Manchester School of Management
MSc International Business & Management
International Trade Theory and Policy

A Consideration of the Validity of Cultural Protectionism
with Reference to the Multifunctionality of European
Farms and the Canadian Magazine Dispute

by

Ben Beiske, Li Cai, Jennifer Murray & Stuart White

December 2002

Table of Contents

1 EXECUTIVE SUMMARY 1

2 INTRODUCTION 3

3 PROTECTIONISM 4
3.1 NEW VS. OLD PROTECTIONISM 4
3.2 JUSTIFYING PROTECTIONISM 5

4 CULTURAL PROTECTIONISM 7
4.1 INTERNATIONAL TRADE POLICY AND CULTURAL PROTECTIONISM 9
4.2 CULTURAL PROTECTIONISM POLICY IN THE CONTEXT OF CRITICAL DEBATE 10

5 CASE STUDY I: THE MULTIFUNCTIONALITY OF EUROPEAN FARMERS 12
5.1 THE POSITION OF EUROPEAN FARMERS 12
5.2 THE VALIDITY OF EUROPEAN FARMING SUBSIDIES 13
5.3 CONCLUSION: MULTIFUNCTIONALITY OF EUROPEAN FARMERS 14

6 CASE STUDY II: THE CANADIAN MAGAZINE DISPUTE 15
6.1 THE EMERGENCE OF THE CANADIAN MAGAZINE DISPUTE 15
6.2 NATIONAL OR INTERNATIONAL POLICY MATTER? 16
6.3 CONCLUSION: CANADIAN MAGAZINE DISPUTE 17

7 CONCLUSION AND RECOMMENDATIONS 18
7.1 RECOMMENDATIONS 19

LIST OF REFERENCES 21

1 Executive Summary

The defence of local culture is becoming an increasing concern in the current era of globalisation, as diminishing transport costs and new forms of communication are enabling worldwide dissemination of products and ideas. The importation of cultural goods from nations with disparate values and traditions could potentially cause the destabilisation of national or local communities. Indeed, these cultural goods may displace existing products and result in cultural homogenisation. Another potential threat is that posed to cultural industries, where competitive foreign firms may be able to dominate, again resulting in a reduction in cultural diversity.

However, while it is widely agreed that local culture should be preserved, the term "culture" is a subjective construct open to varying interpretations by different groups and institutions, including national and international policymakers. It is difficult for governments to legislate the link between trade and culture, since the latter is a concept often used to further a country’s own political and economic interests. Many critics have contented that cultural protectionism, the intervention of the state in trade in the defence of local culture, is merely economic protectionism in disguise. This report examines the claim in the light of two case studies: the multifunctionality of European farms and the Canadian magazine dispute.

The concept of multifunctionality rests on the assumption that the continuing existence of local farms is vital in order to preserve the local way of life, that production generates diverse benefits and forms a cultural heritage. The argument follows that protectionist measures are justified to protect an industry that would otherwise be unable to compete following trade liberalisation. The Canadian government, during the 1990s, claimed that their protectionist measures, implemented in retaliation to competition from the US magazine industry, were warranted since American cultural goods threatened to displace an important domestic cultural industry. The US contested these restrictions, arguing that they were based upon an economic agenda and were therefore illegal under WTO rules.

Currently, measures designed to protect culture are exempt from WTO consideration and disputes between nations are negotiated bilaterally. As a result, there are fears that larger economies, such as the US, are able to dominate the cultural industries of smaller nations. This paper makes two main recommendations: the first is for a change in domestic policy, arguing that government measures to halt the intrusion of foreign culture would be better directed by using subsidies, education and training to promote local cultures; the second is for international trade policy, based upon the establishment of an independent body to deal with cultural issues. Through the development of a methodology which can develop agreements on more easily recognisable cultural interests - those less clouded by economic motivations - such a body would be able to tackle the more complex and problematic issues, with the aim of separating economic and political issues from genuine cultural concerns.

2 Introduction

The reduction of barriers to trade and the current era of globalisation has led to intensified economic interaction between nations, posing a threat to national and local culture. This has resulted in government intervention and a trend towards cultural protectionism: the erection of trade barriers intended to defend local cultures. This paper will first examine the theory behind economic protectionism and the benefits to society of maintaining a diverse, intrinsically valuable cultural base. The cultural concerns resulting from globalisation will then be discussed in relation to government trade policy, and their economic validity examined. Two case studies will be used to assess the arguments raised in the context of current issues: the multifunctionality of European farms and the Canadian magazine dispute. Finally, the conclusion will consider whether these cases are in fact economic protectionism in disguise or a legitimate non-trade concern, and make recommendations as to how both international and domestic trade policy can deal effectively with these contentious issues.

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