CIAO DATE: 4/99

Hollywood and Europe: A Case of Trade in Cultural Industries, the 1993 GATT Dispute

Luc Véron

School of International Relations
University of Southern California
March 1999

Center for International Studies, University of Southern California

The author is very grateful for the support, both material and intellectual, which he received during his stay at the University of Southern California. He is particularly appreciative of the many conversations he had with colleagues at the School of International Relations, the Center for International Studies, the Marshall School of Business and the Department of Economics of USC as well as at UCLA's School of Public Policy and Social Research which greatly helped him to formulate the ideas presented here. Although the author is currently employed by the European Commission, the ideas expressed in this paper are purely personal and do not reflect the views of any institution.

"With regard to entertainment issues, we were unable to overcome our differences, and we agreed to disagree"
Bill Clinton

 

Introduction

The heated dispute that erupted at the end of the GATT (General Agreement on Tariffs and Trade) negotiations between the United States (US) and the European Union (EU) on audio-visual services is fairly representative of the cultural argument in trade. Culture is often proclaimed to oppose full liberalisation of international exchanges of goods and services. In 1989, after the liberalisation of US film import in Korea, angry Koreans directors in some Seoul theatres showing US movies released poisonous snakes ₁ . Japan traditionally opposed rice imports on the basis that it would endanger Japanese culture. The United States claimed that the "potato-potato-potato rhythm at idle and the staccato beat at cruising speeds" of a Harley-Davidson was part of the American culture ₂ with the obvious aim to ridicule any notion of culture, or more precisely of national culture. German director Wim Wenders replied to the latter by provocatively reminding that the essence of US national culture being trade ₃ the Americans have no sense of any possible contradiction between trade and culture. When, to justify the remarkable work of the Australian Film Commission, experts came up with a tentative definition of Australian culture, the simple evocation of Crocodile Dundee generated outrage, especially among the feminists. ₄ It is uneasy to find an acceptable and workable definition of national culture to analyse its impact on trade.

It is probably even more difficult to determine an unequivocal relation between the cultural argument and trade liberalisation. Jack Valenti could express his frustration at the end of the GATT negotiations by declaring that culture was the European word for protectionism. President Mitterrand had, a few months earlier, publicly asked with the same self-confidence: "who could be blind today to the threat of a world gradually invaded by Anglo-Saxon culture, under the cover of economic liberalism." ₅ Where the European, and singularly the French, see trade liberalisation as a camouflage for cultural invasion, the United States challenges the national cultural expression argument as an excuse for continued protection of cultural industries.

This paper revisits, in a 'flashback', the 1993 dispute on audio-visual services and tries to determine the rationale of it. This first attempt is frustrating because the US-EU audio-visual terms of trade seem insufficient to support what actually happened in the EU-US contention on audio-visual services. The bargaining theory offers a better explanation backed by some factual evidence. However, the apparent European "anti-economist" ideology, the recurrence of the crisis surrouding the audio-visual industry, the strength of the Hollywood lobby and transatlantic difference regarding State intervention in cultural issues might indeed lead to the conclusion that culture matters in trade.

 

Flashback ₆

For Hollywood, the Uruguay Round of the Multilateral Trade Negotiations ended in anger and confusion, in the dawn of December 14, 1993. Hollywood was left out of the picture ₇ or so it was said. After the bitter row between the United States and the European Community, President Clinton concluded: "With regard to entertainment issues, we were unable to overcome our differences with our major trading partners, and we agreed to disagree." ₈ Meanwhile on the other side of the Atlantic, Prime Minister Balladur, after receiving a one-minute standing ovation in the French National Assembly, announced the conclusion of the GATT negotiations and stated that"the cultural identity of Europe (was) protected." In political terms, the situation seemed to reflect a clear European victory over the United States.

In legal terms, the situation was a bit different. To the satisfaction of the United States, audio-visual services were not excluded from the newly created General Agreement on Trade in Services (GATS). The only exclusions from the scope of the GATS, within the meaning of Article XIV are those

(a) necessary to protect public morals or to maintain public order; (b) necessary to protect human, animal or plant life or health; (c) necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of this Agreement including those relating to: (i) the prevention of deceptive and fraudulent practices or to deal with the effects of a default on services contracts; (ii) the protection of the privacy of individuals in relation to the processing and dissemination of personal data and the protection of confidentiality of individual records and accounts; (iii) safety.

Audio-visual services are not explicitly excluded. The European Community, however, submitted a list of exemptions to the Most Favoured Nation (MFN) clause to be included in the Annex to Article II of the GATS. This list ₉ comprises eight exceptions regarding audio-visual services and applying to all or some Members. Moreover, the European Community did not make any commitment to phase out existing trade barriers with regard to the clause on national treatment within the meaning of Article XVII of the GATS.

In other words, audio-visual services were included in the GATS. The general principles of the GATS, such as those of non-discrimination and transparency, therefore, apply to the sector. Progress on such issues as intellectual property can be made under the auspices of the World Trade Organisation (WTO). However, the European Community, and its Member States, can preserve their specific policies toward the sector, such as the 'Television Without Frontier' European Community (EC) Directive. As such, the treatment of the audio-visual industries in the GATS is very different, for example, from that of cultural industries in the bilateral agreements between Canada and the United States. ₁₀ Article 2005 of the 1989 US-Canada Free Trade Agreement simply states that: cultural industries are exempt from the provision of this agreement and is reproduced, with regard to Canada, in the NAFTA (North American Free Trade Agreement). The GATS does not comprise the cultural exception of NAFTA. But it reflects the specificity of audio-visual services, which means exemption from some principles, within a general framework of agreement.

But how was this bitter ending, so foreign to Hollywood tradition, reached? The dispute warmed up at the time of Berlin Festival (February 1993), erupted by the end of the summer and became very heated in December. From the end of the summer until the ratification of NAFTA, on December 1, 1993, the EC chief negotiator, Leon Brittan, and the U.S. Trade Representative, Mickey Kantor met three times ₁₁ . The positions during that period seem to have been rather stable on the audio-visual issues. The US party insisted on including the audio-visual services in the GATS while the EC argued the specificity of the sector. The EC offered, however, to freeze the audio-visual European legislation with regard to 'future technologies' (satellite, video-on-demand etc.). Between October and December, however, two independent events occurred which had an influence on the on-going negotiations. On October 6, the EC Culture ministers assembled in Mons (Belgium) and agreed on a six-point formula designed to guarantee the cultural exception. In the meantime, President Clinton attended a Democratic Party fundraising affair in Los Angeles hosted by Marvin Davis, the former owner of Twentieth Century Fox. Two million dollars were added to the party's coffers. ₁₂ and the President apparently gave some assurance to Hollywood ₁₃

When Kantor, a Los Angeles lawyer himself and Brittan reconvened in early December the pressure relating to audio-visual services had increased for both of them. Yet the deadline of December 15 for the conclusion of the Round, determined by the expiry in 1994 of the U.S. fast track procedure, was approaching. On December 7, Kantor signalled the US readiness to trade an agreement on maritime transport and financial services against EC acceptance of US terms on audio-visual services. Brittan adopted a position reflecting the tightening of his mandate: the freeze of EC legislation was no longer on the table. Kantor immediately pulled back on maritime transportation, financial services and civil aircraft. From December 10 to December 14 (with a break on Monday 13), the bilateral US-EC discussions comprised maritime transport, financial services, civil aircraft industry and audio-visual industry. The US party focused on the latter and counted on Japanese support because of Sony and Matsushita's interest in Hollywood. It was apparently a time of bluffing and counter-bluffing. Brittan offered to tie maritime transport to audio-visual services. Kantor countered by offering to link audio-visual services to civil aircraft. On December 13, Brittan signalled that the EC was ready to trade a standstill on audio-visual legislation against the same commitment by the US on maritime transport. At this point, Kantor chose to toughen the US demands, in particular by claiming the national treatment clause on some specific EC taxation, e.g. to share the revenues generated by taxes on blank videotapes.

Very early on December 14, compromises were issued between the US and the EC including an EC pledge not to apply TV quotas on 'future technologies'. After consultation with the industry and President Clinton, Kantor rejected the offer to the apparent relief of the EC party. Not only Hollywood, but also maritime transportation, financial services and civil aircraft were left out of the picture. Meanwhile, Spielberg's Jurassic Park was conquering the world and particularly Europe.

Many interpretations have been given of this strange episode of Uruguay Round. Could Hollywood really have hijacked the Multilateral Trade Negotiations? Paemen maintained that it was the Motion Pictures Association of America 's (MPAA) ultimate ambition. Was the US entertainment industry really expected to lose billions of dollars in foreign revenue as the result of being excluded from the GATT? ₁₄ Was it, as French Director Jean-Jacques Beneix put it, the "birth of a second Europe, a Europe which is acquiring a spiritual dimension"? ₁₅ All this seems somewhat extravagant.

 

Are these guys crazy?

On the one hand, the US Trade Representative (USTR), in the 1995 Foreign Trade Barriers Report, could write:

"While the EU did not make specific commitments to liberalize trade in the sector, the United States succeeded in preventing the exclusion of the audio–visual sector from coverage under the General Agreement on Trade in Services (GATS)."

On the other hand, the EU negotiation co-ordinator Hugo Paemen wrote in his account that the MPAA thought it could 'held up' the negotiations. The archives of the period are not available and one has to guess the intentions of the parties with the help of what the actors are ready to say. What were the immediate reasons for the bitter feud between the US and the EU at the end of 1993? What did the MPAA really want? Had the MPAA been overconfident?

Let us start with five observations. First, it seems that the 15 December deadline worked as an asymmetric constraint on the parties. The US negotiator was bound by the 'fast track' procedure more than the EU was by the commitment to end the Round in due time. Time pressure was probably slightly more on Kantor's shoulders. It was not however a major element since both parties had a common interest in achieving results in the GATS. Second, could the US have obtained more concessions in the audio-visual sector from the EU? It is striking that the US party rejected the last minute compromise and chose to "agree to disagree". The EU negotiator apparently could not sell the compromise to the motion picture industry, although it was obviously better than nothing. The expectations seemed to have been too high on the part of the US film industry. Third, The aggressive 'claiming' tactic adopted by the US negotiating team seemed to have been counterproductive in that it greatly helped the European film lobby to mobilise. The claim of national treatment with regard to box office tax in France was typical. Apparently, it was not even a serious claim of the entire industry. If intended to divide the Europeans, it totally missed the target. The same can be said of Spielberg's and Scorcese's provocative and misguided comments. It was noted that even the traditionally reluctant UK film industry joined forces with their continental counterparts. Fourth, both inflexibility and aggressiveness could be explained by overconfidence. Apparently Valenti thought he had secured a deal at the highest level, which eventually was not delivered. Seemingly, Valenti was subsequently blamed within the industry for not delivering his own deal from Geneva. "Jack has lost his touch", grumbled a couple of studio executives but Valenti, who had overestimated his hand, was given a pardon. His contract was supposed to expire in 1996 ₁₆ .

Fifth, was it overconfidence or bluffing? Probably both. Could an experienced political operative such as Valenti, a former Presidential adviser, seriously think he could held up the GATT? It seems a bit outrageous. After all, the results were not so bad, as the USTR wrote later. And the end result of the feud was that it left the Europeans relieved but shaken. It can well be argued that the real concern was more about the future EU Television Directive than anything else. Would the next Directive due in 1997 include new technologies, will the TV quotas be made more binding? The end of 1993 coincided with the implementation of the 1989 Directive and its impact was still unclear. The Europeans eventually reached in April 1997 an internal compromise on the new Television Directive, which was no cause for concern for the US. The USTR, in the 1998 Foreign Trade Barriers Report, could write with apparent satisfaction:

"by the time an agreement was reached on a revised directive, the divisive issue of strengthening European content quotas had fallen by the wayside despite the Parliament's protectionist line." ₁₇

In the USTR report the adjective "divisive" refers to European intestine divisions as much as to an EU-US trade issue "that the US will continue to monitor."

After all, what did the US, and the MPAA, achieved through the GATT negotiations on audio-visual services? These services were included in the GATS. A number of countries, accounting for about 20% of US film industry foreign revenues (Japan, Switzerland, Mexico, South Korea, Hong Kong, India, Israel, Malaysia, New Zealand, Nicaragua, Singapore and Thailand), made commitments to improve market access. But more importantly, the "cultural lobby", led by the French, had shaken the Europeans. This shaking had been both mobilising in the short run but also retrospectively frightening (what could have resulted of a major failure?). The studios were not so happy about the irritation that the negotiations had generated in their main foreign market, the EU, and they wanted appeasement. So they asked Jack Valenti (or Valenti volunteered) to charm the Europeans. The chief arsonist led the fire brigade. USTR and MPAA officials were mobilised in 1994-95 and toured European countries in this "peace process" ₁₈ that encountered some tangible success in the following years as mentioned above.

Again the archives, all the memos and meeting minutes on this period are lacking but we can try to guess what really happened. Arguably, by the end of 1993, both the US and the EU parties used the contentious audio-visual issue to try to extract concessions from the other party on other issues, like maritime transportation or aircraft. They reached a non-transparent but really balanced agreement: audio-visual services were included in the GATS but without a substantial commitment from the EU. On both sides, the audio-visual lobbies were white-heated but the cooling down process began immediately: demobilising of the European lobby and re-conquest by the MPPA. To a certain extent it was a Pyrrhic victory for the Europeans and singularly for the French.

Apparently defeated the MPAA was actually reinforced. It can well be argued that the US trade 'comitology' was a threat for the MPAA bargaining power. Through the Advisory Committee on Trade Policy and Negotiations (ACTPN), the Industry Sector Advisory Committees (ISACs) and the Labor Sector Advisory Subcommittees (LSACs) which provide for the involvement of the private sector in trade negotiations, the MPAA could be marginalised and become a simple 'primus inter pares'. The studios could be tempted to conduct their own lobbying. By 'stealing the show' in the last moments of the Uruguay Round, Valenti probably saved his job and the turf of the MPAA. That his ego suffered was probably a small price to pay.

However, the 1993 GATT dispute on audio-visual services was only a small event in much broader trade negotiations and also a single episode in a long history of cultural trading to which the bargaining approach offers a useful but limited explanation.

 

What was this all about?

For a very short time trade in audio-visual services was a big issue in the GATT negotiations and a major source of contention between the EU and the US. The importance of the subject was justified by the notion that the film industry is a significant component of the American economy and a weighty element of US trade and EU-US trade relations. There are indeed three elements in this proposition: the way this economic information is shaped, the weight of entertainment in the US economy, and in particular, the Californian economy, and, the economic significance of audio-visual services in EU-US trade. These three elements will be successively examined.

 

Narcissism and misinformation

Hollywood coverage by the media is clearly not proportionate to its economic importance. US box office is available worldwide on CNN. Not less than two daily programmes on TV networks ("Entertainment Tonight" and "Access Hollywood") are dedicated to gossip and trade information. The combined circulation ₁₉ of the two daily trade newspapers, "The Hollywood Reporter" and "Variety", is about 60.000. There are numerous magazines and Websites on Hollywood. The general press also offers extensive coverage. Extensive coverage is partly explained by the star system. Publicists are in charge of the image of the stars and continuously feed the media. A star is a commodity and a fading star disappears from the media. In the motion picture industry, only the talents enjoy name-recognition and not the corporations; the sole exception being Disney ₂₀ . However, economic information on Hollywood is subject to disproportionate coverage. Mergers, a shifting jumble of corporate cross-ownership and joint venture arrangements in this industry are given much more attention than in, say, the chemical industry, steel, automobile or banking. Annex I shows, over two years 1996-1997, the number of headlines containing the name of a sample of four Hollywood corporations (Disney, Warner, Paramount and Murdoch ₂₁ ) and four other corporations (Microsoft, Boeing, Exxon, Dow Chemical) in a group of 25 newspapers ₂₂ and in the Wall Street Journal. The average newspaper gives a large coverage to Disney and Warner but less than Microsoft and Boeing respectively. The business newspapers, represented by the Wall Street Journal, demonstrate a somewhat lesser bias. It is therefore interesting to compute an exposure index, which compares the coverage in the general press to a standard for business objectivity, arbitrarily measured by the Wall street Journal coverage. The graph below shows this index which gives a good indication of Hollywood overexposure, in terms of economic information.

Note: I = ((P/W)*(e W/e P))-1 I index of coverage, P number of titles in All Press for a specific firm, W number of titles for a specific firm in Wall Street Journal, e P total of titles in All Press for all firms in the sample, e W total of titles in Wall Street Journal for all firms in the sample

The obvious bias in the press coverage of the film industry can partly be attributed to some kind of navel-gazing since the media groups, like Murdoch, are both newspaper owners and major players in Hollywood. It is, however, true that many investor imagine that nothing could be more fun, and potentially more lucrative, than making movies. The case of Paul Allen, co-founder of Microsoft, investing 500 millions dollars in DreamWorks in 1994 is typical.

Of course, a lot of coverage does not necessarily equate with public knowledge. There is a lot of misinformation too. It is, for instance, commonly accepted that the distributor manipulates box office figures in the opening week of a movie. There are good reasons to manufacture the information on the audience of a film since an audience is a cumulative process. The main motive of seeing a movie is to talk to someone about it. The opening ₂₃ of a movie is increasingly important: in 1987, 25% of the domestic theatrical ultimate ₂₄ of a movie were made in the first 10 days; in 1997, the proportion has doubled to 50%.

In fact, the information is very much under the control of the industry and in particular the MPAA. There are very few independent sources of business information in the movie industry. Most of the studies are commissioned by the industry. The then president of the MPAA, Eric Johnston, introduced the annual report of its organisation in March 1946 by stating "the film industry probably knows less about itself than any other major industry in the United States". ₂₅ About at the same time, in 1950, a PhD Candidate was deploring, in his dissertation, the "paucity of accurate, reliable, dependable, and acceptable factual information relating to the technical, economic, financial and operating aspects of the industry. To call the available statistics unreliable is to understate the misleading manner in which data is offered. Deliberate, unexplainable and inexcusable contradictions exist among the basic sources as well as within the same source". ₂₆ It is not evident that much has changed. Interestingly, the official European data also derive from the MPAA. ₂₇

 

California

Let us examine the role of the film industry in the richest and most populous state in the Union, California. This role is worth considering since it could partly justify the constant political support enjoyed by the industry at the federal level. A study commissioned by the MPAA published in April 1998 ₂₈ emphasised this role by claiming that Hollywood's direct economic impact on Californian economy —defined as payroll combined with payments to suppliers- amounted to 27.5 billion dollars ₂₉ in 1996 and its total direct employment to 226.000; i.e. a rate increase of 69% and 38% respectively in the last four years. These figures are basically reconcilable with other estimates. For example, according to a recent Los Angeles Times survey, the number of jobs in the entertainment industry (a slightly looser definition) increased from 143.000 in the early 1990s to 262.000 in 1997 in Los Angeles, i.e. a 83% jump in seven years. The jobs in Hollywood outnumber the employment figures in the traditional sectors in Southern California, namely the aircraft and defence industries. ₃₀ They compare with the total employment in Boeing Corporation: 238.000 worldwide in 1997. These figures do not account for the 50.000 jobs in the ancillary industries such as multimedia programming or advertising agencies nor for the professionals (legal and accounting firms, agents, catering companies...) specialising in the entertainment industry. A major factor, which apart from the business cycle explains the booming situation in employment figures, is the success of the conversion from the defence industries during the 1990s. Official estimates show an average of 2 jobs created in the entertainment industries, mainly in small and medium-sized businesses, for 1 job lost in the defence industries. Certain savoir-faire such as flight simulation or virtual reality creation proved to be common to both types of industry. The case of Hughes Electronics Corporation is often mentioned. ₃₁ It is also interesting to note that the average weekly wage in the entertainment industry is 1200 dollars, i.e. the double of the average industrial wage in Southern California.

The role of the entertainment industry in the regional economy of Southern California is certainly important and growing as most of TV productions have been relocated from the East Coast. ₃₂ However, the importance of Hollywood seems sometimes grossly overstated. According to the Los Angeles Times ₃₃ , the total income of Hollywood broadly defined would reach 40 billions dollars in the year 2000. This figure is probably somewhat exaggerated. Present estimates by industry analysts are in the range of 20 billions ₃₄ , 20% of this turnover represented by exports (more than 50% in the cinema sector). The same is true for employment figures. Even the 310.000 jobs claimed by the industry represent a mere 5% of civilian employment in Southern California ₃₅ , where public administration alone employs 875.000 persons and the banking-insurance sector 345.000. Moreover, direct Hollywood output, according to rough estimates ₃₆ , would represent only 4% of the added value created in the Los Angeles area, i.e. about 1.5% that of California.

$ million	1990	1991	1992	1993	1994
Total Gross State Product	794397	810323	826532	842068	875697
Motion pictures	11859	10839	10044	11222	11970
	1.5%	1.3%	1.2%	1.3%	1.4%

Anyway, the $27.5 billion of the MPAA report would only represent 2.9 % of the California GSP ($962.1billion in 1996 ₃₇ ).

 

Trade

Foreign trade is the second economic variable that could explain the US trade policy interest in the film industry and reciprocally that of the European Union, the largest US trading partner. It is often claimed that the entertainment industry is the largest single net contributor to the US trade balance. It is impossible to trace the origin of this rumour. A closer look at this assertion reveals however that there is very little to support the assertion. Annex II shows the thirty-five largest net contributions to the US balance of goods and services in 1993 (at the time the assertion was first made) and in 1996. The item in which the motion pictures exports are included, "Other unaffiliated services", ranked 13 and 15 in 1993 and 1996, respectively, far below agriculture as a whole and and lower than some single agricultural commodities such as corn, wheat or soybeans. It also ranked below aeroplanes, business services, travel, education or plastics ₃₈ . It has to be noted that "Other unaffiliated services" receipts cover a wide variety of services, including

"Expenditures by foreign governments for services related to maintaining embassies and consulates in the United States; expenditures of international organizations—such as the United Nations, the International Monetary Fund, and the World Bank—headquartered in the United States; receipts from unaffiliated foreigners for sales and rentals of U.S. motion picture and television films and tapes; and expenditures of foreign residents employed temporarily in the United States".

Indeed, it comprises mainly expenditures of foreign governments and international organisations in the US. An industry analyst estimated the foreign revenues of the US film industry to be around 3.5 billion dollars ₃₉ ; this compares with the net contribution of more than 25 billion by the agricultural commodities, more than 20 billion dollars generated by royalties or travel, and the 15 billion dollars by aeroplane sales.

On the other side of the Atlantic, the European Audio-visual Observatory estimated that the net deficit of the European Union with the United States in audio-visual services went from 2 billion in 1989 to 6 billion dollars in 1996 ₄₀ , without adjustment for exchange rates variations. The President of the European Union announced, at the Birmingham Audio-visual Conference, a deficit of 7 billion dollars. ₄₁ A quick look at the bilateral balance of payments gives an idea of the relative importance of audio-visual services in EU/US trade:

US Bilateral Balance of Payments w/ European Union $ million

	1993	1994	1995
Exports
Goods	94992	100429	121482
Services	55613	56130	63733
Goods & Services	150605	156559	185215
Imports
Goods	-102239	-112387	-134193
Services	-45584	-47095	-51627
Goods & Services	-147823	-159482	-185820
Balance
Goods	-7247	-11958	-12711
Services	10029	9035	12106
Goods & Services	2782	-2923	-605

Source: US Department of Commerce, Bureau of Economic Analysis, Updated: September 18, 1997

The figure of US-EU exchanges in audio-visual services is understandably politicised. It may be argued that everyone has good reasons to exaggerate this figure. The US motion pictures industry wants to demonstrate its own strategic importance to Washington trade authorities. The European industry, on the other hand, has excellent motives to show its weakness by relaying US self-promotion estimates while seeking trade protection.

It is also often argued that the US motion picture industry is dependent on exports for its development. Revenues generated in foreign markets represent 40 to 50% of total revenues. It is true that this export-dependency is not so common among US industries. It is not however a new phenomenon since Hollywood entertained the same level of export dependency before World War II. Between 1930 and 1940, foreign markets, principally Europe, represented 50% of Hollywood revenues. During the war, the United States were cut off from Europe and film exports progressively increased again to present levels after 1945. The popular assessment is that the US film industry 'needs' export markets in order to absorb increasing production costs. This dependency is often blamed for the cultural content of US films designed to appeal to large foreign audiences. But the argument is not economically relevant since the production cost of a movie is largely dependent on its expected revenues or potential audience. In other words, it is because it does well on exports that the US motion picture industry can afford to make expensive movies, not the reverse. The better the exports the higher the costs.

To sum up, filmed entertainment is a rather tiny business whose economic importance is grossly inflated for reasons which have to do with the very nature of the business (information on content is part of the content) and the strength of the Hollywood lobby reinforced by the implicit/effective support of the European lobby.

If basic economics cannot explain the core of the EU-US dispute on audio-visual services, it is necessary to examine the role of other factors: the European anti-economist and anti-Hollywood ideologies, the strength of the Hollywood lobby, the role of State patronage in culture.

 

The anti-economist ideology

What the economist John Stuart Mill (1806-1873) wrote in 1861

"Men lose their high aspirations, as they lose their intellectual tastes because they have no time or opportunity for indulging them: and they addict themselves to inferior pleasures not because they deliberately prefer them but because they are either the only ones to which they have access or the only ones which they are any longer capable of enjoying" ₄₂

is not so different than what the French statesman Mitterrand (1916-1996) said in 1983:

"If the spirit of Europe is no longer menaced by the great totalitarian machines that we have known how to resist, it may be more insidiously threatened by the new masters- economism, mercantilism, the power of money, and to some extent technology" ₄₃

Could the misunderstanding on audio-visual services between the US and the EU be a simple matter of vocabulary? The Americans refer to the movie industry as part of the entertainment business. College classes or textbooks, such as Entertainment ₄₄ industry Economics by H.Vogel (1998), treat the movie industry along with television and radio, music, publishing, toys and games, gaming and wagering, professional sports, performing arts and amusement parks. A quick look at the content of a French textbook dealing with Culture Economics, like l'économie de la culture by F. Benhamou, would reveal chapters on performing arts, fine arts, museum and heritage, cultural policies and a chapter on cultural industries including publishing, music and cinema. The Europeans will typically include the motion pictures in their definition of culture along with music, performing arts and publishing, all items that Americans would consider as entertainment. Reciprocally, an American textbook on art and culture, like Heilbrun's Economics of art and culture-An American Perspective (1993), would be exclusive of the cultural industries. In Europe, the accepted term for "filmed entertainment" is the technical term of "audio-visual". ₄₅

Supposedly the Europeans would not object to call Hollywood movies "entertainment" and to praise a certain type of American production, involving Woody Allen or Cassavetes, by naming this production art or "cinéma d'auteur". Thus revealing that the non-acceptance in the European parlance of the "entertainment" terminology is the rejection of some kind of 'commercial' inference symbolised by Hollywood. This censorship prevails even among those, academics or media professional, who clearly accept the economic aspects of the movie industry. The French President could declare in Mauritius in October 1993 during the warming-up of the GATT dispute in a very tailored sentence, "intellectual creations ("créations de l'esprit") are not merchandise, cultural services are not mere trade". The reluctance or simple rejection of the commodification of culture is widespread in the European public debate. "Culture sieved through the narrow accountancy of a sterile search for value for money" ₄₆ as Hewison put it. The refusal to consider culture as a commodity is a regular theme in the French monthly "Le Monde Diplomatique". For example, in an article cleverly entitled "Pour resister à Hollywood" (To resist Hollywood), L. Tamaris wrote

"la fabrication de l'imaginaire d'un peuple met en jeu des principes supérieurs à celui du libre-échange" (the imaginary fabric of a nation involved principles that are superior to that of free trade).

The academic critique of the economic paradigm in audio-visual studies is centred on the necessity of cultural standards, which are inevitably normative. Dyson argued, for instance, that "cultures may be reconstituted by economic, technological and social changes. But that factor does not make the economist, the technologist or the sociologist the appropriate person to advise the media about cultural standards; and without standards there would be no culture worth speaking about" ₄₇ . Dyson basically condemned the economic approach in media studies: "acting as ideologist of (the middle classes) economists argued that self-interest and personal aggrandisement would maximise public advancement. Professional economists with their market paradigm played accordingly, a central role in transforming media discourse." ₄₈ And concludes that "the danger is that, as our popular culture flourishes in the form of the "cultural industries", organised as a lean market-oriented production process, so the quality of our common life will diminish." ₄₉ The question, however, with cultural standards is: whose standards? For example, the standards of 'quality' represented by the public broadcasting services could ironically make the commercial television magnates appear as proto-Marxist champions of anti-elite radicalism like Kirch in Germany. ₅₀ Also Murdoch in the UK who could declare:

"Much of what passes for quality on British television really is no more than a reflection of the values of a narrow elite which controls it and which has always thought its tastes are synonymous with quality- a view, incidentally, that is natural to all governing classes."

₅₁

However, Hollywood remains the leader on the world filmed entertainment market and, as such, the symbol of commercialism in culture. Hollywood therefore concentrates in its movies most of the criticisms attached to commercial culture and what implicitly derive from it, i.e. triviality, vulgarity etc. It is interesting to note that these accusations are not specifically European but are also recurrent in the American public debate. Hollywood realised very early that its commercial success was highly dependent on accommodating US public concerns with some kind of "cultural standards". The trade organisation of the US motion pictures industry was created with the explicit task of self-regulating film making by imposing guidance or restrictions on creative people. From the old Production Code to the 'Movie ratings' and 'TV parental guidelines' of today, social control prevails as the main domestic role of the MPAA. Nevertheless, it does not totally prevent the conservative fringes of the American society from regularly assaulting Hollywood. During the last presidential campaign, the Republican candidate, Bob Dole, in a harsh attack on Hollywood, stated that "our popular culture threatens to undermine our character as a nation" dwelling on "nightmares of depravity"-movies that contain "casual violence and even more casual sex" ₅₂ . It can be argued that US cultural standards, low tolerance for explicit sex, bad language and relative acceptance of violence do not exactly meet European standards, at least in their ranking. However, Dole's contention that Hollywood is undermining "our character as a nation" would not be displaced in the left-wing "Monde Diplomatique". Some American authors like Prindle ₅₃ , stretching the paradox, even claimed that Hollywood is indeed more about ideology than commerce. Prindle argued that there is a systematic liberal (left wing) bias in Hollywood ₅₄ . It seems that Hollywood private ideology might be different from its public expression through film production, notably because it involves the intention of making a profit. And, Gans ₅₅ quite rightly replied to Prindle by reintroducing the economic argument:

"Entertainment is a distinctive business. Unlike, say, the supermarket business, which must reflect the demands and wishes of the general public, entertainment caters to a set of specific and fickle audiences, and has to be, virtually by definition, deviant, daring, and even oppositional to the values of these audiences. Popular movies and TV programs are not about everyday marriage but about passionate and violent affairs; they do not deal with car theft but with murder; they ignore life in the suburbs for life in the Mafia."

The anti-economist ideology sometimes walks along paradoxical paths. The French Director Bertrand Tavernier, for example, accused the EU trade negotiators of being narrow minded free-traders in their misinterpretation of the importance of the film industry. According to Tavernier they ignored the true intention of the American audio-visual sector that is to conquer the world for American products- the essence of American ideology:

"Aux Etats Unis, on a compris depuis longtemps que l'industrie de l'image drainait de nombreux autres secteurs économiques. Il n'est pas seulement question des images que l'on achète ou que l'on vend, mais de tout ce que v&ecute;hiculent ces images, qui permettent d'exporter la musique, les habits, la nourriture, les boissons- une ideologie am&ecute;ricaine." ₅₆

Again, these considerations bear some resemblance with recent anti-smoking campaigns in the United States accusing Hollywood of inducing the teenagers to smoke with glamorous portrayals of tobacco use on television and in movies. Vice-President Gore took the lead in this battle declaring:

"We know that popular culture has an enormous impact on our children's habits and on America's values (...) today, as more and more children start smoking, the fact is that smoking in the movies is way up as well. " ₅₇

The argument that audio-visual media are indeed shaping consumption is not recent. Hollywood started in the 1940s to show trademarks in the movies. In 1945 in a Warner's movie, Mildred Pierce, Joan Crawford conspicuously drank Jack Daniels Bourbon. Today, as Patt Morisson complains:

"rather than staying home and watching free TV, which has too many commercials, we pay $7 to enjoy a commercial-free theatrical film, only to find it stuffed with visual commercials: Meryl Streep sipping 7-Up out in Madison County (...) Michelle Pfeiffer the high school teacher eating a Butterfinger bar ₅₈ ."

Product placement is now common practice with its standard legal contracts whereby manufacturers seek to promote and/or protect their brand names. There are some studies showing the importance of the phenomenon and tolerance of the public for product-placement practices. ₅₉ But very little is known on the real impact of these subliminal messages. There are good reasons to believe that the sales of Ray-Ban's Predator worn by Will Smith and Tommy Lee Jones in Men in Black increased; as did the sales of Reese's Pieces Candy after ET in 1982. Karen Sortito, senior vice president of promotions for MGM, by crediting the $100 million in added world-wide media exposure from companies including BMW, Visa, Ericsson and Smirnoff for the box-office success of the last James Bond movie Tomorrow Never Dies, ₆₀ seems a bit self-serving. MGM also benefited from the advertising of Bond tie-in products effectively gives the movie, an additional $50 million worth of free promotion. ₆₁ James Bond has always been a major advertiser ₆₂ . However, a great deal of the brands advertised by Hollywood is not even American. Ironically for Tavernier's comments, in Tomorrow Never Dies, the main lesson is that 007 in his BMW, in a German (European) trade war of sorts, writes off the bad guys in a Mercedes.

A reason that could explain Tavernier's anti-economist ideology and that of other European filmmakers is that the general environment of the European cinema is not very entrepreneurial. The argument of the "Fortress Europe" in audio-visual services that would confine the European cinema in a "Cultural ghetto" is put forward by Dale. ₆₃ Dale claims that:

"while the American majors thrive on high-risk free market capitalism (...) quotas and subsidies have herded European cinema in a cultural ghetto from which it is very difficult to conduct a rational debate." ₆₄

He blames an aristocratic State patronage for this situation. It is true that public policies in Europe are based on the assumption that the motion pictures industry performs the public function of defending national culture, in its anthropological definition. Dale's macroeconomics does not however seem totally convincing; in particular, the figures of actual State subsidisation, he advances without further explanations: "70% for the average continental film, and 50% of the average British film" ₆₅ or even 80% of the average negative costs, are simply ridiculous (cf. Annex III). More important, it seems, is the microeconomic environment in which the cinema operates in Europe. The subsidising procedure is a process whereby the State delivers cultural labels. Obtaining such a label, like the CNC agreement in France, is not only worth State aid but also works as a "greenlight" for a movie. That alone makes the movie business in Europe different from that in America ₆₆ in which the "greenlighting" is the basic economic risk of a private investor. Indeed, the anti-economist ideology fits well in the actual political economy of the European cinema. This rejection of the economic paradigm in favour of a cultural one is self-reinforcing. It is an ideology in that it is circular: our business is not like any other business because we perform a public interest function and hence deserve public support; since we are publicly supported we are not a business like any other business. It is therefore no mystery that the 'economist' (and free trade) discourse of, say, the European Commission, generates such irritation in the European movie community.

 

The European Neurosis

neu.ro.sis n, pl -ro.ses [NL] (ca. 1784): a mental and emotional disorder that affects only part of the personality, is accompanied by a less distorted perception of reality than in a psychosis, does not result in disturbance of the use of language, and is accompanied by various physical, physiological, and mental disturbances (as visceral symptoms, anxieties, or phobias) ₆₇

A sort a neurosis seems to characterise European behaviour with regard to international audio-visual trade. Of course, the provocative use of this word outside the context of psychopathology does not imply that the Europeans are either 'disturbed' or that they act irrationally, preposterously or fallaciously. It does not mean that the cause of that behaviour is a figment of European imagination; the deficit in audio-visual trade is a reality. The qualification of 'neurosis' refers here precisely to the way the Europeans are coping with this reality. It seems that contemporary history offers multiple examples of the Europeans dealing with their 'Hollywood problem'. ₆₈ Neurosis refers to the repetitive pattern of coping with this embarrassing reality: Hollywood cultural hegemony. As Ellwood put it:

"contemporary experts are virtually united in their belief that the mechanism which has traditionally connected the impact to the fear (Hollywood power) is not a direct one." ₆₉

Ten thousand persons demonstrating in Paris streets on a Sunday led by the most famous actors and directors of the day: Yves Allegret, Simone Signoret, Jean Marais, Louis Daquin, Jacques Becker. That was on January 4, 1948. The demonstrators were protesting against the effects of the Blum-Byrnes Agreement, named after the US Secretary of State, James Byrnes, and the old socialist statesman, L7éon Blum, who had signed on May 28, 1946 a accord whereby France would lift her 1930s restrictions on US film imports in exchange of financial aid to reconstruction. The Blum-Byrnes agreement had immediate consequences: the releases of French movies went down from 96 in 1945 to 91 in 1946 and 78 in 1947; meanwhile in the first half of 1947 not less than 338 US movies had been released in French theatres. ₇₀ Again, in the summer of 1993, at the end of the Uruguay Round, the French movie profession mobilised in favour of the notion of "cultural exception". At that time, the US market share was 60% of the French theatrical box office and 50% of TV fiction time. Early 1998, another repetition occurred as the negotiations on the MAI (Multilateral Agreement on Investment) were approaching their conclusions at the OECD. The European cinema lobby saw another threat to national film policies and France rallied again around the "cultural exception". _{71 72}

France presents convincing and well-documented evidence of the European neurosis. ₇₃ During the 1993 crisis, which coincided with the release of Spielberg's movie, the French culture minister declared without irony that the dinosaurs of Jurassic Park were threatening the "cultural identity of France" ₇₄ . In an opinion published in "Le Monde", ₇₅ he wrote in the language of the 1930s far-right league Action Française: "we must not let our souls be asphyxiated, our eyes blinded, our businesses enslaved (...) let us mobilise for this battle of survival". The director F. Tavernier referring to the "genocide" of the Indians proclaimed "we cannot allow the Americans to treat us in the way they dealt with the redskins." ₇₆ In 1993, the actor G. Depardieu declared that France was the "only country not devastated by the invasion of commercial American cinema"; he echoed another famous actor, Louis Jouvet, arguing against the Blum-Byrnes Aggreement in 1947 by stating that "the change of taste would be irremediable and mortal. Nurtured on the wine of Bordeaux, ours stomachs would be forced to accustom themselves to Coca-Cola- a process that would spell the abdication of Frenchness". ₇₇ Again, on February 16, 1998 a rally was organised in the legendary Odeon Theatre in Paris by writers, actors and producers' organisations in presence of the French culture minister with the support of France Television and "Le Monde Diplomatique" under the banner "Cultural exception in the MAI: a question of survival." ₇₈

However, examples of cultural allergy to Hollywood may be found in other European countries. An often cited article, from the London Daily Express in 1927, commented that in England "the bulk of picture goers are Americanised to an extent that makes them regard the British film as a foreign film" and the author added that "they talk America, think America, dream America; we have several million people, mostly women, who, to all intents and purposes, are temporary American citizens." That same year, in 1927, the Cinematograph Films Act was passed by Parliament, which required that a certain minimum proportion of the films exhibited in British theatres be of domestic origin. In 1993, seven European directors, none of them French, including Almodovar (Spain), Bertolucci (Italy), Puttnam and Frears (UK), Wenders (Germany) published in Variety a "Letter to Martin Scorsese and Steven Spielberg. ₇₉ The latter had accused Europe of endangering the freedom of expression. They claimed that they were the "dinosaurs of 1993" "desperately defending (their) tiny margin of freedom (...) trying to protect European Cinema against its complete annihilation" and appealed to the solidarity of their American colleagues to defend "(their) common craft, art, industry and language". Similarly, in her 1998 "blitzkrieg" against the MAI, France received the spontaneous support of several European countries including Italy, Belgium and Greece along with non-Europeans like Australia and Canada.

The way in which European elites are coping with American cultural hegemony since World War I is well analysed by authors such as Kuisel, de Grazia, and Ellwood. They all claimed that European attitude towards Hollywood is determined by a collective sense of insecurity vis-à-vis modernity, independence or national identity. As Kuisel put it "the debate about the American model continued because this was a discussion among French (could read Europeans) about their future". ₈₀ It is also striking that those recurrent crises, with their thrill and colouring, alternate with moments of dejection and melancholy as in a typical neurosis. As Le Monde recently noted, after the MAI episode, cultural exception is a "pessimistic consensus". ₈₁

Moreover, it can be argued that the European neurosis seems to refer to a "Golden Age" of the European cinema. There is a mythical golden age of European Cinema of the Lumières brothers and of the times, before the advent of sound, when Path&ecute; was dominant on the world market. In 1993, for example, Tavernier referred to the long-standing dispute over who should be credited as the actual inventor of the cinema, Edison or the Lumières. ₈₂ But the actual golden age is more recent. Cinema historians establish the apogee of European movie industry, in the 1930s-1940s, at the time when authoritarian regimes first ruled in several countries then momentarily dominated Europe. Both fascist Italy and nazi Germany made considerable efforts to build national movie industries by basically emulating Hollywood. Mussolini inaugurated in May 1937 the huge studios of Cinecitta, in Rome, combining craft-based organisation, the most advance equipment under the supervision of a Hollywood-trained engineer. Italian movie releases went up from 31 in 1927 to 83 in 1940 and 119 in 1942. Very few of these were political but rather " white telephone" style, a "clever commercial blend of Italian social commentary and Hollywood melodramatic formulae" as De Grazia put it. ₈₃ In Germany, as from 1933, the cinema was under the personal supervision of Goebbels, Minister of Public Enlightenment and Propaganda, who conducted a mix-policy of industrial rationalisation, trade restrictions (against US imports), star-system and international co-production. De Grazia noted ₈₄ that Goebbels organised biweekly private screenings of Hollywood movies for German producers. These working sessions were aimed at emulating American style, which led Goebbels as from 1942 to promote entertainment in movie production, Unterhaltungsfilm. Non-ideological was the style of the German cinema when, in 1942, it consolidated in the giant holding UFA and became synonymous of European Cinema. In occupied France isolated from US imports, World War II was also, like in Hungary for example, a golden age. La Continentale, created by the occupyingGermans, made a number of remarkable movies in co-production with the German UFI. At the end of World War II, the US foreign policy by coercion (dismantling of UFI in Germany), menace (Blum-Byrnes Agreement in France) and seduction (representation of US industry in ANICA, the Italian trade organisation) put an end to the true Golden Age of the European Cinema and re-established Hollywood supremacy.

The European neurosis originates in this unspeakable past: the golden age of the European Cinema was the darkest period of Europe contemporary history. References to this 'glorious' past appear only in lapses or inaudible sighs. Tavernier, for example, candidly stated that

"The dictators are paradoxically those who often best understand the importance of imagination. Franco controlled the Spanish cinema and liked it so that he went, it often ignored, as far as to write the screenplay of Raza" _{85 86}

The lapsus, of course, here is the word "paradoxically". Long ago, Lenin had declared: "The cinema is for us the most important of the arts". Dictators indeed understand the importance of imagination and remain close the creative work: Hitler's damned soul (Goebbels), Mussolini's son (Vittorio) or Lenin's wife (Nadezhda Krupskaya). Democratic Europe cannot easily cope with her dark side; hence European neurosis in audio-visual matters.

 

The strength of Hollywood Lobby

In examining why Hollywood is a major player in the formulation in the US trade policy, there are several elements to consider. First, although the economic weight of the motion pictures industry is probably overestimated, as previously argued, it is not negligible and it is highly visible. The second element is the nature of the relationship existing between Hollywood and Washington as described by Brownstein, in The Power and the Glitter ₈₇ . The third element is the articulation between the economic importance of Hollywood and its political voice; the way in which the Hollywood lobby operates.

Apart from its undeniable economic power, Hollywood enjoyed a special relationship with the US federal capital based on a sort of mutual fascination. As Brownstein put it

"Practical campaign help and mutual social envy explain much of the attraction between Washington and Hollywood, but not all of it." ₈₈ "For politicians associating with celebrities is, consciously or not, part of a search for legitimacy at the most fundamental level." ₈₉

No politician generates the same excitement as a popular entertainer. As President W. H. Taft confided to Mary Pickford, the first Hollywood star during the silent era, "all the people love you and I can't even have the love of half of the people." The Kennedys, father and sons, are the most obvious example of politicians enthralled by Hollywood. They have inspired others, most of them Democrats, like Gary Hart who was swallowed up by Hollywood with disastrous consequences or more recently Bill Clinton. Hollywood because of its liberal bias is clearly a Democratic constituency. ₉₀ Prindle ₉₁ ironically recalls how, under the Reagan presidency, the actors who had a corporatist concern with some kind of tax reform searched among themselves for one who had access to the White House and could only find Charlton Heston who eventually was sent to Washington. Republicans, like Charlton Heston, Arnold Swartzenegger or Bruce Willis are a minority. Reagan who came to politics through his activism in the actor's guild and who only became a Republican in 1964 in the Goldwater campaign is atypical. The politician Reagan was considered as an outsider by both Hollywood ₉₂ and Washington, not that it prevented him from being a very popular President. The relationship between Hollywood and Washington changed over time. At Warner Bros., Jack Warner was busier courting media barons like W.R. Hearst, than politicians. But he was careful enough to delegate the political meddling to his brother Harry. An interesting episode of the industry-government relation occurred at the end of the studio era with the witch-hunt of the House Un-American Activities Committee (HUAAC). The search for Communists ₉₃ had also strong anti-Semitic connotations. The studio moguls, most of them Jewish, and unsympathetic of the politics of the HUAAC decided nevertheless to acquiesce and engaged in the blacklisting policy. ₉₄ With the advent of television the political world realised that Hollywood could produce political symbols strong enough to surmount languages and borders, like the poster of Gary Cooper as a sheriff used by Solidarity in the 1989 Polish elections. Symbols such as strength, honesty etc. are the essential nutriment of politics. ₉₅ In the television age politicians are "just one more supplicant pressed up against the Hollywood glass." ₉₆ It is like being in a literary delicatessen to observe some of these bright and Harvard or Yale educated politicians fraying with Hollywood mavericks. But similarly interesting is the quest for respectability by Hollywood stars for whom politics is just another stage to exercise their ego. ₉₇ As Brownstein put it "the capital of power and the capital of glamour are inextricably bound" ₉₈

How do the true Hollywood political operatives cultivate the Washington link? Partly with help of the celebrities like Jack Valenti entertaining Washington with private screenings and parties at his headquarters of 1600 I Street. But partly, only. A first measure of the influence of motion picture industry can be given by comparison to another industry similarly dependent on exports, the software industry for example. The case of Microsoft, as the very symbol of the software industry, is revealing. For years Mr. Gates and Microsoft have behaved with disdain for politics typical of the West Coast techno-elite. The software industry had so far always thought that defending against government meddling was a job for oil companies and other dinosaurs. But it has had a rude awakening: accusations of anti-competitive practices, Senate hearings... More telling maybe was the fight over encryption or the battle lost with Congress and the White House over controls on Internet content (later thrown out by the Supreme Court). It seems that the clash of cultures goes a long way toward explaining why the booming high-tech industry remains something of an outsider in the world of politics and government. "The very qualities of individual initiative, rational intellect and bristling self-confidence that have allowed Silicon Valley pioneers to flourish in business have contributed to the industry's fumbles in the slow, cumbersome, consensus-driven arena in which political business gets done". ₉₉ Things are slowly changing: the 1997 tax bill, for instance, granted high-tech companies a much-sought tax break for income generated by ... software exports! Microsoft and the software industry are however a bit like Germany in its international relations after the "economic miracle": an economic giant and a political dwarf. Hollywood is the exact opposite and moreover does not enjoy the same kind of cultural difference. Unlike that of the Silicon Valley, Hollywood's creativity is like a political sponge. As Shields put it "to see and to feel the honest-to-goodness passion of populist politics today, forget Washington and look to Hollywood. Go to the movies, in particular three current hits, As Good as It Gets, Titanic and Good Will Hunting." ₁₀₀

Arguably the historical and single role of the Hollywood lobby, in short the MPAA, has been to minimise government interference both on the domestic side by preventing content censorship and, on the international front, by fighting trade barriers and securing property rights. If for the domestic objective cajoling legislators sufficed, the international objectives required more sophisticated articulation vis-à-vis the US government apparatus. Segrave ₁₀₁ notes that in 1916, i.e. prior to the creation of the motion picture association, US consuls were instructed to report on the market for American movies and that the government, in turn, made this information available to the industry. Since its creation in 1922, the movie trade organisation has always recruited prominent and experienced political operatives. Will Hays, Eric Johnston, Jack Valenti successively led the organisation and their teams have always been packed with diplomats, trade specialists, and lawyers with substantial government experience.

Interestingly the rationale for government intervention as put forward by the Hollywood lobby has changed over time. Before World War II industry rhetoric was that American films served to Americanise the world. ₁₀₂ The post war line was that American films created good will towards the US as a superpower in her fight for democracy and against communism. ₁₀₃ Since the end of the cold war, in the context of the 'end of history', the discourse of the industry surfs on the liberal wave of trade and free speech to conquer new markets and secure the traditional ones. To paraphrase Maltby ₁₀₄ Hollywood has become just a "harmless entertainment".

However, Washington's support for Hollywood's cause has never faltered in this secret war against the barriers erected before US films. As Jarvie put it "ambassadors and trade representatives were deployed, briefed, prompted and reminded". ₁₀₅ A Circular to All Diplomatic Officers signed by Assistant secretary of State A.A. Berle, February 1944, stated:

"The Department desires to cooperate fully in the protection of the American motion picture industry abroad. It expects in return that the industry will cooperate wholeheartedly with this government with a view to insuring that the pictures distributed abroad will reflect credit on the good name and reputation of this country and institutions" ₁₀₆

The motion picture association was permitted to use State Department secure communications facilities for sensitive messages. In many cases, the motion picture association negotiated directly with foreign governments, threatening US retaliations in some instances. The State Department has also efficiently relayed the 'Little State Department', as the MPAA liked to call itself. The post World War II diplomacy of a MPAA dominated by the desire of the film industry to regain its lost markets in Europe is well documented by the historians. ₁₀₇ The US Governmental Organised, through the Office of War Information (OWI), as from 1944, the systematic flooding of the liberated countries with the backlog of Hollywood war production. The United States, as an occupation power in Germany, immediately dismantled UFI. It was very active in Britain, where the Film Attaché at the London US Embassy, Don Bliss, worked hand-in hand with the motion picture association delegate in Europe to amend the 1927 Cinematograph Act. In France, the Secretary of State, Byrnes, signed with Blum in 1946 a agreement guaranteeing US films free access to French theatres. During the 1947 negotiations in Havana, the State Department advocated on behalf of the industry, though without success, specificity for motion pictures in the GATT. The US diplomatic service promoted Hollywood fiction through the Economic Recovery Administration's International Media Guaranty (IMG) created as part of the Marshall Plan. The most recent period is for obvious reasons less documented. As for the 1993 battle and its aftermath the reading of the USTR's and MPAA's ₁₀₈ respective memos and exchanges would certainly make fascinating reading; in particular, the way the US Government and the industry in 1994-1995 orchestrated a campaign in EU countries to soothe European irritation and re-adjust their strategic objectives. Also the rumour that US foreign policy made market access for Hollywood products one condition for the membership of former eastern European communist countries in such organisations as the OECD and NATO has never been denied.

 

Culture and the State

"Si c'était à refaire il faudrait commencer par la culture" (if we had to do it again we should start with culture) had said Jean Monnet, the first President of the European Commission. During the 1993 GATT psychodrama, he was echoed by his successor, Jacques Delors, who justified the insistence on the cultural exception by referring to the "kings and the bishops" and the secular tradition of patronage in culture. These assertions point to a possible source of misunderstanding between Europe and the United States, a country that had a President privately confessing "the arts is not our people, we should dump the whole culture business." Indeed State encouragement to culture seems as embedded in European society as the right to keep and bear arms in the American society; the only acceptable policy issue appears to be the way to accommodate the tradition.

At first sight, it is clear that the Church and the political power, only recently separable, played a major role in the history of the arts in Europe. The Dukes of Burgundy in the 15th century were the major producers of their time. They invested massively in the Flemish Art and Jan Van Eyck from Ghent (then in the Netherlands, today Belgium) was the official painter of Philippe the Good (1419-67). At the same epoch, the performing arts were the domain of the Catholic Church. The "Sacra rappresentazione", the Italian ecclesiastical drama, was flourishing in Florence, representing scenes of the Old and New Testaments and dramatising the punishment of vice and the reward of virtue like in a movie of Cecil B. DeMille. Based on similar codes, the Jesuit drama born in the Collegio Mamertino at Messina in Sicily in 1551 prospered until the 18th century. The Medici family was notable for its patronage of the arts, supporting projects by a list of masters that included Brunelleschi, Michelangelo, and Cellini.The Borghese family played a similar role. The Pope Clement VIII (1592-1605) was the urban developer of Rome, which he enlightened with Baroque creations. Richelieu founded the Académie Française in 1634 and Louis XIV the Comédie Française in 1680. In Britain, the Royal Society was established in 1660. Jean-Baptiste Lully ruled the French Opéra from 1672 until his death in 1687. Haendel was appointed Kapellmeister to the Elector of Hanover, the future King George I of England, in 1710. The Arts Council of Great Britain created in 1946 subsidies the National Theatre, Royal Shakespeare Company, English National Opera and... movie production. Today in all EU Members there are ministers at Cabinet-level in charge of cultural affairs. Moreover, culture, which was omitted in the 1957 Treaty of Rome, has become a prerogative of the European Union after the Maastricht revision of 1993.

If State meddling with culture is a seemingly solid European tradition, nothing seems more alien to public affairs in the young American republic. Whilst there are many agencies dealing with the arts or, in some cases, with "cultural affairs" (generally including tourism) at the state level, the United States has no federal cultural policy and federal spending in cultural matters are limited and always controversial; ₁₁₀ see, for example the National Endowment for the Arts and the National Endowment for the Humanities created in 1965. As Nelson Rockefeller put it "it takes courage to vote for culture when you're in public life." ₁₁₁ The most obvious explanation lies in the ethnic and cultural diversity of the United States. But, more fundamentally, the reluctant interventionism in cultural affairs is deeply rooted in the US constitutional history and its Jeffersonian tradition. The author of the "Kentucky resolutions" (1799) opposed federalism on the basis that all powers not specifically granted to the central authority were retained by the individual states or by the people. This individualist tradition is well alive as reflected in current congressional debates. Kammen ₁₁₂ noted only a few exceptions of government support to culture. One of them took place during the Cold War when "a pervasive concern to combat and contain communism prompted an unprecedented array of initiatives by the federal government to export American culture" and a new position of Under-Secretary of State for Cultural Affairs was created. ₁₁₃ Most of these operations during the cold war were conducted by the Central Intelligence Agency (CIA). Placed on the defensive by Congress, CIA Director Kennan later justified the role of his agency by stating: "this country has no ministry of culture, and the CIA was obliged to do what it could to try to fill the gap." ₁₁₄ Kammen convincingly argued that these exceptions occurred at times when the American identity, precisely based on individualist traditions, were at risk. He noted, in passing, other major State interventions in culture by dismissing them as purely economic in nature and reflecting no cultural intention. During the New Deal, several federal agencies were created to fund work for cultural artists (painters, sculptors...) and even to produce theatre shows. Kammen also indicated the considerable support provided by the Commerce Department to the movie industry in the 1920s and in the 1940s when the federal government rescued Disney from bankruptcy, again without cultural intention. Kammen's remarks seemingly converged with the reading by Tocqueville ₁₁₅ of the essence of mass democracy in Democracy in America, 160 years ago; and incidentally, its impact on elitist culture.

For Kammen, the American obstinacy to refuse state patronage of culture is also part of the British and Dutch heritage. As he put it, in these countries, "whose destinies were determined by the Protestant Reformation and by the evolution of constitutional monarchy (...) kings and queens did not find themselves in such an absolute position to spend quite so lavishly on cultural projects as a means to glorify their reigns. Consequently they relied more heavily on what we would consider the private sector, as a matter of both policy and of necessity." ₁₁₆ Interestingly Kammen's remarks on America are an invitation to re-visit attitudes toward state patronage of culture in European history in a more careful way.

Let, for example, consider how the largest European nation State, Germany, was constituted in the nineteenth century. Crankshaw, in his authoritative book on Bismarck, ₁₁₇ gives account on the political project of the father of the Second German Reich. Bismarck was no romantic nationalist; he did not believe in the nation, at least in the German nation, but in the State. He federated the fragmented German political entities on the basis of a common culture propagated by the State, through the Kulturkampf, and modern Germany emerged as a Kulturstaat. One of the objectives of this pro-Prussia and Protestant policy, orchestrated by the curiously liberal culture minister Falk, was to combat the Catholic and francophile influence in the southern states. The Bismarckian approach was indeed opposed to the Jefferssonian tradition. Lenin, however, seems to have drawn a lot from Bismarck. He established the first culture ministry embracing book publishing, music, fine arts, cinema etc, whose directorates were headed by wives and sisters of the Bolshevik leaders (Lenin, Trotsky, Kamenev). In short, the strong tradition of cultural interventionism during the first part of the twentieth century in Europe was clearly the characteristic of the authoritarian regimes: Soviet Union, Third Reich, and fascist Italy. The case of France is illustrative. Fumaroli, ₁₁₈ in his book directed against the French cultural policy since the late 1950s, argued quite convincingly that the Bismarckian or Lenist attitude toward culture was not part of the French tradition during the III^rd and the IV^th republics (1870-1958). Culture erupted as a public policy issue in France only after World War II under both the influence of some post-collaborationist circles and that of the Communist Party. The cement of this dual influence was the strong Anti-American ideology already present among French elites since the 1920s. A respected writer originally from the Left with an impeccable Gaullist war, Malraux, the first French Culture Minister, in 1958, had the credentials to pursue De Gaulles's dual objective of countering the United States in foreign policy and the Communist Party on the domestic side. This French cultural policy has flourished and been amplified in the last 40 years. Meanwhile, Britain had pursued a tradition of patronage of the arts at arm's length of politics through QUANGOs (quasi-autonomous non-governmental organisations). Germany has clearly constitutionally departed from centralised cultural policy since the aftermath of the war, under American influence and as part the de-nazification; culture is a prerogative of the Länder and there is no federal Culture Minister.

The context of cultural policy in the European Union is more diverse and contrasted than a superficial look at the long history of the kings, bishops and popes would suggest. Not surprisingly the original landmark of the European Community, the Treaty of Rome, did not mention culture at all, though consensus should arguably have been easier to reach at a time when the Community counted only six countries than today. Monnet's often-quoted remark does not fit very well in the functionalist theory; one wonders what spillover effects could have been generated by such a controversial issue as culture: coal, steel and later, agriculture were surely safer bets. When the European Union decided to embrace culture as part of its prerogatives, it did so in a way that reflects the context of cultural policy in the European union. Article 128 of the EC Treaty reads:

"1. The Community shall contribute to the flowering of the cultures of the Member States, while respecting their national and regional diversity (...) 2. Action by the Community shall be aimed at encouraging co-operation between Member States and, if necessary, supporting and supplementing their action in the following areas: improvement of the knowledge and dissemination of the culture and history of the European peoples; conservation and safeguarding of cultural heritage of European significance; non commercial cultural exchanges; artistic and literary creation, including in the audio-visual sector."

The legal framework of the EU cultural policy is clearly the principle of "subsidiarity", which is to ensure that the Union takes action only when it will be more effective than if left to individual Member States. Ironically, the Aristotelian principle of subsidiarity, which belongs to the Catholic doctrine, ₁₁₉ was invoked by Ludwig Windthorst, Catholic opponent to Bismarck in the Reichtstag, to oppose the Kulturkampf.

 

Conclusion

This paper has re-visited a single incident in the trade relations between the US and the EU that occurred in 1993: the bitter feuds on audio-visual services at the end of the Uruguay Round. This event seems, in the first place, completely disproportionate to the actual interests at stake. Hollywood's supremacy was not seriously contested in the marketplace and not really challenged by Europe's mild protectionism in film industry. An analytical approach based on bargaining theory offers a useful but limited explanation as to why the dispute became so heated. The paper then identifies five factors which could account for trade in culture beyond the traditional economic interests: i) the bias in economic information on Hollywood which makes it appears more important than it actually is; ii) the anti-economist ideology which distorts European perception of cultural industries; iii) the historical bias in European attitude toward Hollywood; iv) the strength of the Hollywood lobby; v) the differentiated attitudes with regard to State patronage in culture. These factors point to the conclusion that culture actually matters in trade.

Obviously policy responses in the field of audio-visual trade have to and do take into account some kind of 'cultural dimension' however complex the definition thereof may be. Cultural industries as examined in another paper ₁₂₀ present both differences and similarities with other industries. It is a fact, however, that Hollywood enjoys a competitive advantage in the industry of filmed entertainment. Any policy formulation, especially in Europe, cannot ignore that fact. But the United States should also be more as open in its trade policy as it is domestically to the cultural argument.

Since 1993, the US-EU dispute has considerably cooled down. The focus has shifted from quotas and trade barriers to copyright questions, direct investments and digital technology. However, it is claimed that the tentative model presented here helps understand these new challenges and develop policy responses.

 

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Gans, H Hollywood Entertainment: Commerce or Ideology, Social Science Quarterly, Vol 74, Number 1, March 1993

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Heilbrun, J., The economics of art and culture, Cambridge, UK: Cambridge University Press, 1993

Hewison, R. Culture and Consensus: England, Art and Politics since 1940, London: Methuen, 1995

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Jarvie, I, Dollar and ideology: Hollywood and Government, 1922-1945, Film and History, 2, 1988, pp. 207-221

Jarvie, I. C. Hollywood's overseas campaign : the North Atlantic movie trade, 1920-1950 Cambridge [England] ; New York, NY, USA : Cambridge University Press, 1992.

Kammen, M., Culture and the State in America, The Journal of American History, December 1996, pp.791-814

Kuisel, R Seducing the French : the dilemma of Americanization Berkeley and Los Angeles, California : University of California Press, 1993.

Lacorne, D et al. Eds, l'Amérique dans les Têtes: un siècle de fascinations et d'aversions, Paris: FNSP 1986

Maltby, R Harmless Entertainment, Hollywood and the Ideology of Consensus Metuchen, NJ and London: Scarecrow Press, 1983

Maltby, R Hollywood cinema : an introduction Oxford ; Cambridge, Mass. : Blackwell Publishers, 1996.

McAnany E.G. and Wilkinson K.T., Mass media and free trade, Austin: University of Texas Press, 1996

McMahon, D Echoes of a Recent Past: Contemporary French Anti-Americanism in Historical and Cultural Perspective, Columbia International Affairs Working Papers, January 1995

Mill, J. S. Utilitarianism, London : Collins/Fontana, 1962

Mitchell, A Selling Points: On TV, product placement is limited; in films, it's big business. Management today (London, England). p 81 February 1996

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Murdock, G Branded Images Sight and sound Volume 2, Number 3 p. 18 July 1992

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And articles from:

• Broadcasting and Cable
• Daily Variety
• Economist (The)
• Financial Times (The)
• Forbes
• Guardian (The)
• Hollywood Reporter (The)
• Libération
• Los Angeles Times
• Monde (Le)
• Monde Diplomatique (Le)
• New York Times (The)
• Official Journal of the European Communities
• Wall Street Journal (The)
• Washington Post (The)

Annex I : Number of headlines containing the name of the firm in 1996-1997

Source: EMI ; All Press includes the following titles: Afro - American Red Star, American Banker, Amsterdam News, Atlanta Constitution, Atlanta Journal, Barron's, Boston Globe, Call & Post, Chicago Defender, Chicago Tribune, Christian Science Monitor, Denver Post, Detroit News, Detroit News and Detroit Free Press, Guardian, Houston Chronicle, Houston Post , Los Angeles Times, Michigan Chronicle, Muslim Journal, New Journal & Guide,New York Times Book Review, New York Times Magazine, New York Times, San Francisco Chronicle, Sentinel (Los Angeles), St. Louis Post — Dispatch, Times — Picayune, USA TODAY, Wall Street Journal,Washington Post

Annex II : Thirty five largest positive net contributions to the US balance of goods and services in 1993 and 1993 (million dollars)

		1996	1993
1	Agricultural commodities	26810	18298	Agricultural commodities
2	Royalties and license fees	22652	17465	Aeroplanes
3	Travel	21169	17162	Travel
4	Aeroplanes	15034	15485	Royalties and license fees
5	Business, professional and technical services	13994	10096	Business, professional and technical services
6	Corn	8509	7101	Gold, nonmonetary
7	Scientific instruments	8238	6873	Airplane parts
8	Airplane parts	8236	6766	Scientific instruments
9	Chemicals - plastics	8026	6136	Affiliated services
10	Soybeans	7416	5971	Education
11	Specialized ind. mach.	7189	5896	Chemicals - plastics
12	Affiliated services	6784	5298	Passenger fares
13	Education	6766	4984	Other unaffiliated services
14	Wheat	6049	4558	Soybeans
15	Other unaffiliated services	5625	4466	Wheat
16	Chemicals - n.e.s.	5106	4443	Corn
17	Financial services	4850	4061	Specialized ind. mach.
18	Passenger fares	4781	3894	Chemicals - n.e.s.
19	Cigarettes	4670	3628	Financial services
20	Meat and preparations	4651	3428	Cigarettes
21	Gold, nonmonetary	3906	3096	Animal feeds
22	Animal feeds	3554	2684	Coal
23	Coal	3249	2433	General industrial mach.
24	Records/magnetic media	2478	2041	Power generating mach.
25	Cotton, raw and linters	2436	1969	Printed materials
26	Chemicals - cosmetics	1906	1874	Records/magnetic media
27	Chemicals - fertilizers	1666	1796	Chemicals - organic
28	Printed materials	1654	1654	Vehicles/parts
29	General industrial mach	1411	1616	Chemicals - medicinal
30	Pulp and waste paper	1389	1562	Cotton, raw and linters
31	Hides and skins	1383	1562	Meat and preparations
32	Mineral fuels, other	1347	1239	Chemicals - cosmetics
33	Rice	874	1210	Other mineral fuels
34	Chemicals - dyeing	568	1092	Pulp and waste paper
35	Spacecraft	404	1067	Hides and skins

Source: Report FT900 (93) (CB-94-98), Bureau of the Census, Foreign Trade Division, FINAL 1993, Exhibit 14: Exports and imports of goods by principal SITC commodity groupings; Report FT900 (96) (CB-97-99), Bureau of the Census, Foreign Trade Division, FINAL 1996. Exhibit 14: Exports and imports of goods by principal SITC commodity groupings; US International Sales and Purchases of Private Services, Survey of Current Business, Bureau of Economic Analysis, October 1997

Annex III : statistical approach of State subsidies in the French movie industry

A general idea is given by the French Government's budget for 1995 (in US $)*, in terms of public support for filmed entertainment.

Income		Expenses/Subsidies
Box office tax	99	cinema and video	216
Video tax	14	television (fiction, documentary, animation)	170
TV tax	284	administrative costs	15
Other	4
Total	401	Total	401

Breakdown for 'cinema and video'
Production-distribution	151
Exhibition	60
Video	5
Total	216

(Source: CNC Info May 1996, Centre National de la Cinématographie)

It reveals that the total amount of subsidy for movie production and distribution was budgeted in 1995 at a level of $151 million. The number of French movies in 1995, as previously defined, was 97 (+32 majority foreign coproduction and 12 supported East-European movies) ; i.e. 141 films eligible for subsidy. Subsidies to theaters amounting to $60 million obviously do not discriminate against non-European movies.

The average negative cost of a French movie was $5.6 million and the median $4.1 million. Only 15 French movies had negative cost above $10 million ; two above $20 million.

A closer look, however, at the CNC annual report reveals that direct subsidies to the negative costs of French movies and other coproductions were actually lower. The budget was globally underspent, more than $66 million were spent on exhibition, about $11 million on distribution, some $3 million on East European films, a couple of million on short movies etc. At the end of the day: about $45 million were spent in 'automatic' subsidies to feature movies and about $20 million in the form of advance on box office revenues (to 50 selected movies).

Back to simple arithmetic : $75 million subsidizing 100 movies equals $0.75 million per movie ; i.e. 0.75/5.6=13.4%

A more sophisticated calculation based on actual budgets for French movies in 1995 gives a rate of 14.4%. See next page (Source : CNC Info May 1996).

Post-scriptum: the market share of French movies in France in 1995 was 35.4% (43.5% for EC12) against 54.3% for US movies. In the top10 in the box office: 5 were French movies and 5 US movies (Pocahontas[3], Die Hard 3[5], 101 Dalmatians [6], Stargate [7], Lion King [8]). There 371 openings in France in 1995: 136 French movies, 134 US movies and 101 others.

 

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Endnotes

Note 1:  Los Angeles Times VI, 1:4; Jun 19, 1989 Back.

Note 2:  This seems defendable, especially since Easy Rider. However, when Japanese clones began to arrive in the United States in the late 1980's - Suzuki's Intruder was the first - Harley was incensed that Honda had managed to duplicate its engines' distinctive sound, a result of Harley's simple crankshaft layout. Harley has applied for a trademark on the sound. Honda, Yamaha, Kawasaki and Suzuki, all today sell Harley-Davidson clones, motorcycles that emulate the Harley look, sound and feel. New York Times COL: 11, 1:1; Jul 20, 1997 Back.

Note 3:  in Sojcher, F. ed. Cinéma Européen et Identité culturelle (1996) Editions de l'Universite de Bruxelles: Bruxelles Back.

Note 4:  The feminists could have been reconciled with a definition of Australian culture by Jane Campion's Piano, a movie supported by the Australian Film Commission, although it was a New Zealand film Back.

Note 5:  Quoted by Sinclair, J in McAnany and Wilkinson eds. (1996) Mass media and free trade, University of Texas Press: Austin p 38 Back.

Note 6:  This part is based on written sources, notably the book published by the EC negotiation coordinator, Hugo Paemen, From the GATT to the WTO, Leuven University Press (1995) and press articles from The Los Angeles Times, The New York Times, Le Monde, The Wall Street Journal, The Hollywood Reporter and Daily Variety. The author interviewed Mr. Paemen as well as officials from the US Trade Representative Office and the Motion Pictures Association of America in Washington, DC in January 1998. The author also greatly benefited from a discussion of the Harvard Business School Case, "The MPAA and the GATT", in Mark Weinstein's class at the University of Southern California Marshall School on February 3, 1998. Back.

Note 7:  Title of Los Angeles on December 15, 1993 Back.

Note 8:  The Hollywood Reporter, December 17, 1993, p. 3 Back.

Note 9:  Communication from the European Community and its Member States, MTN.GNS/W/228/rev.1 of 15 December 1993; see also WRITTEN QUESTION No. 3533/93 by Sotiris KOSTOPOULOS to the Commission. Exemption of cinema and television from the General Agreement on Tariffs and Trade (GATT) OFFICIAL JOURNAL NO. C 255 , 12/09/94 P. 0051 Back.

Note 10:  see for example Galperin, H "Cultural industry policy in regional trade agreements: the case of NAFTA, the European Union and MERCOSUR", paper presented to the 1998 annual conference of the International Communication Association Back.

Note 11:  27 September in Washington, 13-14 October in Brussels, 22-23 November in Washington Back.

Note 12:  Dryden, S; Trade warriors: USTR and the American crusade for free trade New York : Oxford University Press, 1995. p 389 Back.

Note 13:  according to an interview at the MPAA Back.

Note 14:  Los Angeles Times on December 15, 1993 Back.

Note 15:  Broadcasting and Cable, December 20, 1993 p 14 Back.

Note 16:  It was then renewed. Back.

Note 17:  P. 116 Back.

Note 18:  Visible examples of that are: the speech by Valenti at the 1995 Beaunes Rencontres or the speech by Carol Balassa, Media and Communications Director at the USTR, before the Friedrich Ebert Foundation on December 12, 1995. Back.

Note 19:  Total average paid circulation (Source: Variety and Hollywood Reporter) Back.

Note 20:  Disney is mainly a real estate company, which earns most of its revenues from theme parks and resorts. The brand is however shaped by the cultural icons, such as Mickey Mouse. Back.

Note 21:  The name of Rupert Murdoch is chosen because the name of his corporation, News Corp., appears almost exclusively in the business press and the film subsidiary of News Corp is a too common name that causes distortions. Back.

Note 22:  Including the Wall Street Journal Back.

Note 23:  The traditional say is "a movie is like a parachute, if it does not open, you are dead". Back.

Note 24:  Total revenues generated by a movie in its lifetime normalised, for accounting purposes, at 7 to 10 years. Back.

Note 25:  Cited by Maltby in Harmless Entertainment, Hollywood and the Ideology of Consensus Metuchen, NJ and London: Scarecrow Press, 1983, p.3 Back.

Note 26:  Cited by Jarvie in " The Postwar Economic Foreign Policy of the American Film Industry: Europe 1945-1950" in Ellwood, D, Kroes, R eds., Hollywood in Europe: experiences of a cultural hegemony, Amsterdam: VU University Press, 1994, pp.155-175 Back.

Note 27:  Cf; The European Audiovisual Observatory, on the exchanges with North America Back.

Note 28:  Los Angeles Times, April 24, 1998 p. D1 and D4 "Hollywood's Starring Role" Back.

Note 29:  90% of which in Los Angeles County. Back.

Note 30:  Los Angeles Times, 18 January 1998, A1 Back.

Note 31:  Cf. "From Science to Fiction, Military and Entertainment Swap Expertise", The New York Times, October 10, 1997, p.1 Back.

Note 32:  with the notable exception of the news which remain in New York. Back.

Note 33:  18 January 1998, A1 Back.

Note 34:  Cf. Vogel, Entertainment Industry Economics, Cambridge University Press (1998) p. 55 Back.

Note 35:  as defined by the five counties of Los Angeles conurbation: Los Angeles, Orange, San Bernardino, Riverside and Ventura Source: California Department of Finance, Economic Research (1998) Back.

Note 36:  Own calculations based on California Gross State Product (GSP) in 1994 where motion pictures accounted for 1.4% of total and Los Angeles for 40% of California GSP. The assumption is made that all motion pictures services are produced in Los Angeles, which an exaggeration since the San Francisco area (George Lucas studios, for example) is neglected. This exaggeration compensates for time lag and probable under-valuation of motion picture services by national account methodology. Source: U.S. Department of Commerce, Bureau of Economic Analysis, Regional Economic Analysis Division Back.

Note 37:  December 1997 UCLA Anderson Forecast Back.

Note 38:  There is no "Plastics tonight" on television! Back.

Note 39:  Vogel, Entertainment Industry Economics, Cambridge University Press (1998) p. 55 Back.

Note 40:  Libération, 6 April 1998 Back.

Note 41:  Opening Speech by the UK Foreign Secretary, Mr. Robin Cook, 6 April 1998 Back.

Note 42:  Mill, John Stuart Utilitarianism, London : Collins/Fontana, 1962 p.261 Back.

Note 43:  Cited by Alain Rollat "l'Elysée dans la bataille de l'exception culturelle" in Le Monde October 11, 1993 Back.

Note 44:  en.ter.tain.ment n 1: the act of entertaining 2 a archaic:maintenance, provision b obs: employment 3: something diverting or engaging: as a: a public performance b: a usu. light comic or adventure novel Merriam-Webster's Collegiate© Dictionary Back.

Note 45:  Interestingly, an article of the Financial Times dated April 1, 1998 signalled that the International Telecommunications Union, probably in search of consensus, proposed to reduce the confusion created by the increasing number of Web sites by adopting a set of new domains; among them arts for sites emphasising cultural and entertainment activities and rec emphasising recreation and entertainment. In the near future, cinema might be considered by both Americans and Europeans as arts on the Internet. Meanwhile, 'Entertainment', with the connotation of light comic and adventure novel, should remain a taboo word to designate cinema in Europe, or maybe to designate the European cinema. Back.

Note 46:  R. Hewison, Culture and Consensus: England, Art and Politics since 1940, London: Methuen, 1995 Back.

Note 47:  Kenneth Dyson in Culture First, promoting standards in the new media age Dyson, K and Homolka, W london: Cassel (1996) p.18 Back.

Note 48:  ibid. pp. 153-154Back.

Note 49:  ibid. pp. 160-161Back.

Note 50:  Cf. Schulze, G in Culture First, p. 51Back.

Note 51:  Mac Taggart Lecture in Edinburgh 25 August 1989 quoted by Dyson in Culture First p. 16Back.

Note 52:  quoted by Sayre, N Assaulting Hollywood, World Policy Journal, Winter 1995/96, p 51-60Back.

Note 53:  Prindle, D Risky Business: The Political Economy of Hollywood, Boulder: Westview 1990Back.

Note 54:  One of Prindle's arguments is the number of Jews in Hollywood. This is indeed a classic attack on Hollywood that it is dominated by the Jews or, put in a mild language, that Hollywood pictures a non-Christian America. Gabler, N ("An Empire of their Own: How the Jews Invented Hollywood", New-York: Crown 1988), however, demonstrated the true patriotism of the mostly Jewish immigrants who founded Hollywood studios.Back.

Note 55:  Gans, H Hollywood Entertainment: Commerce or Ideology, Social Science Quarterly, Vol 74, Number 1, March 1993Back.

Note 56:  in Sojcher, F. ed. Cinéma Européen et Identité culturelle (1996) Editions de l'Université de Bruxelles: Bruxelles p.43Back.

Note 57:  Los Angeles Times p. A, 25:1 Dec 4, 1997. In January 1998, the American Cancer Society's California division sent J. Valenti a petition with 105,000 signatures deploring the number of smoking scenes in the movies. The package was wrapped in black shiny paper inscribed with the names of Hollywood stars who had died from smoking. J. Valenti replied "I don't see a lot of smoking in films, and I see a lot of films," (Wall Street Journal p. B, 1:3 Mar 17, 1998)Back.

Note 58:  Morrison, Patt "A Word From Our Sponsor" Los Angeles Times p. B, 2:1 Jan 2, 1998Back.

Note 59:  See on the importance of product placement: Mitchell, A Selling Points: On TV, product placement is limited; in films, it's big business. Management today (London, England). p 81 February1996; Solomon, M and Englis, B The Big Picture: Product Complementarity and Integrated Communications. Journal of advertising research. Volume 34, Number 1 p. 57 January 1994; Product Placement Brandweek. Volume XXXV, Number 13 p. 30 March 28 1994; Murdock, G Branded Images Sight and sound Volume 2, Number 3 p. 18 July 1992. On puplic's attitude: Nebenzahl, I; Secunda, E Consumers' Attitudes Toward Product Placement in Movies International journal of advertising. Volume 12, Number 1 p. 1-12 1993Back.

Note 60:  Los Angeles Times p. D, 4:1 Mar 19, 1998Back.

Note 61:  As noted by Pippa Oakes " Licensed to sell Is the real star of the new Bond movie a) a suave British agent, or b) a suave German car? Guardian (United Kingdom) p.13:1 Dec 19, 1997Back.

Note 62:  Goldfinger (1964) Ford cars; Rolex watches (seen when Pussy Galore is flying the plane); Slazenger golfing equipment. You Only Live Twice (1967) Toyota; Pan American Airlines (who flew Bond to Japan in the film). On Her Majesty's Secret Service (1969) Ford (a large number of Escorts are smashed up in the stock car sequence); Berketex (supplied bridal gown for Diana Rigg); Art Galore, Bond Street (wedding rings); Avon (all stock car tyres); Nikon cameras; De Beers (fake diamonds). Guardian (United Kingdom) p.13:1 Dec 19, 1997Back.

Note 63:  Dale, M The Movie Game, The Film Business in Britain, Europe and America, London: Cassel (1997)Back.

Note 64:  ibid. p xBack.

Note 65:  ibid. p 123Back.

Note 66:  Véron, L The Competitive Advantage of Hollywood Industry (1998) to be publishedBack.

Note 67:  Merriam-Webster's Collegiate© DictionaryBack.

Note 68:  Ellwood, D, Kroes, R eds, Hollywood in Europe: experiences of a cultural hegemony, Amsterdam: VU University Press, 1994. De Grazia, V, Mass culture and Sovereignty: The American Challenge to European Cinemas, 1920-1960, Journal of Modern History 61 (March 1989) p.53-87 Back.

Note 69:  Op. Cit. p. 4 Back.

Note 70:  Sellier,G, Le Précédent des Accords Blum-Byrnes, Le Monde Diplomatique, 476, November 1993, p.15 Back.

Note 71:  see "La création audiovisuelle française se mobilise contre l'AMI", Le Monde February 13, 1998; "Fronde contre le projet d'accord multilatéral sur les investissemnts" Libération February 12, 1998Back.

Note 72:  Although the MAI was planned to be signed on April 27-28, 1998 in Paris, the United States apparently aborted the project for domestic political reasons. See "U.S. Backpedals on Investment Pact" Los Angeles Times February 14, 1998; "A l'OCDE, la négociation sur la libéralisation des investissements s'enlise" Le Monde February 17, 1998Back.

Note 73:  See, in particular, Kuisel, R Seducing the French : the dilemma of Americanization Berkeley and Los Angeles, California : University of California Press, 1993. McMahon, D Echoes of a Recent Past: Contemporary French Anti-Americanism in Historical and Cultural Perspective, Columbia International Affairs Working Papers, January 1995; Lacorne, D et al. Eds, l'Amérique dans les Têtes: un siècle de fascinations et d'aversions, Paris: FNSP 1986Back.

Note 74:  quoted in Le Point, September 18, 1993 p. 32Back.

Note 75:  Toubon, J "GATT et culture: laisser respirer nos âmes!", Le Monde October 11, 1993Back.

Note 76:  quoted by McMahon, Op.Cit.Back.

Note 77:  ibid.Back.

Note 78:  Le Monde, February 17, 1998Back.

Note 79:  Daily Varity October 29, 1993Back.

Note 80:  Op. Cit p. 69Back.

Note 81:  Le Monde, April 7, 1998 "l'exception culturelle: un consensus pessimiste" by D. DhombresBack.

Note 82:  cited by Cohen, R in "Out There: Paris; Barbarians at the Box Office", The New York Times, July 11, 1993Back.

Note 83:  Op. Cit p. 76Back.

Note 84:  Op. Cit pp.80-81Back.

Note 85:   in Sojcher, F. ed. Cinéma Européen et Identité culturelle (1996) Editions de l'Université de Bruxelles: Bruxelles p.44 : "paradoxalement, ce sont les dictateurs qui comprennent souvent le mieux l'importance de l'imaginaire. Franco controlait le cinema espagnol et l'aimait au point- ce qu'on a tendance à oublier-d'écrire un scénario de film: Raza"Back.

Note 86:  Another lapsus is, for example, Sellier op.cit. writing "l'occupation allemande interrompit les importations américaines (...) sur tout le territoire, à partir de novembre 1942, pour le plus grand profit du cinéma français qui connut paradoxalement un âge d'or..."Back.

Note 87:  Brownstein, R, The Power and the Glitter, the Hollywood-Washington Connection, New-York: Pantheon Books, 1990Back.

Note 88:  Brownstein, op.cit p.12Back.

Note 89:  Ibid. p. 12Back.

Note 90:  Cf. Prindle, D Risky Business: The Political Economy of Hollywood, Boulder: Westview 1990 and Gans, H Hollywood Entertainment: Commerce or Ideology, Social Science Quarterly, Vol 74, Number 1, March 1993Back.

Note 91:  Op.citBack.

Note 92:  When Reagan was elected Governor of California, a studio executive grumbled "we should have given him better parts". Interestingly, just elected governor, Reagan, asked about what were his priorities had replied "I don't know I never played a governor". However, Hollywood remains cruelly condescending towards Reagan. For example, an exhibition that could be seen in the Warner's museum in Burbank, CA during the spring of 1998 showed the original of a letter by Reagan begging Jack Warner for a job and behind, in the wall, all the posters of Reagan's movies with Warner including a mocked poster pictureing Reagan as the 40th President of the United States-his best part.Back.

Note 93:  Or "premature fascist" as one of the writers was accused of being by the Committee. Back.

Note 94:  See Gabler, N "An Empire of their Own: How the Jews Invented Hollywood", New-York: Crown, 1988Back.

Note 95:  Incidentally, some commentators seem to have misinterpreted the attitude of the long-serving socialist French culture minister, Jack Lang, entertaining Hollywood stars, not necessarily the most progressive nor the most 'exceptionally cultural' (Silvester Stallone, Jerry Lewis, Sharon Stone...) with medals and honors. What they see as a contradiction seems to be the mere law of politics: association with cultural icons is very important in the television eraBack.

Note 96:  Brownstein, op. Cit. p.15Back.

Note 97:  Some of Hollywood celebrities have political consultants who advise them on what causes to support. Their primary concern lies with image. Celebrities are not lobbying the politicians on corporatist issues. Source: conversation with Jeff Greenfield, journalist, specialist of media and politics, formerly ABC now CNN, in Los Angeles January 20, 1998.Back.

Note 98:  Op. Cit p.15Back.

Note 99:  Simons, J and Harwood, J. Gates Opening: For the Tech Industry, Market in Washington Is Toughest to Crack --- Clash of Cultures Has Left Silicon Valley Companies Unprepared for Lobbying - Wall Street Journal A, 1:6 Mar 4, 1998Back.

Note 100:  Shields, M " Populists of the Silver Screen" Washington Post A, 19:3 Feb 9, 1998Back.

Note 101:  Segrave , K, American films abroad : Hollywood's domination of the world's movie screens from the 1890s to the present, Jefferson, N.C. : McFarland, c1997.Back.

Note 102:  Jarvie, I, "Dollar and ideology: Hollywood and Government, 1922-1945", Film and History, 2, 1988, pp. 207-221Back.

Note 103:  Jarvie, I, " The Postwar Economic Foreign Policy of the American Film Industry: Europe 1945-1950" in Ellwood, D, Kroes, R eds., Hollywood in Europe: experiences of a cultural hegemony, Amsterdam: VU University Press, 1994, pp.155-175Back.

Note 104:  Maltby, R "Harmless entertainment : Hollywood and the ideology of consensus" Metuchen, N.J. : Scarecrow Press, 1983.Back.

Note 105:  Op. Cit. p.173Back.

Note 106:  Cited by Jarvie, I, " The Postwar Economic Foreign Policy of the American Film Industry: Europe 1945-1950" in Ellwood, D, Kroes, R eds., Hollywood in Europe: experiences of a cultural hegemony, Amsterdam: VU University Press, 1994, pp.155-175Back.

Note 107:  The classic but a bit outdated Guback, T..H. "The international Film Industry", Bloomington, Ind: Indiana University Press, 1969; De Grazia, V, Mass culture and Sovereignty: The American Challenge to European Cinemas, 1920-1960, Journal of Modern History 61 (March 1989) p.53-87; Jarvie, I, " The Postwar Economic Foreign Policy of the American Film Industry: Europe 1945-1950" in Ellwood, D, Kroes, R eds., Hollywood in Europe: experiences of a cultural hegemony, Amsterdam: VU University Press, 1994, pp.155-175; Swann, P, "the Little State Department: Washington and the Hollywood's rhetoric of the Postwar Audience, ibid. pp. 176-195; and the recent Segrave , K, American films abroad : Hollywood's domination of the world's movie screens from the 1890s to the present, Jefferson, N.C. : McFarland, c1997.Back.

Note 108:  By the way, the archives of the motion picture association have never been made accessible to researcher. The historians on the subject based their works on Government documents. Back.

Note 109:  Richard Nixon, November 1972, Hadelman Diaries cited by Kammen, M., Culture and the State in America, The Journal of American History, December 1996, pp.791-814Back.

Note 110:  Kammen, M., Culture and the State in America, The Journal of American History, December 1996, pp.791-814Back.

Note 111:  cited by Kammen, op.cit., p.796Back.

Note 112:  op. Cit. Back.

Note 113:  The State department still supervises the U.S. Information Agency, whose first mission is to understand, inform, and influence foreign publics in promotion of the national interest" by "explaining and advocating U.S. policies in terms that are credible and meaningful in foreign cultures". USIA's programs include the Voice of America; Radio and TV Marti; Worldnet TV; the Fulbright scholarship program; the U.S. Speakers program; the International Visitors program; the Wireless File newswire, transmitted daily in five languages to USIS press officers overseas; Foreign Press Centers in Washington, New York, and Los Angeles; and an overseas network of professionally staffed, computer-linked information resource and cultural centers. USIA has U.S. and foreign national professionals in more than 200 U.S. embassies and consulates in more than 140 countries. (Source: State Department website)Back.

Note 114:  cited by Kammen, op. Cit. p. 798Back.

Note 115:  See recent American edition: Tocqueville, A. de, De la démocratie en Amérique. English Title:Democracy in America, 2nd ed. Chicago : Encyclopœdia Britannica, Inc., c1990 Back.

Note 116:  Op. Cit p. 810Back.

Note 117:  Crankshaw E. Bismarck, New York : Viking Press, 1981. Back.

Note 118:  Fumaroli, M, L'Etat culturel : une religion moderne, Paris : Editions de Fallois, 1991Back.

Note 119:  As reminded by the Encyclic "Quadragesimo Anno" in 1931 Back.

Note 120:  Véron, L The Competitive Advantage of Hollywood Industry (1998) to be publishedBack.