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  • Culture, trade and globalization: questions and answers

  • Culture, trade and

    globalizationQuestions and answers

    UNESCO Publishing

  • Published by the Division of Creativity,

    Cultural Industries and Copyright,

    Sector for Culture, UNESCO

    Editorial Team:

    Guiomar Alonso Cano

    Alvaro Garzn

    Georges Poussin

    Graphics:

    Guiomar Alonso Cano

    Directed by Milagros del Corral

    ISBN 92-3-103748-X

    UNESCO 2000

  • Contents

    Introduction 7

    1. What do we understand by cultural industries? 112. What do we understand by cultural goods and

    services? 13

    3. What is the growth rate of the international trade of cultural goods and services? 15

    4. What is the market structure of cultural industries? 195. What do we mean by free trade? 236. What is copyright and why is it important for

    cultural industries? 24

    7. What is the GATT? 258. What is the WTO? 279. What are the differences between the GATT and

    the WTO? 27

    10. What are the common goals of the WTO/GATTsystem? 28

    11. What does most-favoured nation mean? 2912. What is the national treatment principle? 3013. What is the GATS? 31

  • 14. What is the TRIPS? 3315. What is the TRIMS? 3416. What do we generally understand by cultural

    exception? 35

    17. How is the cultural exception applied? 3718. What do we understand by cultural diversity? 3819. What are the Florence Agreement and its Nairobi

    Protocol? 40

    20. What was the draft Multilateral Agreement on Investments (MAI)? 41

    21. What is pending on the WTO agenda? 4422. What are the guiding principles for a fair development

    of international trade on cultural products? 45

    23. Which factors should be taken into account? 4724. What accompanying measures should be taken at

    the national level? 49

    25. What co-operation strategies should be adopted at the international level? 56

    Selected list of sources 61

    Bibliography 65

  • Introduction

    Over the past fifty years, the general world economictrend has been towards open markets: world exportsincreased from 8% to 27% of world GDP between 1950and 1998 and total trade in 1997 was fourteen timesthe level of 1950. This expansion of international tradehas been accompanied by comprehensive multilateraland bilateral trade agreements establishing the condi-tions for eliminating tariff and non-tariff barriers to thecirculation of goods, services and investments. Theend of the Uruguay Round in 1994 initiated a new eraof global economics, characterized by the emergence oftrading blocks from the highly integrated EuropeanUnion to the less-consolidated, but still evolving,ASEAN (Association of South-East Asian Nations),NAFTA (North American Free Trade Agreement) andMERCOSUR (the Southern Cone Common Market).More recently, the evolution of telecommunicationsand new technologies has dramatically reduced thecost of providing commercial services. The World

    7

  • Wide Web is also transforming the nature of productsand services.

    Market integration allows consumers to buy goodsfrom all over the world in their local shops and super-markets. While local businesses must compete withthese foreign goods on their home turf, they also havenew opportunities to develop their export markets byselling in a multitude of other countries.

    Cultural goods and services are no exception to thesenew patterns of production, consumption and trade.Cultural markets are increasingly going global; trade incultural goods multiplied by five between 1980 and1998. Cultural (content) industries are growing expo-nentially and will continue to do so in the future; as weshall see, they are to become a central pillar of the infor-mation society, also known as the knowledge society.

    As consumption of cultural goods and servicesspreads all over the world, production itself tends toconcentrate. This results in an oligopolistic market witha highly asymmetric structure. The effects of this marketprofile are as yet unknown: while we are aware that alarge share of the cultural products circulating in mostcountries are produced elsewhere, we know very littleabout the impact of this global cultural market on citi-zens, audiences, businesses and governments.

    In this context, the following considerations arise: First, culture has moved to the forefront. The past few

    years have seen the emergence of a powerful interest inculture resulting from a combination of diverse phe-nomena such as globalization, regional integration

    8

  • processes and cultures claiming their right to expressthemselves all this in a context where cultural indus-tries are progressively taking over traditional forms ofcreation and dissemination and bringing about changesin cultural practices.

    Second, the issue of culture and trade has now acquiredprime strategic significance. Cultural goods and servicesconvey and construct cultural values, produce and repro-duce cultural identity and contribute to social cohesion;at the same time they constitute a key free factor of pro-duction in the new knowledge economy. This makesnegotiations in the cultural field extremely controversialand difficult. As several experts point out, no otherindustry has generated so much debate on the political,economic and institutional limits of the regional andglobal integration processes or their legitimacy. Whenculture is put on the table, it often prompts complex dis-cussions on the relationship between the economic andnon-economic value of things, that is, the value attrib-uted to those things that do not have an assigned price(such as identity, beauty, or the meaning of life).

    Third, some governments understand that internationaltrade law is exercising growing pressure on their abilityto influence the production and distribution of culturalgoods and services within their borders. This hasincreasingly polarized positions in trade negotiationswhenever they deal directly or indirectly with culturalissues. This mounting tension was revealed in the finaldiscussions of the Uruguay Round in 1994, acquiredmomentum during the negotiations on the Multilateral

    9

  • Agreement on Investments (OCDE, 199598), and werecrystallized in the preparations for the WTO MinisterialMeeting in Seattle (USA) in 1999.

    Fourth, and as stated in UNDPs 1999 HumanDevelopment Report, two-thirds of humanity do not ben-efit from the new model of economic growth based onthe expansion of international trade and the develop-ment of new technologies, and are excluded from theconstruction of the information society. This situationreveals gaps in terms of individual countries capacitiesand resources to produce cultural goods and services. Inmany developing or small countries, these capabilitiesare actually shrinking. As a consequence, trade flows ofcultural goods are unbalanced, heavily weighted in onedirection, and cultural industries show great disparitiesin their structures both within and between the variousregional trade blocks.

    However, world trade rules are still in the making.Just like in any major social, cultural or political change,rules are gradually established. For instance, trade part-ners have been unable to agree on how far investmentshould be liberalized, or on the necessity (or lackthereof) of creating legal frameworks to regulate newindustries such as electronic commerce.1 In short, traderules are evolving and being transformed; there is stillmuch work to be done.

    10

    1. Electronic commerce being understood to mean theproduction, distribution, marketing, sale and delivery ofgoods and services by electronic means.

  • It is generally admitted that part of the problem isthe lack of shared concepts and definitions. This mightbe explained by the fact that actors in trade negotiationstend to read and interpret the same facts and situationsin opposite ways. Not only their economic interests maydiffer, but their views, values and priorities also tend todiverge.

    Therefore, a better understanding of the nature ofthe current changes is crucial for all countries, but par-ticularly for developing ones. They must look forwardand identify areas of strategic interest for their culturalsectors, and, overall, help shape more forcefully theglobal trade structure of cultural goods and services.

    The following twenty-five questions and answersexplore key concepts and ideas related to culture andtrade and its potential for development. Their purpose isto provide a basic overview of the multilateral trade agree-ments that regulate global flows of cultural goods andservices, the institutions that oversee their implementa-tion, and their eventual impact on the development ofdomestic cultural industries. Also, some proposals onhow to put in place national support measures and inter-national co-operation strategies are suggested.

    1 What do we understand by culturalindustries?

    It is generally agreed that this term applies to thoseindustries that combine the creation, production andcommercialization of contents that are intangible and

    11

  • cultural in nature. These contents are typically protectedby copyright and they can take the form of goods orservices.

    Depending on the context, cultural industries mayalso be referred to as creative industries, sunrise orfuture-oriented industries in the economic jargon, orcontent industries in the technological jargon. Thenotion of cultural industries generally includes printing,publishing and multimedia, audiovisual, phonographicand cinematographic productions, as well as crafts anddesign. For some countries, this concept also embracesarchitecture, visual and performing arts, sports, manu-

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