Australian Fabian Society.  

Preservation and Expansion of Diversity: AUS-US Free Trade Agreement

Jock Given
Autumn Lectures Series, 29 March 2004

Address by Jock Given at the 'Our Airwaves: Perspectives on the Preservation and Expansion of Diversity', Australian Fabian Society Autumn Lectures 2004The Assembly Hall, 156 Collins St, Melbourne.

Jock Given is a senior research fellow at Swinburne University's Institute for Social Research. His books Turning off the Television: broadcasting's uncertain future and America's Pie: trade and culture after 9/11, were published in 2003 by UNSW Press. He is the 2003/04 CH Currey Fellow of the State Library of NSW.

Malcolm Long has talked about what we can and should do to preserve and expand diversity in our media future. I want to talk mainly about whether we'll still have the capacity to do it.

The thing I want to talk most about is the free trade agreement Australia is likely to sign later this year with the United States, a draft of which was released earlier this month. The draft agreement places some important constraints on the ability of Australian governments to maintain, adapt and introduce policy measures addressing media diversity. It's about 1000 pages long, once you add in the 23 chapters, the Annexes and the many 'side-letters'. You'll be pleased to know I'm not going to read you even the most exciting and poetic sections.

But I do want to try to explain its impact and why I think it is such an important document for media policy in Australia. In doing so, I hope I can raise some issues not just about the agreement itself, but about where media might be headed and so connect to what Malcolm has said, what Kath might say, and what you in the audience might want to discuss.

To give an overview of where I'm coming from, I don't think the draft agreement represents a good deal for Australia. It's not that I think that it is going to lead to Hollywood suddenly going taking over our hearts and minds. Hollywood has been having a pretty good crack at that for a long time now and I'd like to think most of us have still got hearts and minds of our own. I know few better ways to spend a Sunday afternoon than down at the Astor in St Kilda watching double bills like Singin' in the Rain plus An American in Paris, Badlands plus Mean Streets, Manhattan plus Hannah and Her Sisters.

I'm not opposed to the idea of trade agreements - I support them. I think a global trade system that is based on rules is better than one that is based on the unilateral exercise of power, especially if you're a little player like Australia. I'm not opposed to the idea of bilateral trade agreements, although I much prefer multilateral ones - they are fairer, and I think Australia tends to do better out of them. I'm not opposed to the idea of a bilateral agreement with the US - it is the world's largest economy, our largest trading and investment partner. By all means, let's articulate the relationship in some detail. I'm not even opposed to the idea of an agreement which sets some limits on cultural policy making flexibility. I just think the draft text sets the wrong ones. In doing so, at this time, I worry about what it says to the world about Australia.

Where I want to start is not in the 1000 pages, the 23 chapters, the Annexes or the side-letters of the Australia-US free trade agreement, but some time earlier, in 1947 - the year Australia's oldest think-tank, the Australian Fabian Society, was formed.


That year, Australia and about 20 other countries entered into something called the General Agreement on Tariffs and Trade - the GATT. Along with World Bank and the International Monetary Fund, the GATT was one of the three new international economic institutions designed to help administer a world without war. It was a partial implementation of a bigger plan for an International Trade Organisation, initially supported, but eventually opposed, by the US. It took nearly 50 years to carry out the bigger plan - we finally got a World Trade Organisation in 1995.

The GATT was all about getting rid of government policy measures that impeded free trade in goods - things like import tariffs and quotas. But complete free trade was not politically possible. So the GATT contained special provisions that allowed some deviation from free trade. One of the areas where this was allowed was agriculture. Another was films.

The special provisions about films allowed member states to maintain 'screen quotas' - requirements that local cinema exhibitors reserve a proportion of screen time for films of national origin. It was a deal, a compromise, delivering neither the unrestricted trade that the Americans - who'd dominated the movie business since the 1920s - wanted, nor the unrestricted capacity for government intervention that other countries wanted.

The 1947 GATT deal was an important compromise struck at a time of great international tension - the Europeans and others were desperate to reconstruct their economies and their cultures after the War, negotiating from a position of weakness given their military and financial debts to the US. But they cut the deal. Cinema quotas were OK. What happened to the audiovisual industry in the decades that followed however, was more complicated.

First, television had started in the UK before the second world war, though it stopped during it. After the War, it surged, particularly in America, eventually in Europe as well. It didn't kill the cinema but helped to undermine its central place in the audiovisual economy, the market place of images and ideas and in the minds of cultural policy makers. Television quotas became more important than cinema quotas. GATT members argued about whether the new medium was covered by the goods trade agreement at all, but they used the existence of the cinema quotas exception as justification for imposing similar local content quotas on television. Many, especially in Europe, also put the new medium in the hands of public service broadcasters, generally the same ones who already controlled radio. The result was a new audiovisual market which was much more national, much less international, than the cinema. It need not have been, as the era of multi-channel television has revealed.

The second thing that happened after the war was that while cinema quotas continued to be used by governments, subsidies, about which the GATT imposed few limits, became an increasingly important way of supporting local film industries. They were vital for the 'new cinemas' of Italy and Germany and the French New Wave in the 1950s and 1960s - an era when Hollywood, to some extent, lost its way.

So the trade deal done in 1947 allowed governments to intervene in media markets, through quotas, public service broadcasting and subsidies. Partly by accident, partly by design, what the world got in the decades that followed was a more diverse media universe than might otherwise have evolved. That doesn't mean the outcomes were as good, or interesting, or diverse as they could have been; or that countries which, unlike Australia, ran television as a public monopoly for decades, made the right choices - I'm very glad Australia didn't have the public television monopoly that Labor Party policy decreed at the time. It doesn't mean that the policy measures adopted then for movies and television are the ones we should adopt now for digital media and the internet. It means only that the media universe that evolved was more diverse than it might otherwise have been.

If we've learned that lesson, we know that governments negotiating trade agreements need to reserve as much flexibility as they can to intervene in markets in new and creative ways in the future. Not because they will use that power, but because they might.

The term diversity is crucial here. Cultural policy, especially in the context of trade policy, is often seen as a national thing. National governments intervening to ensure their citizens get access to more national rather than overseas content. It's more than that and has been for a long time. The SBS and film festivals have been about bringing the world here. Support for participation by Australians in overseas events, for marketing Australian material overseas, for Radio Australia [and more recently television] are about taking Australia, or parts of it, there. In a world of increasingly global distribution systems, what is produced here is available not just to Australians but to people elsewhere. If it's on the website, it's available to the world, or at least to those people in it who can afford a computer and a connection to the internet. Australian government interventions are not just about Australians talking to Australians - they are our contribution to global cultural diversity.


So what of this latest deal, the Australia-US Free Trade Agreement?

A bilateral trade agreement between Australia and the US was always going to require concessions from Australia about audiovisual and cultural industries. Limiting such concessions was, according to the chief negotiator, one of Australia's four most important 'defensive' interests in the negotiation. Australia has made more concessions than I hoped, but less than I feared.

A lot of existing government policies about broadcasting, audiovisual and cultural industries are not affected by the draft agreement. Australia can continue to make tax concessions available for investment in cultural activity, like feature films, TV drama and documentaries, provided certain levels of local content are met. It can continue to make radiofrequency spectrum available for particular kinds of entities, such as community broadcasters - 3RRR, 3MBS, 3RPH, Channel 31 - and national broadcasters - the ABC and the SBS. Immigration policies are unaffected, so we don't have to change the rules about temporary entry of actors, musicians, film crews and technicians - nut neither do the American shave to change their tough laws about greencards We can have government programs to support indigenous people and enterprises - so there would be nothing to stop the establishment of a National Indigenous Broadcasting Service, parallelling the new Maori Television Service across the Tasman. Universal service arrangements can be maintained in telecommunications, to ensure a decent level of service is made available to all Australians at a reasonable cost, funded by industry cross-subsidy. International co-production arrangements can be retained and expanded, providing preferential treatment for projects co-produced between Australia and a small number of other countries, including NZ, France, Canada, Ireland, Great Britain, Israel, Italy, Germany.

But there are a lot of existing government policies about broadcasting, audiovisual and cultural industries which are affected by the draft agreement. These are quotas, grants and subsidies, investment and ownership of media, public enterprises, and intellectual property. [five areas]

Here's a quick overview of those five areas.

[1] On quotas, we can retain quotas on free-to-air commercial broadcasting, which currently require, among other things, 80% of TV advertisements and 55% of TV programs to be Australian. We can require 25% of commercial radio programming to be domestic. We can also apply the commercial TV quotas to at least one new channel provided by an operator if the government changes its policy and allows the existing networks to use their digital capacity to introduce so-called

'multichannel' free-to-air services. We can retain our
requirement for pay TV drama and general entertainment channels to spend at least 10% of their program budgets on new Australian drama. We can also apply it to some other kinds of channels - childrens, educational, documentary, arts - and, for drama, increase it to 20%. On newer services - the agreement calls them 'interactive video and/or audio services' - we can introduce new quota-style measures, but only to ensure that Australian content or genres are 'not unreasonably denied' to Australian consumers, and only on companies carrying on business in Australia.

What that all amounts to, I think, is a solid safeguard about quotas for services already in place like commercial TV and radio, but not much safeguard at all for emerging services. The precise impact will depend on how 'new media' replaces, subsumes or supplements 'old media', and how quickly. Personally, I'm not looking forward to the challenge of convincing the US Trade Negotiator that Australian content or genres is 'unreasonably denied' to Australian audiences.

[2] Grants and subsidies, an extremely important form of support for film, TV and multimedia projects provided through organisations like the Film Finance Corporation, the Australian Film Commission and Film Victoria, are supposed to be unaffected by the agreement. In fact, the draft text does impose some constraints on the way they can be used. However, this has been pointed out to the negotiators and, it appears, is being addressed in the 'legal scrubbing' process currently being undertaken.

[3] Investment is an area where this agreement goes much further even than Australia has been prepared to go in its Closer Economic Relationship with New Zealand. It requires substantial liberalisation of Australia's existing foreign investment regime across the whole economy. It broadly removes the need for Foreign Investment Review Board notification of proposed investments in Australian companies with assets of up to $800 million. In media and telecommunications, however, Australia can retain its limits on foreign ownership of broadcast television, newspapers and Telstra, and its requirement for

'national interest' scrutiny by the Treasurer of all direct media
investments and investments in telecommunications businesses with total assets of more than $A50 million. The US has done the same. But these are 'standstill' commitments. There is no capacity to introduce new limits and a 'ratchet' provision on existing measures means that any reduction or removal of these limits would be irreversible.

The agreement also sets important new restrictions called 'performance requirements' on government measures imposing local content, purchasing or similar obligations on individual foreign investors and investments. This was one of the things that sunk the Multilateral Agreement on Investment (MAI) in 1998. A version of it has come back in this bilateral agreement. For the media industries, this could include the Docklands, Fox and Warner Roadshow studio complexes. Broadly, existing State government measures can be retained, though not made more onerous. As existing contracts or perhaps legislative provisions expire, an important question will be whether the renewal of existing arrangements represents a new or grandfathered measure. Further, any new local content obligations will need be cast in more general and less specific, measurable terms than may currently be the case.

[4] Public services, like grants and subsidies, are supposed to be unaffected by the agreement. But the definition of public services, I think, might not cover all the things that are done by some organisations we think of as public enterprises. I'm pretty confident that the core of what, for example, the National Film and Sound Archive does, will fall within the definition of public services. But I'm not at all sure that all the services provided by our public enterprises - for example, the sale of commercial air-time by the SBS, the provision of commercial research services by state-funded libraries - will so easily be regarded as public services. This doesn't mean they won't be able to provide them. It just means they might not be able to maintain local content-style preferences in doing so. The precise consequences are difficult to foresee, but I suspect there are some messy little surprises in store.

[5] Finally, the agreement's intellectual property provisions require Australia to adopt major elements of US copyright law. This includes longer copyright terms - from life-of-the-author-plus-50-years to life-of-the-author-plus-70-years - stronger enforcement provisions and new obligations for internet service providers dealing with allegedly infringing material on their systems and networks. These provisions will improve the ability of Australian and non-Australian copyright holders to enforce their existing rights. But they'll also increase the period during which the producers of copyright material will be able to control commercial use of their work.

Australia is already a net importer of audiovisual material with a growing trade deficit reflecting the growth of pay TV and DVD in recent years. The deficit for cinema films, TV programs and videos reached nearly $650 million in 2001/02. The practical implication of the intellectual property provisions is that Australia will have to continue to pay for some old material which would otherwise have entered the public domain and become freely available. For creators of new works which make use of archival material, such as documentary and web producers, longer copyright terms represent a formidable practical and financial obstacle.

Now let's add all this up:

  • No impact on tax concessions, spectrum allocation, immigration policies, indigenous programs, universal access to basic telecommunications services and international co-production agreements.

  • Assuming some modifications to the draft text, no impact on grants and subsidies and probably little if any substantial impact on public services.

  • But where there is an impact is with quotas and investment and IP. On IP - Australia loses. On quotas and investment, we have preserved some capacity to intervene through local content requirements for programming and investment, but compromised our unfettered ability to intervene. It institutionalises much lower aspirations about the level of Australian content in emerging media systems than Australians have come to expect in broadcast television. Think of the numbers: 80% Australian TV ads, 55% Australian TV programs, 25% Australian radio programs, up to 20% Australian expenditure on pay TV movie and general entertainment channels and 10% on pay TV arts, educational, documentary and childrens channels, and on interactive services, Australian content 'not unreasonably denied'.

Supporters of the agreement make a number of points:

  • First, as the government argues, there's lots of policy levers still available.

    • Answer - yes, but which ones will be most important?

  • Second, to the extent that the agreement institutionalises lower levels of Australian material in new media markets, some see this not as a concession but simply as an articulation of the policy impotence which will inevitably flow from continuing technological change in media and communications. The Weekend Australian summarised the outcome on audiovisual as 'Political heat turned down by retaining free TV local content rule, but bows to the reality that new technology will rule because it will empower consumers to watch what they want'.

    • Answer: I'm not so sure. For better or worse, the federal government seemed to move fairly quickly back in 1999 to regulate new technology to try to restrict access to sex and violence on the internet. It was prepared to act to pass legislation last year to try to restrict unsolicited email or 'spam'. Crucial to be able to intervene in distribution processes, not just production.

  • Third, will the concessions make any difference in practice - despite the concession made to NZ in the bilateral CER free trade agreement, to treat NZ programs as Australian programs for the purposes of local content quotas, Australian networks still buy virtually no NZ programs five years after the change was made.

    • Answer: The Austn networks have been reluctant to bring on themselves the industrial trauma which would likely result from locating a major Austn TV show across the Tasman. But more importantly, the US is a very much bigger player than NZ, much better capable of exploiting any improved access to Australian markets.

  • Fourth, the agreement safeguards existing measures in existing markets better than it safeguards the capacity to introduce new measures in new markets.

    • Answer: I agree. That's what the US wanted and it suited local industrial politics.

  • Fifth, the Austn film industry (it is said) is not performing, so why not make some concessions to the US, if it enables us to lever better access to markets for other products where Australia is performing better?

    • Answer: It's not just about performance today, it's about performance into the distant future. It's about preserving the capacity to intervene in certain ways, not whether particular interventions are currently perfect. Also, did we get the concessions in other sectors, eg. agriculture?

  • Sixth, can't the film industry look at the improved opportunities for access to the US market, rather than the constraints on govt support at home?

    • Answer: I can't see anything in the agreement that is going to help Australians to get better access to US audiovisual markets - the tough immigration rules don't change and both countries can retain their foreign ownership restrictions for broadcasting.

For me, the Australia-US Free Trade Agreement amounts to a broad acceptance of the long-standing US agenda for the development of the information economy - long and tough protections for intellectual property rights, but liberal global markets in which to trade them. Some of that agenda works for Australia, some of it doesn't. I think our negotiators have handled the sector pretty skillfully - to repeat, I think Australia has made less concessions than I feared, though more than I hoped. But overall, I think we lose.

I said at the outset that I could tolerate some limits on cultural policy making flexibility. I just thought the draft text sets the wrong ones and in doing so, at this time, made a worrying statement to the world about Australia.

The worry is that we have made our concessions of Australian policy capacity in a bilateral negotiation with the world's global audiovisual superpower at such a decisive moment in international relations. They are concessions Australia has not yet had to make in the multilateral World Trade Organisation. We've broken ranks with a large, if uneasy coalition of countries unwilling to make similar concessions in this area, and it will make it harder for them to resist doing so in the future.

While we've been doing our bilateral deal with the US, countries have been finally getting together to draft something called a new international instrument on cultural diversity. It's not happening in the WTO, it's happening at UNESCO (UN Educational, Scientific and Cultural Organisation). The new instrument proposes to establish an international framework governing what countries can and can't do in cultural policy. Australia hasn't been enthusiastic about this UNESCO initiative. We think we can do it on our own. So we're now proposing to sign off on more extensive concessions about future cultural policies in our agreement with the US than I suspect the UNESCO process will end up settling for.

It is an unfortunate outcome for a country that has worked so hard over the last two decades to position ourselves as a multilateralist. In this moment of international tension, when once again, we have got both a war and a trade agreement, I think we've just got ourselves too close to the wrong crowd.

Australian Fabians Inc. 2016