Public Policy Option

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countries impose barriers to stop or hinder the import of cultural products (film, movies, etc.) or offer subsidies to promote their production and distribution

"This memo is in response to your request for input regarding the debate of whether countries should impose barriers to hinder the import of cultural trade or provide subsidies to promote their distribution and production."

In the olden days, the cultural products such as television, movies and broadcasting systems were only developed within the national territories and were shaped using the national regulations. Even during the twenty-first century, the promotion of cultural values through television, films and movies remain the national phenomenon. (Morris and Waisbord 2001). However, rapid development of information technology has revolutionized the promotion of the cultural values to international level. The advent of satellite and cable channels as well as the growth of modern technology such as internet and digital compression has transformed the promotion of cultural products into the international level. In an attempt to spread their channels across the borders and to the transnational audience, many television stations such as MTV, CNN, Eurosport and BBC have launched the international channels using different languages to spread the news services. Moreover, many films and movies company have translated their films into different languages in order to reach international audience. One of the benefits of selling cultural product to other countries is that it assists countries to earn foreign exchanges. Moreover, the cultural product enhances the development of the audiovisual sector and provides employment opportunities within the country. The growth of television has also led to a strong development of the regional television market in Latin America, and Arab countries. Despite the benefits that countries derive from the growth of cultural products, some countries still emphasis on policy and regulations to control the importation of cultural products. The major reason is the contents of the foreign televisions reflect the culture of the foreign countries. Thus, allowing the foreign TV, movies or films in the country can erode the cultural value of a country. Thus, countries such as China and Korea implement a strict policy and regulation to control the importation of foreign cultural product. Between 1916 and 1920s, the German government initiated a policy and banned the importation of foreign movies. The France also set a quota on the importation of foreign movies to protect the domestic film market in the same period. The UK and Portugal implemented a screen quota policy in the mid-1920s, which required theaters to screen films.

However, some countries did not use aggressive policy such as trade barrier on cultural products; rather they had offered tax concessions and subsidies to promote local film production. However, the United States was aggressive against the quota on foreign films by emphasizing that the policy was against the globalization, GATT and OECD deregulation agreement. Many countries removed the quotas because these countries were having trade problems with the United States. The Brazil attempted to implement the similar quota policies in 1940s; however, the country abandoned the policies because of the aggressive pressure from the U.S. government. Lately, many countries are using different strategies to support the domestic film production using passive regulatory policies such as tax concessions and subsidies. However, a country such as China is still restricting the importation of foreign cultural product in the Chinese market. Nevertheless, there is still no empirical evidence that support the effectiveness of the policy of protectionism for the audiovisual sector.

This paper argues that countries should allow the importation of foreign films in the country as well as providing subsidies to promote the distributing and production of film and movies production in the country.

POLICY OPTION

"The audiovisual sector -- for current purposes, film and television -- is significant in terms of its contribution to economic wealth creation and employment but, at the same time, it is widely recognized that the audiovisual industries play an important cultural role. The role of conveying ideas and entertainment to usually large audiences involves significant cultural and welfare implications." (Doyle 3).

The nature of audiovisual sector and the type of contents delivered to consumer have made authorities of various countries to have a significant interest in policing and regulating the audiovisual sector. Many countries have used strict regulatory policies against the cultural products; however, some countries have provided subsidies for the distribution and production of cultural products.

Subsidies for the domestic film production are part of the important policy choice to enhance rapid development of cultural product in a country.

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Several countries have stopped the policy of barriers or quotas on foreign films, movies and television because this policy does not enhance growth of domestic audiovisual sector. Rather, countries have allowed the importation of foreign cultural products to allow efficient competition in the domestic industry. Moreover, some countries have also offered subsidies to local film companies to enhance the distribution and promotion of domestic audiovisual industry. The United States is one of the notable countries that provides subsidies for the production and distribution of cultural products. Apart from the subsidies from the federal government, each state in the United States provides tax incentives for the in-state film production. Since 1990, different states in the United States have provided different incentives such as tax credits, tax exemptions, cash grants, and other incentives to enhance film production in the United States. The subsidies have enhanced a rapid development of film production and assisted in creating job, increase tourism and generate tax revenue for the country. For example, the Louisiana was able to create more than 5,437 jobs shortly after introducing the tax incentives to enhance production and distribution of films and movies in the state. The New York has recorded the influx of $7 billion in the state economy after the state has offered subsidies in 2004. The subsidies that the United States offers for the development of the audiovisual sector has made the U.S. film market to dominate the global film market. Other countries such Hungary and Canada have also offered subsidies for the distribution and promotion of films in the country. In 2004, the Hungary introduced the Financial Incentives and Film Financing Tax to enhance the production and distribution of domestic film.

Despite the financial incentives that many countries offer for the distribution and production of cultural products, policy makers of some countries still belief that the import of foreign cultural products especially the music, video, film, radio and television have negative impacts on the cultural and economic outcomes of their countries. Looking from the economic angle, the importation of foreign cultural products competes with locally made films, movies and television thereby may harm the local cultural industry. From the cultural angle, the importation of foreign culture can influence a country's culture thereby serving a threat to the existing culture. At present, the United States films and movies enjoy more than 70% of the global market shares. Many countries consider dominance of the U.S. films in the global film market as a threat to their cultural sovereignty and domestic film industry. For example, the U.S. account for the 90% of the film in distributed in Canada. Moreover, the 70% of the film distributed in France are from the U.S. In essence, many countries have implemented various policies to protect their domestic audiovisual section against foreign films. Due to the domination of the U.S. film production, many countries have implemented various policies that include screen quota, import quota, and tax concessions to protect the domestic films industry in order to preserve the local films market shares against foreign film domination. Countries around the world implement different policies to discourage the importation of foreign films and promote the domestic film industry. For example, Shalia (2013) argue that China introduced a policy in 2012 that prohibits showing the imported programs in the Chinese television. McCutchan, (2013) also reveals that the Chinese government implements a strict regulation to decrease the market shares of the U.S. film using the censorship, import quota as well as "competitive release-scheduling policies" (2) in order to restrict the access of the U.S. films into the Chinese market. (McCutchan, 2013).

Implementing policies of protecting local audiovisual market has a significant symbolic reason because the market share of a country domestic film is related to a country's cultural sovereignty. Despite the argument of the countries in favor of protectionism policy and create a barrier against the importation of foreign films, this policy can have negative effects on their economy because the development of the film industry contributes to the economic development of a country. Moreover, the policy of creating barrier against foreign films may not bring any benefit to the local film industry. Typically, the policies of protectionism can strain a trade relationships with other countries especially the United States, which is a country controlling the world economy.

Despite the argument against the importation of the cultural products, the importation of cultural product faces two different economic policies: free trade and protectionism. Countries that are against the.....

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