Are TV and Movies Subject to Free Trade? Canada Says 'No'

Irving Berlin once wrote, "A Pretty Girl Is Like a Melody."

But a song, according to Uncle Sam, is more like a widget.

Not so, say Canadians. Expressions of art - songs, poems, films - are not widgets. They're not commodities. They have to do with nothing less than national survival.

As negotiations resume in Paris today on a treaty intended to further open the developed countries of the world to direct investments in one another, Canada and the United States are at odds on the sensitive issue of cultural industries.

Canadians are awash in cultural imports, the overwhelming majority of them from the US. They insist that they aren't protectionist, but they want to be sure of finding their own products in their own marketplace.

Ottawa wants to see culture exempted from the treaty-in-process, known as the Multilateral Agreement on Investment (MAI). "Culture is a nation's identity," says Andr Lemay, a spokesman for the Department of Foreign Affairs and International Trade. The North American Free Trade Agreement exempts culture, he says, "and the MAI is on the template of NAFTA."

But Washington doesn't accept the exclusion. "Too often we have seen cultural barriers serve as thinly disguised protectionism," says Jay Ziegler, spokesman for the US trade representative.

And make no mistake: The culture industry is about jobs, too. Ottawa estimates that employment in the cultural sector, broadly defined, accounted for nearly 700,000 jobs, or 4.5 percent percent of all jobs in Canada in 1994-95.

Tom Henighan, a professor at Carleton University here, says that Heritage Minister Sheila Copps has "a tricky line to toe. If you do too much you risk retaliation. Do too little, and you risk getting swallowed up by American culture."

Besides, American movies and TV are hugely popular, and the Canadian public doesn't generally have the same sense of the importance of culture as Europeans do, Mr. Henighan adds. "A lot of Canadians don't care - [Minister Copps] has to convince a lot of Canadians that this is worth doing.... But art is not just a commodity."

The US remains unpersuaded. "There are a number of very legitimate ways a government can influence the cultural tastes of its populace," says the USTR's Mr. Ziegler. "Limiting marketplace choices is a very overtly discriminatory path to follow."

Some observers note that Canada, which is also an exporter of cultural goods, particularly television productions, would suffer if other countries were allowed to practice cultural protectionism against it. "Canada's stance on the MAI may be inhibiting Canadian growth and prosperity," warns an article in the latest issue of the International Economics Review of the US International Trade Commission.

The MAI is not the only forum in which tensions between the US and Canada over culture have arisen. This past summer, Ottawa hosted a gathering that Henighan describes jocularly as a "19-nation conspiracy against US culture." The alliance seeks to define measures that countries can take to defend their national identity. A Mexican official in Ottawa plays down the suggestion that this group is "anti-US" by quoting the late novelist Carlos Fuentes: "We are not afraid of Mickey Mouse."

Another flashpoint along the cultural front is so-called split-run magazines: Canadian editions of foreign publications with Canadian advertising but little or no Canadian editorial content. Because such publications cover their editorial costs with revenue from their home market, split-run magazines can offer bargain ad space.

Canada's first proposed solution to this problem was a combination of tariff barriers, excise tax, and differential application of postal subsidies. This was rejected last year by the World Trade Organization, which gave Ottawa until Oct. 30 of this year to eliminate the offending provisions.

Earlier this month, Ms. Copps introduced legislation representing another attempt to control split runs: direct fines on Canadian advertisers who buy space in them. Copps insisted, "Canada will continue to have one of the most open markets in the world for foreign publications. More than 80 percent of magazines sold at Canadian newsstands are foreign, most from the United States."

But many critics expect this approach to run afoul of the WTO as well.

Whatever their differences, Canada and the US are in agreement that the MAI is not quite ready for prime time. The accord is being negotiated by the Organization for Economic Cooperation and Development, the Paris-based club of developed nations. The MAI is intended to facilitate foreign direct investment among participating countries - to make it easier, for example, for a company in one country to open a factory in another. But negotiations on the accord have been on ice since April, when it became clear that it was "not on the road to closure," as Ziegler puts it.

In Canada, public opinion turned sharply against the MAI as grass-roots activists - many of them communicating over the Internet - argued that the MAI would infringe on national sovereignty. "Every country has its reservations" about the MAI in its current form, says Mr. Lemay.