¹ For the purposes of the present discussion, I am situating “culture” along narrow national lines, given that the nation-state remains the entity with standing under international law. My starting point is to focus on “national cultural identity,” although I am not unmindful of the difficulties such a framework poses in terms of the groups and subgroups that are excluded under this definition. As a working definition of culture itself, another issue fraught with difficulty, I will borrow from the Task Force on Professional Training in the Cultural Sector in Canada, cited by Henighan, Tom in The Presumption of Culture 2 (Vancouver: Raincoast Books, 1996)Google Scholar as “cultivated culture”: i.e., what a person knows of his or her cultural tradition and … culture as art.”

² Marrakesh Agreement Establishing the World Trade Organization (WTO Agreement) included in the Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations signed at Marrakesh, Apr. 15, 1994, entered into force Jan. 1, 1995, as reprinted in (1994) 33 I.L.M 1 . In this article, I will use the terms “WTO” and “WTO Agreement” interchangeably.

³ Mar. 14, 1997, WT/DS31/R [hereinafter Panel]; Report of the Appellate Body, June 30, 1997, WT/DS31/AB/R [hereinafter Appellate Body].

⁴ Annex 2 of the WTO Agreement.

⁵ Definition as per the Excise Tax Act, R.S.C. 1985. E-15, Part V.t [am.S.1995, c. 46]. A split-run edition of a periodical means an edition of an issue of the periodical:

• (1) that is distributed in Canada;

• (2) in which more than 20 per cent of the editorial material is the same or substantially the same as editorial material that appears in one or more excluded editions of one or more issues of one or more periodicals; and

• (3) that contains an advertisement that does not appear in identical form in all those excluded editions.

An “excluded edition” is defined as one that has greater circulation outside Canada than it does in Canada. In other words, a foreign edition.

⁶ Customs Tariff Act, R.S.C. 1985, c. 41 (3rd Supp.) as amended to April 30, 1996, s. 114, Sch. VII, Item 9958. Customs Tariff Code 9958 prohibited the importation into Canada of, among other things, “special editions” including split-run magazines containing advertising directed specifically at the Canadian market where that same advertising does not appear in the issues sold in the market of the country of origin.

⁷ S. 36(1) of the Excise Tax Act [am. S.C 1995, c. 46].

⁸ Canada Post offers reduced postal rates to two categories of periodicals identified as “funded” and “commercial.” The former, assessed on the basis of Canadian content criteria, enjoys subsidized rates as directed by Heritage Canada. See the Publications Assistance Program website at: <http://www.pch.gc.ca/culture/cult_ind/pap_e.htm>. The latter, open to both Canadian and foreign periodicals, must meet specific criteria including being printed and published in Canada. See Canadian Publications Mail Products Sales Agreement (Mar. 1, 1995).

⁹ Starting with the O’Leary Commission: Canada, Report of the Royal Commission on Publications (Ottawa: Queen’s Printer, May 1961) and culminating with A Question of Balance: Report of the Task Force on the Canadian Magazine Industry (Ottawa: Minister of Supply and Services Canada, 1994) [hereinafter Task Force 1994]. The Task Force 1994 summarized the issue most succinctly in the Executive Summary at iii: “Canadian magazines are an essential part of Canadian cultural development. They are the ‘vital links’ that permit Canadians to exchange their ideas and information with one another. They allow us to see ourselves and the world through Canadian eyes.”

¹⁰ Following the recommendations of the Task Force 1994.

¹¹ It is ironic that the U.S. chose to pursue this complaint under the WTO when it had previously negotiated bilateral and trilateral free trade agreements with Canada in which the cultural issue was dealt with expressly under the form of a cultural industries exemption. In the Canadian-United States Free Trade Agreement (FTA) (1989) 27 I.L.M 281, in force Jan. 1, 1989 and the North American Free Trade Agreement (NAFTA) (1993) 32 I.L.M 612, in forcejan. 1, 1994, cultural industries, such as the magazine industry, were exempted from the trade agreements with the complaining party entitled to retaliate with “measures of equivalent commercial effect.” In fact, the U.S. had been fully prepared to challenge Canada under NAFTA in 1994, before the WTO came into force. The U.S. stated at that time that NAFTA permitted immediate retaliation to the amount of the losses suffered by U.S. business interests as a result of the proposed excise tax: NAFTA Watch, Vol 1., No. 11, June 23, 1994 (CCH Publications). However, once the WTO came into force, the U.S. initiated its complaint under the WTO instead. Obviously, a WTO decision would have a much greater impact on a much larger portion of the international trade community than would a decision rendered under NAFTA. Also (as discussed below), unlike NAFTA, the WTO makes no allowances for cultural considerations.

¹² The WTO Agreement is made up of four Annexes of which GATT 1994 is Annex 1A. GATT 1994 has five components, one of which is the text of GATT 1947. Hereinafter, all references to the GATT shall mean GATT 1947 as incorporated into GATT 1994.

¹³ Certain aspects of the Panel decision are discussed later in the text under the heading “Lessons from Sports Illustrated.”

¹⁴ Certain aspects of the Appellate Body decision are discussed later in the text under the heading “Lessons from Sports Illustrated.”

¹⁵ In an address entitled “Trading towards Peace,” delivered at the MENA III Con-ference held in Cairo on Nov. 12, 1996, Ernesto Ruggiero, Director-General of the WTO, suggested that

See www.wto.org/wto/archives/press58.htm.

¹⁶ Arts. 2005 and 2012 of the FTA.

¹⁷ Art. 2106 and Annex 2106 of NAFTA.

¹⁸ For further comment on this and other potentially relevant GATT provisions, see Donaldson, J. D., “‘Television without Frontiers’: The Continuing Tension between Liberal Free Trade and European Cultural Integrity” (1996) 20 Ford-ham Int’l L.J. 90,Google Scholar and Braun, M. and Parker, L., ‘Trade in Culture: Consumable Product or Cherished Articulation of a Nation’s Soul?” (1993) 22 Denv.J. Int’l L.&Pol’y155.Google Scholar

¹⁹ See Jackson, John H., World Trade and the Law of GATT (Indianapolis: Bobbs-Merrill, 1969)Google Scholar; Shao, W. Ming, “Is There No Business Like Show Business? Free Trade and Cultural Protectionism” (1995) 20 Yale J.Int’l. L. 105Google Scholar; Braun and Parker, supra note 18.

²⁰ As cited by the S. Macdonald, Hon. Donald, “The Canadian Cultural Industries Exemption under Canada-US Trade Law” (1994) 20 Canada-United States L.J. 253 at 259–60.Google Scholar

²¹ GATT-Basic Instruments and Selected Documents, 11th supp., Mar. 1963, unpublished report: “International Trade in Television Programmes” L/1741. See Shao, supra note 19.

²² For a more detailed discussion of this issue, see Filipek, Jon, ‘Culture Quotas’: The Trade Controversy over the European Community’s Broadcasting Directive” (1992) 28 StanfordJ. of Int’l Law 323; Donaldson, supra note 18 and Shao, supra note 19.Google Scholar

²³ General Agreement on Trade in Services, Annex lB of the WTO Agreement.

²⁴ Agreement on Trade-Related Aspects of Intellectual Property, Annex lC of the WTO Agreement.

²⁵ GATT Focus (1990), vol. 73 at io under heading “Trade in Services Meeting,” held June 18-22, 1990: “The meeting agreed that a further sectoral working group should be established to cover the audio-visual sector, notably films or broadcasting.”

²⁶ It is interesting to note the differing interpretations of commentators reporting on the outcome of the Uruguay Round in relation to audiovisual works. The newsletter “Report of the Uruguay Round” #80 states that “Audio-visuals have not been removed from the scope of GATS.” On the other hand, authors such as Reif, Linda and Raworth, Philip, The Law of the WTO: Final Text of the GATT Uruguay Round Agreements (New York: Oceana Publications, 1995)Google Scholar as well as Shao, supra note 19, and Filipek, supra note 22, state that there was no agreement reached at the Uruguay Round on audiovisual works. These divergent views reinforce the confusion surrounding this issue.

²⁷ The Annexes form an integral part of the agreement (Article 29 of GATS).

²⁸ See GATS/Agreement on Basic Telecommunications — www.wto.org/wto/services/tel.htm. The U.S. and 14 other countries have made specific commitments regarding audio-visual services. See 14 ITR 585, 2/4/97, “GATS Classifications Called Unclear; Film Industry Urges Broader Application.”

²⁹ Council Directive 89/552, O.J. L298/23 (1989) (Council Directive on the Coordination of Certain Provisions Laid down by Law, Regulation or Administrative Action in Member States Concerning the Pursuit of Television Broadcasting Activities). Canada has similar “Canadian content” requirements under the terms of the Broadcasting Act, S.C 1991, c. 11, which allows, at s. 10(1)a), the Canadian Radio-Television and Telecommunications Commission to make regulations “respecting the proportion of time that shall be devoted to the broadcasting of Canadian programs.”

³⁰ The U.S. threatened to act unilaterally under the authority of s. 301 of the U.S. Trade Act 1970, 19 U.S.C §2411–20 (1992).

³¹ For detailed commentary on the EU/U.S. dispute, see Lupinacci, Timothy M.“The Pursuit of Television Broadcasting Activities in the European Community: Cultural Preservation or Economic Protectionism?” (1991) 24 Vanderbilt J. Transn’l L. 113;Google Scholar Donaldson, supra note 18 and Filipek supera note 22.

³² See “Changes in European Union Directive to be Proposed” July 22, 1994, 11 BNA/ITR 1000

³³ See http://www.ustr.gov for United States Trade Representative National Trade Estimate Report on Foreign Trade Barriers in respect of the EU for the years 1995. 1996, 1997. 1998.

³⁴ See Gana, Ruth, “Has Creativity Died in the Third World? Some Implications of the Internationalization of Intellectual Property” (1995) 24 Denv. J. Int’l L & Pol’y 109Google Scholar; Carr, Graham, “Trade Liberalization and the Political Economy of Culture: An International Perspective on FTA” (1991) 6 Can-Am Pub Pol’y 1;Google Scholar Coté, René, “L’Avènement d’un Village Planétaire: L’Internationalisation Normative et le Droit de L’Informatique,” in Coté, René and Rocher, Guy, eds., Entre Droit et Technique: Enjeux Normatifs et Sociaux (Montreal: Les Editions Thémis, 1994)Google Scholar

³⁵ “Producers in larger countries and producers in countries that belong to large natural-language markets, have a financial incentive to create larger budget films and programs that generally will have greater intrinsic audience appeal, a clear advantage in international competition”: Wildman, Steven S. and Siwek, Stephen E., International Trade in Films and Television Programs 105 (Cambridge, Mass: Ballinger, 1988).Google Scholar

³⁶ Bettig, Ronald V., Copyrighting Culture —the Political Economy of Intellectual Property 226 (Boulder:Westview Press,1996).Google Scholar

³⁷ While the WTO is directing itself to identifying an appropriate competition law framework, the pace of the discussions is slow. See, in this regard, WTO/Singapore Ministerial Declaration, adopted Dec. 13, 1996 in which it was agreed to “establish a working group to study issues raised by Members relating to the interaction between trade and competition policy, including anti-competitive practices.” See www.wto.org/wto/archives/wtodec.htm. For a comprehensive canvassing of the relationship between WTO and competition law, see Abbott, Frederick M. and Gerber, David J., symposium editors, “Symposium on Global Competition and Public Policy in an Era of Technological Integration” (1996) 72 Chicago-Kent L. Rev. 345.Google Scholar

³⁸ See Carr, supra note 34; Tawfik, Myra J., “The Secret of Transforming Art into Gold: Intellectual Property Issues in Canada-US Relations” (1994) 20 Can-Am Pub Pol’y 1.Google Scholar

³⁹ Both the Panel and the Appellate Body emphasized this point. See, e.g., the decision of the Panel, supra note 3 at para. 5.15; the decision of the Appellate Body ibid., at 18: “We note that the title to Part V. 1 of the Excise Tax Act reads, ‘Tax on Split-run Periodicals,’ not ‘Tax on Advertising.’”

⁴⁰ Panel, supra note 3 at para. 5.17.

⁴¹ Ibid., para. 5.19 stated that “since Canada admits that in the present case there is no conflict between its obligations under GATS and under GATT 1994, there is no reason why both GATT and GATS obligations should not apply to the Excise Tax Act.” Similarly, the Appellate Body, at 20, did not find it “necessary to pronounce on the issue of whether there can be potential overlaps between the GATT 1994 and the GATS.”

⁴² See in this regard Shao, supra note ig, and Filipek, supra note 22. In fact, critics of the GATS’ approach to culture question the extent to which GATS is the appropriate forum for addressing this issue. See, e.g., Braun and Parker, supra note 18, who advocate a “General Agreement on Trade in Culture” to address the special nature of cultural works.

⁴³ (1998) 2 Int’l Trade Law Rep. at 16-17.

⁴⁴ Panel, supra note 3 at para. 5.18.

⁴⁵ Ibid., para. 3.31.

⁴⁶ Ibid., para 5.9.

⁴⁷ Ibid., para 5.45.

⁴⁸ Art. 3:2, second sentence, of GATT stipulates that “no contracting party shall otherwise apply internal taxes or other internal charges to imported or domestic products in a manner contrary to the principles set forth in paragraph 1” (which forbids protecting domestic production over imports through taxes or other charges). This provision is to be read with Annex I, which stipulates that “[a] tax conforming to the requirements of the first sentence of paragraph 2 would be considered to be inconsistent with the provisions of the second sentence only in cases where competition was involved between, on the one hand, the taxed product, and, on the other hand, a directly competitive or substi-tutable product which was not similarly taxed.”

⁴⁹ The Appellate Body stated at 29 that “a periodical containing mainly current news is not directly competitive or substitutable with a periodical dedicated to gardening, chess, sports, music, or cuisine. But news magazines, like TIME, TIME Canada and Machan’s are directly competitive and substitutable in spite of the “Canadian” content of Maclean’s.”

⁵⁰ In arriving at its decision, the Appellate Body applied the test for the second sentence of Art. 3:2, as enunciated in the decision in Japan — Taxes on Alcoholic Beverages (Panel: WT/DS8/R, WT/DS10/R, WT/DS11/R; AB: WT/DS8/AB/R,WT/DS10/AB/R,WT/DS11/AB/R, adopted Nov. 1, 1996). The determination of whether an imported and a domestic product are directly competitive or substitutable is to be made on a case-by-case basis having regard to “physical characteristics, common end-uses, and tariff classifications, but also at the ‘market place’”(Appellate Body at 25).

⁵¹ 1994 Task Force, supra note 9 at 66.

⁵² Appellate Body, supra note 3 at 31. It must be noted, however, that the Task Force suggested that the 80 per cent tax rate was necessary to “improve the ability of original editorial material to attract advertising directed at Canadian consumers” (1994 Task Force, supra note 9 at 65), and that this tax would not violate Canada’s international obligations under the GATT, the FTA, or NAFTA (ibid., 66).

⁵³ Ibid., 28. The Task Force 1994 stated at 40: “English-language consumer magazines face significant competition for sales from imported consumer magazines. In large measure, this is because the majority of magazines are from the United States and are a close substitute.“

⁵⁴ See “Implementing the 1997 WTO Decision: Actions to be Taken” (www.pch.gc.ca/wn-qdn/culture/annexi.htm), annex to News Release, July 29, 1998 “New Advertising Services Measure to Promote Canadian Culture,” www.pch.gc.ca/wn-qdn/culture/english.htm.

⁵⁵ 36th Parl, 1st Sess., 46–47 Eliz. II, 1997–98.

⁵⁶ S. 3(1) of the Act provides that: “No foreign publisher shall supply advertising services directed at the Canadian market to a Canadian advertiser or a person acting on their behalf.”

⁵⁷ Passed Third Reading, Mar. 12, 1999. See Hansard, Official Report EP195_1999-03-12-1315 at www.parl.gc.ca.

⁵⁸ Exchange of Notes between Canada and the United States, dated June 3, 1999; News Release of June 4, 1999, found at www.pch.gc.ca.

⁵⁹ Art. 3(2).

⁶⁰ Arts. 4-7.

⁶¹ Art. 17(6).

⁶² Art. 2.

⁶³ Arts. 16(4), 17(14).

⁶⁴ Art. 22 (6).

⁶⁵ Art. 8 stipulates that

⁶⁶ Art. 17(3).

⁶⁷ See, e.g., Zaelke, Durwood, Orbuch, Paul, Housman, Robert F., eds., Trade and the Environment, Law, Economics and Policy (Washington: Island Press, 1993)Google Scholar; Jackson, John H., The World Trade Organization: Constitution and Jurisprudence (London: Royal Institute of International Affairs, Chatham papers, 1998).Google Scholar

⁶⁸ See “Ruggiero Announces Enhanced WTO Plan for Cooperation with NGOs,” WTO Press Release, July 17, 1998, ww.wto.org/wto/new/press107.htm. See further, Charnovitz, Steve, “Participation of Nongovernmental Organizations in the World Trade Organization” (1996) 17 U. Pa. J. Int’l Econ. L. 295;Google Scholar Nichols, Philip M., “Extension of Standing in World Trade Organization Disputes to Nongovernment Parties” (1996) 17 U. Pa. J. Int’l Econ. L. 295;Google Scholar Shell, G. Richard, “The Trade Stakeholders Model and Participation by Non-State Parties in the World Trade Organization” (1996) 17 U. Pa. J. Int’l Econ. L. 359.Google Scholar

⁶⁹ See “WTO Completes Framework on Environmental, Regional and R&D Subsidies,” found at www.wto.org/wto/new/subpr2.htm.

⁷⁰ See Miller, Lynn H., Global Order: Values andPowerin International Politics (3rd ed., Boulder: Westview Press, 1994)Google Scholar; Hainsworth, Susan “Sovereignty, Economic Integration, and the World Trade Organization” (l995) 33 Osgoode Hall L.J 583;CrossRefGoogle Scholar Carr, supra note 34.

⁷¹ The Preamble to the draft MAI stipulated:

Wishing that this agreement enhances international co-operation with respect to investment and the development of world-wide rules on foreign direct investment in the framework of the world trading system as embodied in the World Trade Organization.

⁷² Recommendation no. 14 at 31 et seq., Canada and the Multilateral Agreement on Investment, Third Report of the Standing Committee on Foreign Affairs and International Trade, First Report of the Sub-Committee on International Trade, Trade Disputes and Investment, Graham, Bill M.P. Chair, Public Works and Government Services Canada (Ottawa, Dec. 1997).Google Scholar

⁷³ Director-General of UNESCO, Federico Mayor, cited in “Stockholm Action Plan Bridges Culture and Development,” www.unesco.org/opi/eng/unesco-press/98-64e.htm.

⁷⁴ The Director-General suggested that “even some of the most market-driven societies are beginning to recognise that intellectual and cultural products could not be considered as simple commercial commodities.” See “Stockholm Action Plan Bridges Culture and Development,” supra note 73.

⁷⁵ See UNESCO Press Release, “Stockholm Conference to Propose an Action Plan to Place Culture at the Heart of Development,” Mar. 27, 1998. See www.unesco.org/opi/eng/unescopress/98-56e.htm.

⁷⁶ See Canadian Heritage background paper, “Putting Culture on the World Stage International Meeting on Cultural Policy,” www.pch.gc.ca/polculpol/paper-e.htm. The meeting had as its focus three themes, one of which was “culture and trade.”

⁷⁷ See News Release, Canadian Heritage, June 30, 1998, Ottawa Group Forms International Alliance of Culture Ministers,” www.pch.gc.ca/polculpol/news/close-e.htm.

⁷⁸ In his opening remarks on the consideration of the resolution to hold an international conference on trade and employment, which was the conference that ultimately led to GATT 1947.

⁷⁹ UN Journal of Economic and Social Council, 1st year, no. 7, Feb. 13, 1946.