Will EU “Cultural Diversity” Exception Undermine U.S.-EU Trade Talks?

A possible bump in the road  toward  a U.S.-EU trade agreement emerged  today as a parliamentary committee of the European Commission voted to begin trade talks with the U.S. but to allow a “cultural exception” for film and audio-visual subsidies. That means that the EU would be carving out this exception early on, possibly creating an obstacle to real progress on eliminating non-tariff trade barriers between the two parties.

The amendment to allow this exception was pushed by France, which wants to continue to receive substantial subsidies for its film industry and to limit the amount of foreign programs shown in France. German film subsidy bodies also endorsed the need for EU countries — in the name of “cultural diversity” — to subsidize their domestic film industries. The European Commission  in its assessment of state aid to the industry endorses the cultural significance of the industry:

Audiovisual works, particularly films, play an important role in shaping European identities. They reflect the cultural diversity of the different traditions and histories of the EU Member States and regions. Audiovisual works are both economic goods, offering important opportunities for the creation of wealth and employment, and cultural goods which mirror and shape our societies.

If the EU includes this exception in its negotiating mandate, which the trade ministers will vote on in June, it could undermine the talks going forward. The U.S., for example, could try to carve out its own so-called sensitive products, and  the negotiations could falter in tearing down barriers that limit the free flow of goods and services.

The chairman of the EU trade ministers has already expressed his concern about setting out exceptions in the trade talks. Vital Moreira of Portugal was quoted as saying:

If we start to exclude chapters from the negotiations, of course the other side will do the same. Room for negotiations is already very limited and I am convinced this is not helpful.

It doesn’t seem like an encouraging start to what is being heralded as one of the most significant trade and investment agreements to be negotiated.