Protecting Free Trade in Audiovisual Entertainment: A Proposal for Counteracting the European Union's Trade Barriers to the U.S. Entertainment Industry's Exports

By Kessler, Kirsten L. | Law and Policy in International Business, Winter 1995 | Go to article overview

Protecting Free Trade in Audiovisual Entertainment: A Proposal for Counteracting the European Union's Trade Barriers to the U.S. Entertainment Industry's Exports


Kessler, Kirsten L., Law and Policy in International Business


This Note examines the different laws and practices utilized by the European Union to limit the U.S. entertainment industry's dominance of the audiovisual marketplace. The focus is on one controversial directive in particular, which limits the broadcasting of foreign television programming. Emphasis is also placed on the laws and practices of France because, among the Member States of the European Union, France has been the most aggressive and vocal in opposing free audiovisual trade. Past attempts by the United States to challenge these protectionist measures are described, as is the outcome of negotiations between the United States and European Union over audiovisual issues during the Uruguay Round. This paper concludes with a proposal for how the U.S. government, in conjunction with representatives of our entertainment industry, should react to the growing trend of anti-U.S. cultural protectionism and in particular to the developing audiovisual policies of the European Union.

I. Importance of Entertainment Issues for the U.S. Economy

and Balance of Trade

A. Strength of the U.S. Entertainment Industry Internationally

The U.S. entertainment industry collects more revenue from foreign sales than any other U.S. industry except commercial aircraft.(1) The visual media (movies, television, pay television, and home video rentals) generate approximately $ 18 billion in foreign revenues annually,(2) and in 1992, the entertainment industry produced a trade surplus of $4 billion.(3) These international revenues have become increasingly important to U.S. companies as domestic sales of television programs have declined in the 1990's.(4) The entertainment industry also contributes significantly to the U.S. job market. The number of workers in the film, television, and home video sectors reached 414,700 as of April 1993, a 6.3 percent increase over the preceding year.(5) In addition, for every two jobs created in the motion picture industry, roughly three jobs are created in the supporting industries of lumber, construction, costume, and catering.(6)

B. Importance of the European Union as a Market for U.S. Entertainment

Products and Services

Most of the U.S. entertainment industry's international revenues are derived from sales in the European market. In 1989, sales to the European Union represented around half of the U.S. television and film industry's $2.5 billion annual trade surplus.(7) The U.S. industry dominates the movie market in Europe with sixty percent of the French market and seventy-two percent of the entire E.U. market.(8) In addition, American television shows occupy twenty-five to thirty percent of European television program schedules.(9) In the United States, European shows appear in only a few slots on public broadcasting and select cable channels, and French films hold less than one percent of the movie market.(10) Understandably, the European countries, especially France, feel that their national cultures are being suffocated by the glut of U.S. imagery and idioms that infiltrate their audiovisual media.

The importance of the European audiovisual market for the United States also stems from its rapid expansion. The number of European television stations has exploded in the past decade as barriers to private ownership have been lowered throughout the E.U.(11) Before privatization, most television stations in the European Union were operated under strict government control or by a public monopoly.(12) The number of television stations in Europe is now expected to double to around 200 and programming should increase from about 250,000 hours a year in the late 1980's, to approximately 400,000 hours by the mid-1990's.(13) The United States has profited from this dramatic increase in the number of program hours which need to be filled.

The European audiovisual market is also expanding in other directions through the development and implementation of new technologies and services like cable television, video-on-demand, and direct satellite broadcasting.

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