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Audiovisual services is one of the sectors where the number of WTO members with specific commitments is among the lowest. Only 18 WTO members undertook commitments following the conclusion of the Uruguay Round, with some additional members doing so as part of their process of accession to the WTO. Countries with significant audiovisual markets that have undertaken commitments in the sector include China, India, the Republic of Korea, Japan, Mexico and the United States.

Commitments tend to be more frequent in movie-related services than in TV and radio-related services. The sector also has a high number of exemptions to the obligation of MFN treatment. These relate, for example, to film co-productions.

The commitments in the context of audiovisual services within the World Trade Organization (WTO) refer to the specific trade obligations and liberalization measures that member countries undertake to promote international trade in this sector.

https://www.wto.org/english/tratop_e/serv_e/audiovisual_e/audiovisual_e.htm

Why isn't the audiovisual industry treated the same way as other manufacturing goods and services are treated, or even agricultural imports. I was thinking since a lot of money is made within the industry and the fact that every countries seem to protect their industry against foreign competition, that there would be a lot of WTO complaints made, but it doesn't seem to be the case. Is there a sort of implicit agreement that countries should be able to regulate their audiovisual industry and market however they see fit?

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    What kind of commitments are you talking about?
    – Joe W
    Commented Aug 15, 2023 at 22:11
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    One aspect is that thanks to the internet this doesn’t really matter all that much. You can watch whatever you want on YouTube and various streaming websites, with a complete and utter disregard to the wishes of your home country (with the exception of China and their Great Firewall). Commented Feb 18 at 18:02

2 Answers 2

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(note: this answer focusses on quotas and barriers, more so than subsidies)

Probably want to look at the cultural exception clauses in WTO:

In 1992, some countries had voiced their concerns during the final negotiations of the Uruguay Round that implementation of the GATT principles on cultural goods and services "would undermine their cultural specificity (and unique status), in favour of their commercial aspects".2

The purpose of Cultural exception is to treat cultural goods and services differently from other traded goods and services because of the intrinsic differences of such goods and services. Many countries defended the fact that cultural goods and services "encompass values, identity and meanings that go beyond their strictly commercial value".3 It notably allowed France to maintain quotas and subsidies to protect its cultural market from other nation's cultural products, most notably American, on television and radio. South Korean policy in favor of its movie industry is another example of how cultural exception is used to protect the audiovisual market.[4]

First the debate concerned mainly audiovisual products. Secondly, in the WTO liberalization process, every country decides which sectors it will deregulate. Audiovisual services is one of the sectors where the number of WTO members with commitments is the lowest (30, as of 31 January 2009)[5] (Source: WTO) 2

France does its bit to argue for exceptions. Canada also treats domestic programming differently, with its Canadian content regulations.

As to why "audiovisuals" have success carving out exceptions, it's probably a mix of:

  • worries about "hearts and minds", local culture and foreign influence. cultural protectionism, if you wish.

  • a logical-ish offshoot of regulations re. foreign press ownership

  • an industry that is uniquely well-placed to lobby on its own behalf.

  • historically, a crapload of US TV content of sometimes questionable quality that got exported cheaply for extra profit once the production costs had already been covered by the local US market. With very limited reciprocal US intake of foreign productions *. It was claimed this made local productions hard to sustain if they were constantly undercut on price by foreign (US) productions offered for cheap.

"WTO members tolerate..."

You also have to understand the WTO concept when it comes to "members tolerate". WTO rule-making, via its every-so-often trade rounds (not its enforcement and appeal mechanism) is basically a system where everyone comes together and horsetrades the rules they want to see put in place and the concession they are willing to make to get them. More influential countries manage to get their way more than less influential ones. Countries with particular business advantages try to promote those. Poorer countries hope for special treatment (ex: drug patent exemption). Etc, etc, etc...

Point is, if the AV cultural exemptions are what they are it is partially because the US did not fully gets its way because it would not have gotten a deal at Uruguay otherwise. It certainly was hoping for more at the time - that was very much in the news.

It is not because "the members", as a whole, tolerate those exemptions for some altruistic and selfless reason. At least some of those members are plenty happy because they wanted them exactly the way they are.

p.s. typically, "commitment" in WTO-speak refers to promises to open up one's domestic markets.

A specific commitment in a services schedule is an undertaking to provide market access and national treatment for the service activity in question on the terms and conditions specified in the schedule. When making a commitment a government therefore binds the specified level of market access and national treatment and undertakes not to impose any new measures that would restrict entry into the market or the operation of the service. Specific commitments thus have an effect similar to a tariff binding — they are a guarantee to economic operators in other countries that the conditions of entry and operation in the market will not be changed to their disadvantage.

* For better or worse, streaming vendors like Netflix do offer some foreign productions. A Turkish show like The Protector would have never gotten shown on US or Canadian TV. Still, Netflix has cut back on how much foreign, but not Netflix, TV content it shows - probably due to heftier broadcasting fees. Ditto Prime.

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WIPO v. the WTO

There may be less of a need for these commitments under the WTO because a separate UN affiliated organization, the World Intellectual Property Organization (WIPO), and related international treaties on copyright law, provide extensive regulation of the commercial aspects of audiovisual services, and this greatly reduces the need for WTO commitments in this area.

Free Speech Rights v. Trade Barriers

Further, many countries have some kind of human rights protections for the freedom of speech and the freedom of the press, for primarily political and human rights purposes, that have the practical effect of reducing trade barriers to audiovisual services, even though that isn't their primary purpose.

Cultural Exceptions In The WTO

Finally, as noted in another answer to this question, the cultural exception clauses in WTO, further reinforce the notion that commercial regulation of audiovisual services regulation is primarily a matter for WIPO, rather than the WTO.

The Complex Economics Of International AV Production

Also, I'm not convinced that the premise that "every countries [sic] seem to protect their industry against foreign competition" is accurate or at least isn't a great characterization of how the industry works.

The OP seems to be focused on the consumption side of the industry, but one of the main dynamics on the production side is that many countries actively encourage foreign audiovisual content producers to produce audiovisual content, in part, in their country (see, e.g., Canada, Czechia, and Ireland) with local labor for non-leading roles and non-director/producer level roles.

While these subsidies and tax benefits do encourage audiovisual content producers to hire people in their country to work on audiovisual content production, the incidence of these subsidies isn't so obvious. These subsidies and tax benefits also subsidize foreign companies that receive the profits that primarily benefit foreigners from the work produced with this subsidized and tax preferred domestic audiovisual content production labor.

There are also grants, subsidies, and tax benefits for domestic firms to produce audiovisual content to the exclusion of foreign firms and with an emphasis on domestic cultural content. But those kinds of grants tend to focus on the economically marginal "independent" and "art film" dimensions of the audiovisual content production industry, rather than on the far more economically important "mass market" and "genre content" parts of the industries, which are rarely the subject of the same kind of production firm level subsidies.

Put another way, governments tend not to significantly subsidize the production of content like Bollywood movies, Hollywood blockbusters, prime time TV, telenovellas, and K-dramas, even though there are not strong treaty obligations pushing them to refrain from doing so. And, there is no need to regulate something that doesn't happen at an economically significant level even in the absence of regulation.

As another example, in Japan, mangaka (i.e. Japanese graphic novel a.k.a. manga writers) are routinely among the people who pay the most dollars in any given year of taxes in Japan (and will be subject to a whole new tax regime in addition starting in October of this year). While this does illustrate that this creative content is popular (and it often is made more profitable by licensing AV anime rights to these works), it also reflects the reality that mangaka get no special tax breaks and have no real chance to shelter their incomes from taxation, unlike, for example, Japanese corporate executive who take a lot of wealth in the form of fringe benefits incident to their jobs and highly indirect ownership of big businesses. This isn't what you would expect if this highly profitable part of the AV market in Japan (the most successful Mangaka has sold 500 million volumes of his work plus anime licensing and serialization payments) were heavily subsidized.

Economics Rather Than Government Policy Drives International AV Consumption

In the same vein, it isn't clear to me that on the consumption side, that the low level of imports of non-U.S. audiovisual content for U.S. audiences (for example), is due to trade barriers as opposed to purely economic factors like a lack of demand for it in potential audiences and a lack of firms who have identified and exploited this potential market until recently.

Before streaming was widely available, to sell audiovisual content, you needed to find a market large enough to support regularly scheduled programing in a scarce supply of TV channel time availability and basically had to market to the general public rather than niche audiences (cable TV and satellite TV changed this dynamic a little, but didn't really reach a tipping point).

It is very hard to profitably sell foreign audiovisual content via broadcast TV, cable TV channels, satellite TV channels, or movie theaters outside very large immigrant heavy communities with large expatriate communities within easy driving distance of a foreign movie house.

With streaming, in contrast, you can sell foreign audiovisual content to niche audiences of tens or hundreds of thousands of people that make up only a tiny percentage of the total AV consumption market, even if the niche audience is widely dispersed geographically, and you can still make a profit.

Another notable counterexample is that a very large amount of subsidies that France provides to its citizens go towards purchases of Japanese and American AV content, with no significant benefit to France in the form of local employment or profits generated by the producers of these AV services.

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