The Korea Australia Free Trade Agreement | The Music Trust

Submission to the Commonwealth on the Korea Australia Free Trade Agreement

The Secretary
Foreign Affairs, Defence and Trade Committee
Department of the Senate
Parliament House
Canberra ACT 2600
By email:

Committee Secretary
Joint Standing Committee on Treaties
Parliament House
Canberra ACT 2600

June 13, 2014


Dear Sir/Madam

The Music Trust appreciates the opportunity to present this submission on the Korea Australia Free Trade Agreement.

The Music Trust

The Music Trust is a new organisation that “works with energy, imagination and authority to support music in Australia”. Its activities are guided by a distinguished Advisory Council whose members are listed in APPENDIX 2. Its Director is Dr Richard Letts AM who previously made representations to the Commonwealth on international trade agreements as Executive Director of the Music Council of Australia. Ms Lynn Gailey is a member of the Advisory Council and is a close collaborator with Dr Letts in these matters.

General policy position

The Music Trust advocates the application of the “cultural exception” to free trade agreements. APPENDIX 1 lays out the argument. In very brief summary, our belief is that the primary objectives of cultural activity are cultural, not economic. The trade ambitions of other countries should not be permitted to constrain the prerogatives of our government to support Australian culture. Another country may have a comparative advantage in cultural production – by virtue, for instance, of a large domestic market. But Australia cannot pay it to produce Australian cultural services or goods and indeed, aspects of Australian culture may need to be protected from such low price competition.

At the same time, the vitality of Australian culture can be stimulated by an infusion of culture from abroad. Therefore, provided that there is space for Australian cultural production to remain viable and vibrant, The Music Trust supports free entry for cultural production from other countries.

The Music Trust notes with appreciation that the Commonwealth has consistently adopted the cultural exception in the formulation of its position in free trade agreements. Only in CER, inadvertently, and AUSFTA with we understand, reluctance, has it compromised. The formulation of the Commonwealth position is stated clearly and very satisfactorily in the Singapore Australia Free Trade Agreement (SAFTA).

The Korea Australia Free Trade Agreement

The relevant Australian reservations in Annex II under the headings Broadcasting and Audiovisual Services, Advertising Services, and Live Performance, and also under Recreational, Cultural and Sporting Services, follow closely the reservations in SAFTA. This of course has The Music Trust’s support.

We raise two small matters. It is important to the music sector that Australian music is heard on commercial and community radio, both of which are subject to Australian content quotas. In Annex II, such quotas are protected but “audio” is never seen alone but rather, always in the term “audio-visual”. We would be alarmed if at some point in the application of KAFTA or other agreements, this became a loophole through which audio, unaccompanied by –visual, were to be excluded from the reservation. We note that in Annex II, Schedule of Korea, the phrase “audio or video” is used. “Audio or audio-visual” would perhaps be preferable. We propose such an amendment in terminology.

The second matter. During the negotiation of AUSFTA, concern was expressed that Australian audio and audio-visual product may not be sufficiently available, or visible, to Australian audiences in online services. We understand that Australian negotiators proposed to the USA that Australia should be able to regulate to ensure that Australian product had satisfactory online “shelf space”. We were informed in a DFAT briefing that this proposal had been summarily refused.

It is interesting that the following reservation appears in Annex II, Schedule of Korea, Cross-Border Trade in Services and Investment, Digital Audio or Video Services:

Korea reserves the right to adopt any measure to ensure that, upon a finding by the Government of Korea that Korean digital audio or video content or genres thereof is not readily available to Korean consumers, access to such content is not unreasonably denied to Korean consumers. With respect to digital audio or video services targeted at Korean consumers, Korea reserves the right to adopt any measure to promote the availability of such content (our emphasis).

The Music Trust proposes that such a reservation be added to the Schedule of Australia in this and all FTAs.

Investor/State Dispute Settlement

The Music Trust is uncomfortable with the inclusion of Investor-State Dispute Settlement provisions. It would be a departure from the former bipartisan commitment to such provisions not being included in free trade agreements. We note that this commitment has not been rigorously applied and in fact, the result of inclusion in the Bilateral Investment Treaty with Hong Kong should be a strong warning against further error since it was used by Phillip Morris in an [unsuccessful] challenge Australia’s plain packaging laws for cigarettes.

The Music Trust notes that there is rapid and disruptive change in the cultural sector, especially resulting from the unpredictable developments in digital technologies and their application in the entire chain of cultural creation, production and distribution, with accompanying shifts in the market. The Music Trust cannot point to current threats to the cultural sector through utilisation of ISDS, but the safer road to take is the one that avoids unanticipated consequences.

Yours sincerely
Dr Richard Letts AM

There are two appendices, each of which can be read on The Music Trust site.

Culture and International Trade Agreements

The Music Trust
Members of the Advisory Council

May 2014

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