin America, particularly in markets mostly dependent on imports such as Paraguay and Uruguay.11 As Waterman & Rogers (1994) note, television program flows within Latin America are intense, particularly when compared with Western Europe or other Third World regions such as Southeast Asia. The mushrooming of pan-Latin pay-television channels (74 in 1996) (Variety, 1996), most of them originating within the region, also speak to the ever-increasing constitution of transnational publics in this continent. To summarize, in contrast with the EU, audiovisual markets in the MERCOSUR region have become increasingly integrated over the last decade -- even in the absence of national or regional public policies in this direction. As Waisbord (1996) notes, in terms of cultural industries, the MERCOSUR agreement follows rather than leads the integration effort in which the private sector was already engaged.

It should be recognized that MERCOSUR's cultural industries policy is still in blueprint inasmuch as, first, it was only in 1995, upon the creation of the Ministries of Culture Meeting (CMC, 2 / 95), that cultural policies gained recognition in the MERCOSUR institutional structure. Furthermore, key legislation, such as a regional regime for intellectual property rights, is still under negotiation. Lastly, although the recently approved Telecommunications Annex to the Protocol on Trade in Services (CMC, 13 / 97) represents a significant step in the creation of regional communication policies, broadcasting and DBS services were explicitly excluded from its scope of application, as they were in the WTO Telecommunications Annex, discussed below.

To summarize, while audiovisual policy in the MERCOSUR region is still in the making, the above-presented analysis allows for a few conclusions about its viable -- and desirable -- content. Ironically, the foremost challenge in this bloc seems to be designing an integral policy for audiovisual industries, thus avoiding characteristic Latin American cultural policies that, by and large, overlook this sector. And yet, these must not be state-centred policies, which are unlikely to prosper in the MERCOSUR region for two main reasons. First, after the failure of the statist media policies during the 1970s and early 1980s, little political legitimacy remains for direct government intervention in communication industries (Fox, 1988). Public control of the media in Latin America is -- many times legitimately -- perceived as either politically suspect or simply economically inefficient. Second, the financial crisis of the public sector in all four MERCOSUR countries greatly constrains their ability to pursue cultural goals through publicly funded projects such as the EU's MEDIA program. If a lesson is to be drawn from past experiences, the challenge for MERCOSUR policymakers is to co-ordinate audiovisual policies with the private sector. And by private sector I refer not only to the emerging or established media conglomerates but also to the plethora of small, community-based projects that constitute the richness of Latin America's media environment. If policy goals are to be established with regards to cultural industries, steering the private sector, currently the engine of audiovisual integration, towards the realization of such goals appears to be the more realistic policy option.

Global trade village: The GATT, the GATS, and the TRIPS

The world trade legal regime has undergone major transformations since 1947, when the original GATT was signed by 23 countries. Today, over 100 countries adhere to GATT and belong to the World Trade Organization, an association far wider in scope and goals than the original GATT. Although audiovisual industries were, following the original GATT doctrine, excluded from the recently concluded GATT-Uruguay Round negotiations, the analysis of the evolution of the contemporary world trade regime reveals the increased pressure toward cultural trade liberalization exerted jointly by technological innovations and international law.

Free-trade agreements and "cultural exceptions" were literally born on the same day in 1947, when the original GATT was signed. At the time, European film industries were slowly recovering from the devastation of World War II, while Hollywood studios were inundating European screens with over 3,000 films produced during the war (a time of great prosperity for the industry) that had not been released in the old continent. Restrictions on film imports had been enacted as early as 1916 in Germany, with other countries following suit soon thereafter (Mattelart, 1995). These trade barriers were re-established after the war ended in most Western European countries. Thus, when the original GATT was signed, European governments insisted on reserving their right to enforce such trade restrictions.

Article IV of GATT provides that a contracting party may establish or maintain internal quantitative regulations over motion pictures, and that such regulations must take the form of screen quotas and conform to a series of requirements.12 It also allows for other restrictions on cultural trade, most importantly the protection of "national treasures" established in Article XX. Attempts to include audiovisual industries in the ensuing GATT negotiation rounds failed until the launching of the Uruguay Round of talks in 1986, when for the first time service industries were brought to the bargaining table. Disappointed by the exclusion of the cultural sector from FTA with Canada and the establishment of European-wide screen quotas through the 1989 Directive on Broadcasting, American audiovisual producers greeted this change as an opportunity to curb trade barriers and enforce implementation of copyright laws.

Negotiations on service industries, which include audiovisual services, resulted in the General Agreement on Trade in Service (GATS), a treaty intended -- according to its preamble -- "to establish a multilateral framework of principles and rules for trade in services with a view to the expansion of such trade under conditions of transparency and progressive liberalization." The GATS architecture rests on three pillars: (1) a framework agreement, which defines the obligations of member-states; (2) eight annexes, including two on telecommunications services; and (3) schedules of specific commitments by each member-state. It is based on the same governing principles as GATT: most-favoured nation (which provides that members should accord equal treatment to suppliers of all other members), national treatment (each member should accord service suppliers of any other member treatment no less favourable than that it accords to domestic suppliers), and free market access. Unlike GATT, however, GATS limits the obligation to provide national treatment to the sectors that each member inscribes in its own schedule of liberalization. It is thus an "empty shell" with little value in the absence of negotiated commitments by each country to include service sectors in its liberalization schedule (Sauvé, 1995).

The EU, however, led by France, opposed the inclusion of audiovisual industries in GATS. Many legal formulas were sought within the framework of the agreement: a cultural exception clause similar to the U.S.-Canada Free Trade Agreement, or an annex on cultural industries (similar to the telecommunications or financial services ones) recognizing the specificity of the sector -- but these strategies failed. Disagreement over cultural industries between the EU and the U.S. came to a climax in December 1993, a few days before the December 15 deadline, threatening to mar over seven years of negotiations of what became the largest reduction ever in international trade barriers. In the end, an "agreement to disagree" was reached which effectively excludes audiovisual industries from GATS provisions and suspends negotiations for five years (Cahn & Schimmel, 1997). In other words, the EU retained its rights to pursue an audiovisual policy that includes screen quotas and subsidies, and neither part committed to any particular trade liberalization initiative in the audiovisual sector. Despite this standstill, other provisions relating to cultural trade were included in the final GATT-Uruguay Round agreement. Particularly important are the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and the annexes on telecommunications in GATS. Although none of these overrides the impasse described above, they could potentially affect audiovisual trade in several ways.

Copyright laws provide for the creation of property in audiovisual products. Illegal reproduction of works or retransmission of signals is conceived as a major barrier for audiovisual trade, amounting to hundreds of millions of dollars in lost revenues for the major audiovisual exporters. International enforcement of copyright laws is thus among the priorities in these countries' trade agenda. However, intellectual property has already been the subject of manifold international agreements (most importantly, the Berne Convention, UNESCO's Universal Copyright Convention, and the Rome Convention), while an international organization -- the World Intellectual Property Organization -- exists specifically to legislate and enforce intellectual property regimes. The main significance of TRIPS, then, lies not so much in the legal clauses (which in most cases differ only slightly from or simply bind member-states to previous agreements), but rather in the integration of intellectual property into a world trade regime governed by free-trade principles (Lorimer, 1996). This allows, for example, the imposition of trade sanctions within the context of GATT legislation to countries where intellectual property laws are -- according to copyright holders -- only lightly enforced.

Also relevant to audiovisual trade within the GATT-Uruguay Round are the negotiations on telecommunications liberalization, carried out within the framework established by the Annex on Telecommunications and the Annex on Negotiations on Basic Telecommunications in GATS, and later continued through the WTO. The purpose of these annexes was to lay down ground rules for the liberalization of the telecommunications sector and the opening of domestic markets to foreign competition. Although each country's commitments to reduce market access barriers, provide interconnection with public facilities, and grant equal treatment to foreign suppliers are the subject of ongoing negotiations, a significant step was taken in February 1997, when 70 members of the WTO representing 95% of the global telecommunication traffic (not including Russia and China, who are not WTO members) agreed to a phased liberalization in basic telecommunications services.

Developments in telecommunications liberalization are relevant to audiovisual trade for two reasons. The first is the ongoing convergence between telecommunications and broadcasting services into a single digital platform. Although Article 2 of the Annex on Telecommunications, on the scope of the agreement, explicitly states that "this Annex shall not apply to measures affecting the cable or broadcast distribution of radio or television programming," distinctions between telecommunications and data transmission services as opposed to broadcasting are increasingly difficult to make. This will likely bring audiovisual industries within the reach of GATS "through the back door opened by media convergence and the portmanteau concept of enhanced services" (Winseck, 1997, p. 240). Interestingly, during the WTO negotiations on telecommunications, the U.S. attempted to define DTH (Direct-to-Home) television and DBS (Direct Broadcasting Satellite) television as telecommunication services, a regulatory classification rejected by all other WTO members (Centre for Strategic & International Studies [CSIS], 1997). Second, by accepting a global free-trade agreement as the basis for national regulatory reform, governments relinquish many policy instruments such as subsidies or performance requirements, hence limiting their ability to pursue social goals in the communications sector (Fredebeul-Krein & Freytag, 1997).

Overall, the degree to which the GATT-Uruguay Round and its most recent offsprings, GATS and TRIPS, as well as the WTO Telecommunication Agreement, will affect cultural trade remains an open question. Furthermore, there are indications that the "agreement to disagree" may not be a longlasting formula. First, 12 countries (including the U.S., Mexico, and several Asian nations) have already undertaken specific commitments to liberalize audiovisual trade within the framework of GATS (Kakabadse, 1996). Second, the EU and the U.S. have resumed informal negotiations on the issue and the climate has been described as "far less aggressive than the December 1993 talks" (Cahn & Schimmel, 1997).13 Third, GATS members have recently entered into negotiations concerning Article XV of GATS, aimed at avoiding the "distortive" effects of subsidies on trade, which would probably bring renewed debate about the EU's mechanisms to subsidize the audiovisual industry (i.e., the MEDIA program). Finally, digital convergence threatens to overhaul the entire scenario upon which the "agreement to disagree" is based. As an insider to the WTO telecommunications negotiations recently put it,

When I queried French Telecommunications Minister Fillon just weeks before the February deadline [to the WTO Agreement on Basic Telecommunications Agreement signed in February 1997, discussed above], he stated unequivocally "if audio-visuel [sic] is on the table, there will be no agreement." Thus, it is easy to understand the current political realities that fly in the face of technology. How long "moving images" can be kept under the rug is another matter. (American Ambassador Diana L. Dougan, quoted in CSIS, 1997, p. 9)

Conclusion: Renewing the debate on mass media and free trade

The main goal of this paper has been to investigate the way in which the structuring tension between audiovisual products and free-trade principles has been dealt with in three different regional integration agreements (NAFTA, the EU, and MERCOSUR) as well as in the emerging world trade regime represented by the GATT-Uruguay Round and the WTO. In each case, liberalization, co-operation, and exemption have been combined uniquely, reflecting differences in industrial profiles, regulatory regimes, and cultural distances among member-states. As such, this analysis allows for a few conclusions and a proposal to reframe current debates.

First, issues of cultural distance proved central to the implementation of regional audiovisual policies. As noted above, audiences do not necessarily coincide with national -- and least with regional -- borders. Furthermore, obvious disparities exist in the strength of audiovisual industries of member-states in each of the agreements. Striking a balance between cultural diversity and economic integration is a challenging policy conundrum, best exemplified by the contradictions in EU's audiovisual policies. Of the three blocs analyzed here, MERCOSUR, given the minimal cultural distances between audiences and the already-existing trade flows, would seem to have the best opportunity to develop a truly regional audiovisual policy. What seems to be lacking in this agreement, to date, is the political will to do so.

Second, on both sides of the free flow of information versus cultural protectionism debate there are a number of problematic assumptions. On the one hand, little empirical evidence supports the claim made by free-trade advocates (e.g., Noam, 1993) that trade liberalization -- even in the long run -- creates a favourable environment to the development of domestic audiovisual industries. Along these lines, demanding special treatment for cultural industries in trade agreements is far from incompatible with regional integration policies. Even in the case of NAFTA, the most narrow in scope of the agreements analyzed here, special treatment was granted to labour and environmental issues -- interestingly, two of the elements of industry (along with capital) identified by Polanyi (1957) as having an uneasy relationship with the "commodity fiction." Granting cultural artifacts (defined broadly, not as in the original GATT exclusion of "national treasures") a particular treatment merely recognizes that, like labour and environmental issues, these commodities carry socio-political implications beyond the economic realm.

On the other hand, the discourse of cultural protectionism has many loose ends. First, the case studies presented above demonstrate that, to date, free-trade agreements have had a greater impact on the structure of ownership than on the content of local audiovisual markets. The Mexican television industry is a case in point: whereas foreign ownership of distribution channels is ever-increasing, telenovelas, local variety shows, and soccer games still lead the ratings, a situation unlikely to change in the foreseeable future. This is not unlike Western Europe where, EU policies notwithstanding, audiovisual markets are still fragmented into local consumption patterns. Both examples speak to the inertia of cultural practices in comparison with the swift internationalization of capital promoted, among other factors, by integration agreements. Second, the rhetoric of "national culture" contains ideological constructs that gloss over ethnic, class, and gender differences, functioning as a synonym for the protection of private economic interests or an exclusionary conception of culture (Sinclair, 1996). The case of the EU again illustrates this point: while the region stubbornly advocates the exclusion of cultural industries from free-trade agreements on grounds of defending "Europe's cultural identity," its audiovisual policy has fostered industrial concentration and increased social inequalities in the access to the audiovisual offer. Canada is another example in which protectionism and subsidies have successfully nurtured an industry without necessarily providing Canadians access to a more diverse cultural sphere.

A renewal of the debate on cultural industries and free trade must begin with a revision of some of our theoretical assumptions about the nature of communication activities. Fundamentally, cultural consumption must be understood not only as a leisure activity but also as a consequential social practice. This implies shifting the focus of attention from the choices of audiovisual consumers to the rights of citizens to cultural development, a term proposed by Raboy, Bernier, Sauvageau, & Atkinson (1994). According to these authors, "the key to democratic cultural development lies in making available and accessible the full range of resources that the individual must mobilize in order to enjoy the opportunity to participate fully and equally in the public life of his or her community" (p. 299). From this perspective, trade liberalization in cultural industries is not necessarily evil. What hinders cultural development is not the opening of audiovisual markets but rather the institutional arrangements that consistently favour large media corporations and the industrial logic of commercial media systems.

Cultural development calls for new forms of government intervention in the cultural arena, aimed not at protecting producers but at democratizing the use of communication resources. The real debate is not between foreign versus local audiovisual products, but rather between a regulatory regime for audiovisual markets based on the tenets of corporate liberalism and the global competitiveness logic versus audiovisual policies aimed at creating diverse and inclusionary cultural spaces within and across nation-states. Such is, I believe, the much-needed reframing in the debate over mass media and free trade.

Acknowledgments

The author wishes to thank François Bar, Seeta Gangadharan, Jorge Werthein, Joseph Straubhaar, and Theodore Glasser for helpful comments on earlier versions of this article.

Notes

1
However, some countries such as France, based on Article 3 of the Directive (which establishes that member-states remain free to "lay down more detailed or stricter rules" in their territories) have enacted more rigid content quotas. As a recent evaluation notes, compliance to the quota requirement has been highly uneven both within and across countries (see EC, 1998a).
2
The overall growth rate of the European audiovisual market in the 1990s has been an impressive 13.1%, topping that of Japan (10.6%) and the U.S. (4.8%) (EC, 1997b).
3
A good example is the recent battle over pay-television in Spain, in which the EU contested legislation introduced by the government on the grounds that it violated safeguards to the free movement of services as laid down in the 1989 Directive (Burns, 1997).
4
For example, the share of market for foreign films in the U.S. dropped from 10% in the 1960s to 7% in 1986, and down to less than 1% in 1996 ("Shall We, Yawn, Go to a Film?," 1997).
5
However, two qualifications must supplement this large-brushstroke portrait of Canada's audiovisual markets: First, the share of local productions is very uneven across genres. As is the case in most countries, domestic producers dominate television news, public affairs, and sports broadcasts. Second, as Attallah (1996) reports, exports are on the rise for Canadian television programs, particularly to the pay-television U.S. market. Because of cost advantages due to tax incentives, lower labour costs, and the exchange rate, many American companies now produce in Canada, suggesting that this country may be playing host to maquiladora-type industries for the U.S. audiovisual market.
6
For details on the previous differences between the Mexican and the U.S. legislations, see Nivón (1992) and Acheson & Maule (1996).
7
MERCOSUR trade results to date are impressive. Intra-MERCOSUR trade has grown sixfold between 1985 and 1994, at a 22% annual growth rate, increasing the share of regional trade in the partners' overall trade from 5% in 1985 to 25% in 1997 (Ferrer, 1996; "The Road to Santiago," 1998).
8
Currently, negotiations to incorporate Bolivia and Chile to the agreement are well under way.
9
All quotations from MERCOSUR documents are my translation.
10
Though exports are on the rise for Argentinean networks, they still pale when compared with those of TV Globo or Televisa. For example, foreign sales for Grupo Clarín's network in 1995 amounted to U.S.$5 million whereas Televisa exported U.S.$84 million in the same period (Paxman, 1997b).
11
For example, TV Globo had sold, by 1992, 25 and 32 telenovelas and mini-series in the Uruguayan and Paraguayan markets respectively, while only 2 were sold to Argentinean networks in the same period (Marques de Melo, 1995).
12
For example, screen quotas cannot discriminate between particular countries. See GATT, Article IV (a).
13
Interestingly, in a recent address to the American Film Marketing Association, EU's top audiovisual policy official stated that "our relations with the US aim at the realisation of a transatlantic market place with trade flowing unhindered," although later adding that "I would fail my mission if this would mean, at the end of the day, uniformity of content or weakening of our productive capacities" (EC, 1998b, p. 2).

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