International Free Trade and the Issues for Music and Music Copyright

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International Free Trade and the Issues for Music and Music Copyright

In 2005, the General Assembly of UNESCO voted that UNESCO would host a Convention for the Protection and Promotion of the Diversity of Cultural Expressions, or, for those of us with short attention spans, the Convention for Cultural Diversity.[1][2]

This Convention has basically two intentions. The first is to give each country the right to 'cultural sovereignty' – that is, to protect and promote its own culture or cultures as it sees fit. Well, you may think, doesn't every country automatically have full cultural sovereignty? – just as it has sovereignty over its territory and its legal system and its education system and so on? I'll come back to that question.

The second intention of the Convention is to encourage countries to foster cultural diversity within their own borders. Signatories to the Convention are not committing themselves to do so. I suppose you could say that by signing, they agree to allow themselves to be encouraged. As further encouragement, the Convention proposes to set up a fund to support projects that foster cultural diversity. Presumably this fund will be supported by rich signatories for the benefit of poor signatories.

So why do we need a Convention to achieve these two objectives?

Firstly, there seems to be a general agreement that cultural diversity is a good thing but that it is threatened by various changes in the contemporary world. In particular, there is a great concern for traditional arts and crafts. Many of these are threatened with extinction because the social context in which they took seed and whose purposes they served, is changing. Rural life is changing with the introduction of new technologies and people are moving to the cities. There is no use for a rice pounding song if the rice is now milled mechanically. And there may be no-one to sing it if the workers have moved to the city. But even if everyone stayed put in the village, the complaint is that the young are not interested in the traditional music. It's much cooler to sing the international pop songs promoted by the major transnational record companies.

So secondly, people and countries want to find some way to keep their own culture alive and that can seem to depend upon subduing the influx of foreign songs.

In Australia, decades ago, practically all of the music we listened on the radio came from other countries – firstly the USA, and then beginning with the Beatles, Britain also. Most of the television drama came from the USA, and our national channel was full of British TV drama. Our solution to that has been to impose requirements on broadcasters that they must fill some specified minimum amount of broadcast time with Australian productions. In the case of music broadcasting on radio, the maximum requirement is 25% of the time given to music. The requirement for less popular genres is as little as 5%.

Note that these regulations are not intended to keep foreign music out. There is no specification of the source of the 75% or more still available to foreign music. The purpose is to create some broadcast space in which Australian music can continue to exist. And the mechanism has worked despite a lot of complaining from the radio broadcasters. A fairly healthy recording industry has grown up, which did not exist before. We have done some research that shows the link between airplay and CD sales. Australian artists occasionally make it into the international ratings charts and so on.

It should be noted that in the case of television, the regulations are needed to combat what almost amounts to dumping by the USA. Because of its huge domestic market, US television productions can recover their production costs at home. They are then offered cheaply for export. It would cost Australian TV stations 6 to 10 times more to produce an hour of television drama than they would pay to rent an existing US production. Why would commercial stations produce any local drama when that is the case, were they not required to as a condition of their television station licences?

The argument from a free trade philosophy hangs basically on the concept of comparative advantage. The countries that are the cheapest and most efficient producers of a particular product should be allowed to prevail in the marketplace without hindrance from protective barriers, such as local content requirements, set up by other countries.

On this philosophy, then, we should all vacate the production of television drama to the USA; all the world's television programs should come from there, because it is the most efficient producer.

But this is plainly ridiculous. It's one thing to agree that we will open our markets to the most efficient producers of wheat or computers or cars, but another thing altogether to agree to give up our own cultures. We cannot contract with the USA to produce Australia's culture. Only we can produce Australian culture, and we very much want to do so.

A few years ago, Australia negotiated a so-called Free Trade Agreement with the USA.[3] In our negotiations, the USA objected to these regulations on the grounds that they are a restriction on trade. Those broadcast hours that are reserved for Australian content are ipso facto closed to US content. According to the principles of free trade, to which of course the US religiously adheres, this is a no-no.

As an aside, the US assiduousness in the cause of the principles of free trade in culture are at odds with its practices in other areas. For instance in agriculture, it subsidises its farmers to produce food, subsidises them NOT to produce food, subsidises the exports of food, all of which lower the price of US food compared with the price of food produced elsewhere including the poorest third world countries. In case all of that is insufficient, the US bars or limits admission of foreign-produced food to the US market. If anyone can think of an additional way in which the US can limit free international trade in food, let them now raise their hand.

But going back to the cultural issue, it is pretty clear that the US policies brought to bear in free trade negotiations come pretty directly from the US audio-visual industry, and therefore, incidentally, the copyright owners. It wants to maximise its profits through totally unfettered access to foreign markets.

The effect is that cultural policy in Australia and other countries negotiating trade agreements can be determined by the trade ambitions of another country. This is a bizarre and unacceptable proposition.

I have developed this argument here around the activities of the USA. This might be seen as intemperate and biased. So let me bring in another piece of interesting information.

Before the Convention for Cultural Diversity was to be presented to the General Conference of UNESCO, the USA went to rather extraordinary lengths to derail it or to modify it so that it would have no power. Nevertheless, or perhaps partly because of this, the vote was as follows. 154 countries were present. 148 voted in favour. Four abstained – Australia, shamefully, and three other very small countries whose motives I leave to your speculation. All of two voted against: the USA and Israel.

Furthermore, consider the subsequent history. In order for the Convention to come into force, it had to be ratified or accessioned by 30 countries. This ratification apparently took place faster than for any preceding convention, in March this year. Furthermore, it was said that in order for the Convention to have any sway in the real world, it would need to be ratified by at least 60 countries. Only four months later, it had last week been ratified by 62 countries plus the European Community.

It is reasonable to ask what might have caused such an enthusiastic alliance of virtually the entire world, and opposition to that alliance by, in effect, only one country. And consider that it must have taken a certain amount of courage and resolve for many small client states to vote in a way that clearly the US did not want.

For our purposes, then, I think that we can say that it is the US position in the negotiation of so called free trade agreements that is of special interest and is problematical for most of the rest of the world.

It must be acknowledged that the US has softened its position. It is not insisting on the total abandonment of protection or special treatment for local cultures. It is quite happy for a country to protect its poets, for instance, because there is no money in poetry. It seems not to object to cultural subsidies, probably because it assumes that a country's enthusiasm for subsidies will be limited. Its own certainly are, with its allocation to the National Endowment for the Arts being a small percentage of the cost of say, one fighter plane. But in any case, it is on unstable ground objecting in principle to subsidies when its own practices, in say agriculture, are so thorough-going.

Most interestingly, though, it is now willing to concede that countries might be able, for instance, to retain some protective measures in the audio-visual realm (and it is that realm that is its greatest concern) in the interests of the survival of a local culture. So Australia was able to retain a right to a local music quota on radio (although it can never exceed the present level, and if it is ever reduced, it can never be increased again even to the level currently in place.) South Korea built a very healthy film industry by requiring cinemas to include in the programs not less than a certain percentage of local films. This was called a 'screen quota'. The US took direct aim at this regulation and actually said that unless the Koreans removed it, the whole trade agreement would be called off. It was a long and traumatic fight and Korea did back big time, although I think it has still been able to retain a local film quota, but at a lower level.

These concessions have been accompanied sometimes by words of soothing understanding. Of course we poor things would like to maintain our own cultures. The Americans understand that.

I was talking with a man who was Australian Trade Minister at the time of the Uruguay Round in the early nineties. He told me that even back then, the real position of the US was that it was willing to let go some of the provisions that I have spoken about because it saw that they were linked to obsolescent technology. They would simply disappear along with the technology, in the not too distant future. The real game would be in the digital realm. In the digital realm, the Americans were determined that there would be no barriers created for their product.

It is interesting, then, that in the Australia/US Free Trade Agreement, the section that deals with 'new media', renamed 'interactive media', allows Australia to take steps to protect local culture, but they are so hedged about with provisions and qualifications that it would be a brave Australian government that would ever attempt to take any action.

True, it is not clear how we might go about supporting local culture accessed through the digital realm. It may not be possible, who knows. But in the negotiation of the agreement, the Australians proposed that Australian-based providers of film or music on demand could be obliged to reserve what we called 'shelf-space' for local product. The consumer could and of course should not be forced to purchase local productions. But at least we could try to ensure that they are available.

The Americans refused point blank to agree to this apparently harmless measure.

I mention also in passing that the US seems to have shifted its energies to getting bilateral agreements rather than multilateral agreements under the WTO. This is not a good thing for smaller countries because the negotiating partnership is so unequal. The benefits to the partners in the Australia/US agreement seem so far to be rather unequal.

Copyright. I think the proposals came from the US side.

The first concerned technical protection measures. The thrust here was to criminalise attempts or successes in evading the measures. It is interesting that so short a time afterwards, the world has moved on and copyright owners are focusing more on other ways of securing their property.

The second was to legislate to make internet service providers liable for file swapping and other activities that evaded payment of royalties on the use of copyright material.

The third was the extension of the copyright term from 50 years, as it was at that time in Australia, to 70 years. I expect that you have heard this referred to as the "Disney Amendment", for obvious reasons. However, it should be noted that the desire for extension of term does not come from copyright owners only in the USA.

All three of those copyright proposals are clearly in the interests of the copyright owners.

A fourth proposal was that Australia should adopt the US Fair Use system for free use of copyright materials. This deals more in the areas of special interest to libraries and copyright users.

Australia already had a system we call Fair Dealing.[4]

The Music Council of Australia, with a Council of 50 including both copyright owners and copyright users (such as libraries) was invited to make a submission to government on this issue.

We opposed the introduction of a Fair Use system because we believed that for the most part, our constituency would be disadvantaged.

Under the Australian fair dealing system, Parliament, representing the people, establishes the law and the courts apply and sometimes interpret it. Under the American fair use system, Parliament would step back to a degree, providing only an open-ended list of types of use that may be considered as 'fair'; in effect, the courts then are left to establish the detail of the law, case by case. Because each case considers a balance of particular circumstances, the outcomes may or may not be directly transferable to subsequent, even similar cases. So while the courts are on the one hand writing the law, it is in a context in which uncertainty is inherent.

Those best placed and most likely to take a case to court, and to persist with it through to a conclusion are well-resourced corporations and individuals, including multinational corporations based outside Australia. The great majority of Australians are not so well enabled financially, and even the largest Australian organisations are minnows alongside the transnational corporations that still so dominate the music industry. In many (though of course, not all) cases the parties to a court action may be very unequal in their access to resources to fight a case. It is acknowledged that the courts will act expertly and in good faith to see justice done. Nevertheless, it would be unrealistic to suppose that some advantage does not lie with those who can most afford to pursue these legal means.

To the extent that the courts are used to decide Fair Use issues, there could accumulate a body of case law somewhat biased to the interests of, for instance, large corporations. We hoped that this would not be the case were Parliament to continue to decide the law as is the case under a Fair Dealing regime.

As noted, in the Fair Use system, a measure of uncertainty is inherent. Under the open-ended US system it can be very difficult to understand one's position under copyright law. For instance, there was at least one case where a decision of a lower court was reversed on appeal to a higher court, and then reversed again on re-appeal to a still higher court. Such a situation is again to the disadvantage of the less resourced party who may, for instance, be unable to proceed to appeal. This uncertainty is especially disadvantageous to the ordinary person or small organisation that can be charged with a breach made inadvertently.

A large corporation may have taken liberties with copyright materials owned by a less wealthy party. But the latter takes considerable risk in mounting a legal challenge, however well justified. True, if there is no challenge there is no new case law – but then industry practice may be altered simply by custom without any consideration of the merits.

Obversely, a less wealthy party may have taken liberties with copyright material owned by a more wealthy party, and be taken to court for that. If the less wealthy party has knowingly breached copyright, he may simply be made to pay for a deliberate transgression. But as noted, under Fair Use, it can be very difficult to know whether or not one is within the law and a breach may have been inadvertent. The less wealthy party could even be used as the fall guy in a legal experiment by the more wealthy party in order to consolidate some aspect of copyright ownership.

The Australian government's Issues Paper[5] reported that some parties see the introduction of Fair Use as a counterbalance on behalf of copyright consumers to other reinforcements of copyright such as the 20-year extension to the copyright term. However, it is possible to rectify any imbalance through Fair Dealing amendments that grant additional exceptions or limitations. A remedy is achievable not only through a fair use system.

So, in conclusion, that is why the Music Council did not support the introduction of the Fair Use system into Australia.

And also in conclusion, I hope I have been able to shed some light on how culture fares in international trade negotiations and some of the copyright issues that are likely to arise.

(1) Based on economic theory, Hans Hoegh-Guldberg's paper elsewhere in this knowledge base, Cultural capital as an economic force, demonstrates that both tangible and intangible cultural capital influence economic growth in their own right. Cultural diversity is recognised as a positive economic force whereas diminution of cultural diversity has the opposite effect. Protecting cultural diversity, as the present paper argues should be done, is therefore important for economic reasons.


  2. Based on economic theory, Hans Hoegh-Guldberg’s paper elsewhere in this knowledge base, Cultural Capital as an Independent Economic Force, demonstrates that both tangible and intangible cultural capital influence economic growth in their own right. Cultural diversity is recognised as a positive economic force whereas diminution of cultural diversity has the opposite effect. Protecting cultural diversity, as the present paper argues should be done, is therefore important for economic reasons.


Richard Letts. Based on a paper given to the International Association of Music Libraries conference in Sydney, July 2, 2007.

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