The integration of cultural considerations in EU law and policies

The Integration of Cultural Considerations in EU Law and Policies

Graduate Institute of International Studies Series Editor

Katherine A. S. Sibley Saint Joseph’s University Editorial Board

Rorin Platt, Campbell University Jeremi Suri, University of Wisconsin Neville Wylie, University of Nottingham Thomas Zeiler, University of Colorado at Boulder

VOLUME 6

The Integration of Cultural Considerations in EU Law and Policies By

Evangelia Psychogiopoulou

LEIDEN • BOSTON 2008

This book is printed on acid-free paper. A C.I.P. record for this book is available from the Library of Congress.

ISBN 978 90 04 16239 6 Copyright 2008 by Koninklijke Brill NV, Leiden, The Netherlands. Koninklijke Brill NV incorporates the imprints Brill, Hotei Publishing, IDC Publishers, Martinus Nijhoff Publishers and VSP. All rights reserved. No part of this publication may be reproduced, translated, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission from the publisher. Brill has made all reasonable efforts to trace all right holders to any copyrighted material used in this work. In cases where these efforts have not been successful the publisher welcomes communications from copyright holders, so that the appropriate acknowledgements can be made in future editions, and to settle other permission matters. Authorization to photocopy items for internal or personal use is granted by Koninklijke Brill NV provided that the appropriate fees are paid directly to The Copyright Clearance Center, 222 Rosewood Drive, Suite 910, Danvers, MA 01923, USA. Fees are subject to change. PRINTED IN THE NETHERLANDS

To Sotiria, Eva and Stathis

CONTENTS

Introductory note ..................................................................................

xv

Part A The Community’s Cultural Competences Chapter 1 Pre-Maastricht Intervention in the Cultural Domain: An Early Cultural Agenda ............................................................... 1.1 Culture and its Alleged Integrationist Function ..................... 1.2 The Substantive Cultural Dimension of Community Law in the Pre-Maastricht Context ................................................ Chapter 2 Community Cultural Competences: An Appraisal of Article 151 EC .................................................................................. 2.1 Explicit Community Cultural Powers ..................................... 2.1.1 Article 151(1) EC: The EC Cultural Agenda ............. 2.1.2 European Cultural Cooperation: The Internal and External Dimension ............................................. 2.1.2.1 Article 151(2) EC: themes of cultural cooperation and European added value ...... 2.1.2.2 Article 151(3) EC: EC contribution to international cultural cooperation ............... 2.1.3 Article 151(5) EC: Instruments and Procedures ......... 2.1.4 EC Cultural Policy in Practice .................................... 2.1.4.1 A policy of funding opportunities ............... 2.1.4.2 The usual quest for unity-in-diversity .......... 2.1.5 Concluding Remarks ................................................... 2.2 Implicit Community Cultural Powers ..................................... 2.2.1 Cultural Mainstreaming: Destination Maastricht ....... 2.2.2 Article 151(4) EC: Nature and Scope of EC Cultural Mainstreaming Requirements .......................

7 8 16

25 26 27 30 31 35 37 38 40 48 51 54 55 56

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contents 2.2.3

2.2.4

2.2.5

Article 151(4) EC and Other EC Policy-Linking Clauses: A Useful Comparison ................................... 2.2.3.1 EC policy-linking clauses and article 151(4) EC: dening variable mainstreaming obligations ..................................................... Legal basis disputes and article 151(4) EC ...................................................... Hierarchy of public policy objectives and article 151(4) EC .......................................... 2.2.3.2 EC policy-linking clauses and article 151(4) EC: tracing modes of implementation ............................................. EC institutional and procedural arrangements for policy mainstreaming ...... Article 151(4) EC: effective reforms for cultural mainstreaming? ............................... Policy Linkages with Culture ...................................... 2.2.4.1 Regional development and culture .............. 2.2.4.2 Agriculture and culture ................................ 2.2.4.3 Environment and culture ............................. 2.2.4.4 Education, vocational training and culture ........................................................... 2.2.4.5 Research, technological development and culture .................................................... 2.2.4.6 External relations and culture ...................... Cultural cooperation patterns ...................... Promotion of cultural diversity precepts ..... Concluding Remarks ...................................................

61

62 67 74

76 77 80 85 85 93 96 99 104 108 108 117 129

Part B Internal Market and Culture Chapter 3 Culture, Free Movement and European Courts .................................. 3.1 The Pre-Maastricht Context ................................................... 3.2 EC Case-Law Subsequent to the Introduction of Article 151(4) EC .....................................................................

135 137 145

contents Chapter 4 Internal Market Legislation and Cultural Mainstreaming .................. 4.1 Culture and Taxation .............................................................. 4.1.1 VAT Legislation and the Cultural Sector: Exploring the Interface ................................................ 4.1.2 VAT Rates Approximation .......................................... 4.1.2.1 Directive 92/77/EEC .................................. 4.1.2.2 Shortcomings of the scheme ........................ 4.1.2.3 Annex H and cultural mainstreaming: the way forward ............................................ 4.1.3 Special Arrangements for Works of Art, Collectors’ Items and Antiques ...................................................... 4.1.3.1 First harmonisation attempts ....................... 4.1.3.2 The framework adopted ............................... 4.1.3.3 An incidental case of cultural mainstreaming? ............................................. 4.1.4 Taxation and Cultural Mainstreaming— Conclusions .................................................................. 4.2 Culture and Copyright ............................................................ 4.2.1 Copyright in the Information Society ......................... 4.2.1.1 Rethinking copyright .................................... 4.2.1.2 Information society and copyright: the EC challenge .......................................... 4.2.1.3 The framework adopted ............................... Two-level protection: exclusive rights and technological fences ............................... EC attempts to strike a balance: the user perspective .................................................... The interrelation of copyright exceptions/ limitations and protection for technological measures: a troublesome case ................................................................ 4.2.1.4 Cultural mainstreaming: the case of conicting cultural policy goals .................... 4.2.2 The Resale Right for Artists ....................................... 4.2.2.1 The necessity of harmonisation ................... 4.2.2.2 The framework adopted and issues of conict .......................................................... 4.2.2.3 Cultural mainstreaming: intrinsic attainment of cultural policy objectives or prioritisation of competitiveness concerns? ......................................................

ix

151 156 158 162 162 166 168 172 172 175 177 178 179 180 181 182 184 186 190

194 199 201 201 204

210

x

contents 4.2.3

4.3

Copyright and Cultural Mainstreaming— Conclusions .................................................................. Culture and the Audiovisual Sector ........................................ 4.3.1 The Birth of a European Audiovisual Policy ............. 4.3.2 The Television Without Frontiers Directive ............... 4.3.2.1 European content requirements ................... 4.3.2.2 The objectives of the European content rules: economic, cultural or both? ............... 4.3.2.3 The way forward .......................................... 4.3.3 Audiovisual Policy and Cultural Mainstreaming— Conclusions ..................................................................

213 214 216 222 224 230 236 240

Part C Competition Law and Culture Chapter 5 Cultural Mainstreaming in EC Anti-Trust and Merger Control ........ 5.1 The Audiovisual Sector ........................................................... 5.1.1 Rights Licensing .......................................................... 5.1.1.1 Licensing of audiovisual content for theatrical release ........................................... 5.1.1.2 Licensing of audiovisual content to individual broadcasters ................................. Film supply arrangements ............................ Channel supply arrangements ..................... 5.1.1.3 Collective licensing of audiovisual content .......................................................... 5.1.2 Distribution of audiovisual content and platform issues ............................................................................. 5.2 The Music Industry ................................................................. 5.2.1 Recorded Music Production and Publishing Rights ........................................................................... 5.2.2 Online Music Distribution .......................................... 5.2.3 Collective Administration of Rights ........................... 5.3 The Publishing Industries ........................................................ 5.3.1 Merger Operations in the Press and Book Publishing Sectors ........................................................ 5.3.2 Book Price Fixing ........................................................ 5.4 Cultural Mainstreaming in Competition Practice: Does it Work? ..........................................................................

245 249 250 251 253 254 258 260 262 266 267 270 271 273 274 279 286

contents Chapter 6 Cultural Mainstreaming in EC State Aid Control .............................. 6.1 State Aid to Cultural Industries in the Pre-Maastricht Context .................................................................................... 6.2 The Treaty of Maastricht: A New Cultural Derogation to State Aid Prohibition .......................................................... 6.3 State Aid Schemes in the Field of Culture ............................ 6.3.1 State Aid and Cultural Content .................................. 6.3.1.1 The audiovisual sector ................................. State aid in favour of audiovisual production ..................................................... State aid to public service broadcasters ....... 6.3.1.2 The publishing sector ................................... 6.3.1.3 The performing arts ..................................... 6.3.2 State Aid Promoting Cultural Heritage Conservation ................................................................ 6.4 Cultural Mainstreaming in EC State Aid Assessment: Does it Work? ..........................................................................

xi

293 296 298 300 300 300 301 308 314 323 325 331

Part D Evaluation of Cultural Mainstreaming Chapter 7 Cultural Mainstreaming: An Appraisal ............................................... 7.1 Cultural Mainstreaming in Internal Market Legislation ........ 7.2 Cultural Mainstreaming in Competition Law and Policy ......

337 339 342

Chapter 8 Concluding remarks ..............................................................................

347

Bibliography ..........................................................................................

351

Tables of EU and EC Documents ......................................................

361

Tables of Cases .....................................................................................

387

Tables of International Instruments and Documents .........................

391

Index .....................................................................................................

393

Acknowledgments

This book largely builds on a doctoral thesis submitted with a view to obtaining the degree of Doctor of Laws of the European University Institute. I wish therefore to acknowledge the constructive and enlightening discussions over the years with my supervisor, Professor Bruno de Witte. I am deeply indebted to him for his constant encouragement and guidance. The other members of the examining board are also to be warmly thanked for sharing with me their expertise: Professor Vassilios Christianos (University of Athens), Professor Francesco Francioni (European University Institute) and Dr Vladimir Sucha (European Commission, Directorate General Education and Culture—Direction C: Culture and Communication). I am also grateful to Professor Hanns Ullrich (European University Institute) and Professor Lambros Kotsiris (University of Thessaloniki, Greek State Scholarships Foundation) for their valuable comments, and Dr Peristera Kremmyda, Ms Valérie Panis and Mr Xavier Troussard (European Commission) for their helpful suggestions. Special thanks go to Mr Rogier Goos, who translated some useful Commission documents from Dutch to English, the Language Centre of the European University Institute, Ms Emir Lawless and the library team for their advice and help, and Ms Marjolein Landowski at Brill. On a more personal note, I would like to thank my family for their endless and unconditional support. I am also grateful to all those who with their friendship made my stay at the European University Institute a particularly pleasant experience: Aphrodite, Giannis, Despina, Maria, Photis, Angelika, Edurne, Federica and Alessandro. Warm thanks go to Jenny, Aris and Vassilis for administrative assistance, Dimitra and Steve for their support and to Kostis for his computer skills. Finally, I wish to thank especially Fabiano for all the time spent listening. His interest and enthusiasm throughout these years have been a unique source of encouragement. The nancial support from the Greek State Scholarships Foundation (IKY) and the European University Institute is greatly acknowledged. Evangelia Psychogiopoulou June 2007

Introductory Note

Culture has formed an integral part of the European project since 1 November 1993. Article 3(1)(q) of the Treaty establishing the European Community (EC) charges the Community with the task of contributing to ‘the owering of the cultures of the Member States’, whereas Article 151 EC marks the rst express conferment of direct but complementary competence in the cultural eld. Community action which, according to Article 151(1) EC, has to respect Member States’ national and regional diversity, while bringing the common cultural heritage to the fore, is aimed at encouraging cooperation between the Member States and, if necessary, supporting and supplementing their activities. Firmly based on the principle of subsidiarity, it may only take the form of incentive measures and recommendations. By means of Article 151(4) EC, introduced by the Treaty of Maastricht, and amended by the Treaty of Amsterdam, the Community also needs ‘to take cultural aspects into account in its action under other provisions of [the EC] Treaty, in particular in order to respect and to promote the diversity of its cultures’. By requiring the Community to mainstream cultural considerations when taking action under other EC policy headings, paragraph 4 of Article 151 EC is of relevance and importance for EC policy-making. In exercising its competences under the various policy areas within its purview, the Community must heed the cultural repercussions of its activities, so as to refrain from jeopardising the preservation and further enhancement of the cultural distinctiveness of the Member States. Plainly, the exact degree of inuence Article 151(4) EC can exert on the development and implementation of EC policies is unclear. Does the cultural policy-linking clause require that Community policies be pursued in a manner which is compatible with the cultural objectives expressly prescribed by Article 151 EC? What is, indeed, the extent to which other EC policy areas must accommodate cultural concerns, if at all, and how have the EU institutions so far reacted to the mandate of Article 151(4) EC? There is little comprehensive research which probes into the implications of Article 151(4) EC for the EC legal order. Cultural mainstreaming has received relatively scant attention, despite the fact that Article 151(4) EC has now been in force for more than a decade. An attempt to assess the legal value of Article 151(4) EC and the degree of accommodation, or lack thereof,

xvi

introductory note

of cultural considerations in EC action, this book aspires to reach a better understanding of the Community’s contribution to the protection of Member States’ cultural diversity through its various policies. To that purpose, analysis is organised into four large parts. Part A sketches the broad contours of Community cultural activity, so as to place Article 151(4) EC in its proper context. It begins with an overview of early, pre-Maastricht, Community intervention in the cultural domain, in order to examine whether the integration of a cultural rationale in Community action, now explicitly required by Article 151(4) EC, has been a long-standing practice. The study then moves to highlight the principal features of the cultural competence expressly enjoyed by the Community and the way in which it has been exercised. This is to serve as a backdrop for gauging the real impact of Article 151(4) EC which, as will be seen, provides the Community with a set of implied powers to transpose and pursue the objectives of the EC cultural policy, properly speaking, in the context of other Community policies. Next, emphasis is directed to the core subject of this book, the examination of the nature and scope of the cultural mainstreaming mandate of Article 151(4) EC. Following a detailed presentation of the content and legal status of the clause, focus shifts to the commonalities and divergences between Article 151(4) EC and other cross-sectional clauses of the EC Treaty with a view to addressing the cultural mainstreaming process within a broader framework of EC policy-linking efforts. This comparative section seeks to verify whether Article 151(4) EC stands on equal footing with similar EC provisions in terms of legal force and institutional and procedural arrangements for implementation. Given that Article 151(4) EC will be shown to be a much weaker clause than the others, to exemplify its importance for the formulation of coherent and coordinated EC policies in the cultural domain, brief consideration is given to elds of Community activity which already possess a signicant cultural component. The policy areas investigated, namely regional development, agriculture, environment, education and vocational training, research and external relations, disclose the plethora of ways in which culture has crossed over into the broader EU policy agenda. This part of the study demonstrates that the initiatives launched on the basis of the explicit cultural powers of the Community are merely the visible part of much wider, indirect EC cultural action. An adequate evaluation, in the light of Article 151(4) EC, of the cultural ramications that certain Community policies may have can thus encourage the development of EC integrated action which protects and promotes cultural diversity, besides pursuing other legitimate Community objectives. Turning to the actual implementation of Article 151(4) EC, Parts B and C shed light on the degree of attention afforded to Article 151(4) EC by the

introductory note

xvii

European institutions. Two specic elds of Community action are chosen as case-studies: internal market and competition. The selection of these two policy areas proceeds from the fundamental role they continue to play in the European integration process. Since the establishment and proper functioning of an internal market where free movement is secured, and a system of undistorted competition is ensured, is today still a core area of Community intervention, the case is instructive in examining the degree of receptiveness for cultural considerations. Bearing in mind that both policy areas are ‘mature’, with clearly identied objectives and implementation tools, they arguably have a great potential for resistance to compliance with Article 151(4) EC, particularly in view of their economic dimension, which can hinder or conict with adoption of a cultural rationale. The analysis is structured as follows: Part B, ‘Internal Market and Culture’, examines the weight afforded to cultural considerations by distinguishing EC judicial and legislative practice. On the one hand, a series of ‘internal market versus culture’ rulings are discussed, with the aim of identifying the level of recognition of cultural considerations by the European Courts when reviewing the compatibility of Member States’ cultural policies with Community law. On the other, specic instances of EC cultural mainstreaming efforts are presented, namely legislative instruments enacted in the elds of taxation, copyright harmonisation and audiovisual regulation, in order to verify whether cultural factors are taken into account in EC law-making. Part C, relating to ‘Competition and Culture’, concentrates on the EC competition rules, inquiring into the accommodation of cultural considerations in the assessment of private agreements, strategic alliances and state aids at the Community level. It explores whether the EC competition system allows for the adoption of a cultural perspective, drawing upon the practice of the European Commission in cases pertaining to operators active in the cultural sector. Finally, Part D offers a valuable synthesis of the main features of the cultural mainstreaming process and the direction in which it is evolving. It considers the forces, whether political, institutional or economic, which have conditioned the pursuit of cultural policy objectives, alongside other EC policy goals, and concludes that Article 151(4) EC does not create an unduly heavy burden for the European institutions, in view of the added value it may offer for the protection and promotion of Member States’ cultural diversity. That being said, it should be stressed, from the outset, that it is not the purpose of this book to plunge into controversial discussion of the meaning of culture. Despite the lack of any apparent conceptual constraint on the notion of culture, this study is essentially and solely based on the denitional parameters that may be deduced from Article 151 EC itself. Paragraph 2 of

xviii

introductory note

Article 151 EC refers to the improvement of the knowledge and dissemination of culture and history, the conservation and safeguarding of cultural heritage, the promotion of non-commercial cultural exchanges and the encouragement of artistic and literary creation, including in the audiovisual sector. The areas mentioned correspond to the pragmatic denition of culture adopted by the Member States in the pursuit of their own cultural policies, taken in a narrow sense, that is, the policies entrusted to and implemented by national (or regional) ministries of cultural affairs.1 The law is reected as it was on 15 May 2007.

1 To illustrate, the Greek Ministry of Culture denes the scope of its activities by focusing on the protection of cultural heritage, the preservation of cultural monuments, sites and archives, the restoration of cultural assets, the development of modern culture, especially in the areas of letters, theatre, dance, music, visual arts and cinema, the promotion of cultural activities, the encouragement of cultural studies and the provision of administrative and technical support for such purposes. See, in this respect, www.culture.gr.

Part A

The Community’s Cultural Competences

Introduction The launch of the European project in the 1950’s, driven by the desire of the founding States to create a unied political and economic space, was not intended to lead to cultural unication. Whereas the pursuit of goals relating to economic integration and political unication required the transfer of domestic powers to the newly born European Communities, national cultural spheres were to remain strictly unaffected. To that end, the original Treaty of Rome establishing the European Economic Community (EEC) did not shape a Community cultural policy, nor did it empower Community institutions to take action in cultural matters. The only provisions touching upon cultural affairs, namely Article 36 EEC (now Article 30 EC), which allows Member States to restrict imports and exports with a view to protecting ‘national treasures possessing artistic, historic or archaeological value’, and Article 131 EEC (now Article 182 EC), relating to Community association with third countries, designed to assist inter alia their ‘cultural development’, were not aimed at extending Community competences in the cultural eld. The absence of an explicit cultural competence attributed to the Community did not prevent European institutions from being confronted with cultural issues from a very early stage. Community cultural action gained early support in institutional circles as an integrative mechanism that ought to increase the Community’s popular appeal. In addition, efforts to attain one of the fundamental goals of the European experiment, namely the creation of a common market where goods, services, persons and capital could circulate unhindered, prompted initiatives in the cultural domain. Early Community intervention in cultural affairs resulted in blurring the original distinction between the economic and cultural spheres. Fears about the erosion of national cultural powers started to emerge, the Community being suspected of pursuing objectives tending to cultural homogenisation. The signing of the Treaty of Maastricht, establishing the European Community (EC) restored balance through a clearly-delineated division of roles. Community competences acquired a cultural component but the inclusion of culture in the EC Treaty took place in a way that underlines the subsidiary nature of EC cultural activity, leaving the design and implementation of cultural policies in principle to the Member States. The emphasis placed on cultural protection coincided with an overall change in the Community’s objectives and tasks. The Treaty of Maastricht, far from simply extending Community powers into new areas of activity, brought about a qualitative shift in European integration. Following their express recognition in the EC Treaty, citizenship and human rights turned into the catchwords

4

introduction

of the post-Maastricht era; social and environmental concerns assumed a new status as key EC priority areas; and economic and social cohesion was recognised as a necessary corollary to economic and monetary union. Seen from this angle, Title IX of the EC Treaty, dedicated to culture, is symbolically important in providing culture with its own place in the Treaty. But beyond this, by charging the Community to ‘contribute to the owering of the cultures of the Member States’, it serves also to illustrate the value of cultural diversity, henceforth rmly entrenched in the EC legal order. It attributes to the Community, by means of Article 151 EC, a mere complementary competence in the cultural eld, and limits the range of available legal instruments to incentive measures and recommendations. Its main thrust resides in the rejection of any form of cultural assimilation. The Member States remain the principal actors to develop cultural policies. This, of course, does not negate the fact that culture has become an acknowledged branch of Community activity. Article 151 EC may have precluded Community action that undermines the preservation of Member States’ cultural peculiarities but, rst and foremost, it has created a legal basis for the launch of Community-based cultural activities, assigning to the European institutions a precise cultural mandate of their own. Undoubtedly, the EC cultural provisions are constrained by an inbuilt bias: while they seek to provide a coherent response to the needs of the cultural sector, previously insufciently catered for, on the other hand, they strive to deter the expansion of Community intervention in a highly sensitive area for the Member States. The different trajectories evoked, the very reection of ‘the clash between the different visions of the Community’s raison d’être that permeated negotiations at the intergovernmental conference’,1 have led to a delineation of powers that rests on a complex of explicit and implicit cultural competences. Such a combination, though not unique to culture,2 complicates the formulation of EC cultural action. Whilst the explicit cultural powers of the European institutions are clearly articulated, allowing for the development of concrete cultural activities at the Community level, the EC implicit cultural powers are drafted in vague, open-ended terms, impeding straightforward understanding of their legal effect and implementation modes. Of no lesser importance, while intended to provide extra guarantees for the

1 Dehousse, ‘Community Competences: Are There Limits to Growth?’, in R. Dehousse (ed.) Europe After Maastricht: An Ever Closer Union? (1994) 103, at 106. 2 Explicit and implicit powers have also been conferred to the Community for the elimination of inequalities (and the promotion of equality) between men and women, as well as in the elds of environmental protection, public health, consumer protection, industrial policy, economic and social cohesion, and development cooperation. See Arts 3(2), 6, 152(1), 153(2), 157(3), 159 and 178 EC.

introduction

5

protection and promotion of the cultural richness of the Member States, the EC implicit cultural powers may in fact allow broadening of Community cultural activity outside the strict limits of Article 151 EC, so permitting the EC to make cultural choices potentially contrasting with domestic cultural priorities and preferences. It is by no means clear that appropriate monitoring and institutional coordination procedures ensure the harmonious development of both explicit and implicit EC cultural powers. More than a decade down the line, the Community’s cultural performance has concentrated mainly on the explicit facet of action. Nonetheless, there are strong grounds to believe that a revitalised implementation of the implicit dimension of EC cultural competences can contribute much more to the maintenance and promotion of Member States’ cultural diversity than the Community’s cultural powers properly speaking. With a view to inquiring into the untapped potential of the implicit EC cultural powers, the present work’s analysis proceeds as follows: Chapter 1 examines incipient Community inroads into the cultural eld in order to verify whether, prior to the adoption of Article 151 EC, a genuine Community cultural agenda can be identied. The conclusions drawn demonstrate that culture does not operate ‘in a vacuum’. Rather, it interconnects with a series of Community policies and actions, providing proof for its essentially transversal nature, now openly recognised by the implicit EC cultural powers. Chapter 2 deals with the express and long-awaited cultural mandate entrusted to the Community by the Treaty of Maastricht and subsequently rened by the Treaty of Amsterdam. Paragraph 2.1 focuses on the explicit EC cultural powers, considering their principal characteristics and expanding upon the concrete measures with which they have signalled the launch of an EC cultural policy stricto sensu. Paragraph 2.2 centres on the Community’s implicit cultural competences, exploring their nature and scope, as well as the institutional and procedural arrangements to which their implementation has given rise. The analysis thus prepares the ground for an examination, in the following chapters, of their actual contribution to the protection and promotion of Member States’ cultural legacies.

Chapter One

Pre-Maastricht Intervention in the Cultural Domain: An Early Cultural Agenda

The interaction of Community law with culture is long-standing. It did not begin in 1993 when a cultural competence was formally ascribed to the Community, but can be traced back to the early days of the European integration process. Although completely outside the sphere of cultural policy, it was the 1951 Treaty establishing the European Coal and Steel Community which rst hinted at the interrelation between the freshly launched European project and cultural matters. In the Preamble, the founding Member States resolved to overcome old rivalries by establishing ‘the basis for a broader and deeper community among peoples long divided by bloody conicts’, and saw ‘the contribution which an organised and vital Europe [could] make . . . to civilisation’ as ‘indispensable to the maintenance of peaceful relations’.1 Seeking to ‘lay the foundations of an ever closer union among the peoples of Europe’2 it was, however, the founding Treaty of the European Economic Community (EEC), which blazed the cultural trail. Despite the lack of a precise legal basis for the development of cultural action at the supranational level, Community institutions seized the opportunity to introduce measures with cultural impact as a means to guarantee the success of European integration, and as part of the drive to complete the common market. Indeed, contrary to appearances, the Community organs could be said to have had an implicit cultural agenda from the very start: rst, the employment of cultural tactics to defy Euro-scepticism and foster public appreciation for the politico-socioeconomic transformation of Europe; secondly, in seeking to eliminate obstacles to free circulation of cultural operators and the free ow of cultural goods and services, in order to create and guarantee the proper functioning of a common European cultural market.

1

See the 3rd and 5th indents of the Preamble to the Treaty establishing the European Coal and Steel Community. 2 See the 1st indent of the Preamble to the Treaty establishing the European Economic Community.

8 1.1

chapter one Culture and its Alleged Integrationist Function

Growing awareness that the economic, social and political goals pursued by the Treaty of Rome would not gain public support unless efforts were targeted to bring people closer together fuelled a debate over the future of European integration and the positive contribution cultural action could make in this respect.3 It was suggested that cooperation could not be conned to economic and stability themes alone: instead, it needed to be vested with a human dimension to raise the prole of the whole process by exerting a direct inuence upon people. Culture could serve as a vehicle for promoting solidarity and social cohesion, increasing the Community’s popular appeal. In a series of high-prole documents issued from the late 1960s onwards, the Heads of State or Government made clear that the European polity under construction was more than simply an economic entity set up to eliminate economic barriers to trade. ‘Composed of States which, in spite of their different national characteristics, are united in their essential interests’, Europe should, primarily, help preserve ‘an exceptional seat of development, of progress and culture’.4 Economic expansion was ‘not an end in itself ’,5 but a principal means of steering the process of European unication. In the Declaration on European Identity approved at the 1973 Copenhagen Summit, EEC leaders asserted the importance of preserving ‘the rich variety of their national cultures’, and pledged to review the ‘common heritage’ of the Member States.6 Attempting to concretise the elements of a European identity, they invoked, amongst other things,7 ‘the diversity of cultures within the framework of common European civilisation’.8 Whilst the concept of European identity was initially probably seen as a tentative answer to basic legitimacy defects in the integration mechanism,9 3 See Shore, ‘Creating the People’s Europe: Symbols, History and Invented Traditions’, in C. Shore, Building Europe: The Cultural Politics of European Integration (2000) 40, De Witte, ‘Building Europe’s Image and Identity’, in A. Rijksbaron et al. (eds), Europe from a Cultural Perspective (1987) 132, and Spiering, ‘National Identity and European Unity’, in M. Wintle (ed.), Culture and Identity in Europe (1996) 98. 4 See the Final Communiqué of the 1969 Hague Summit, I Bull. EC (1970) 11, at para. 4. 5 See the Declaration of the 1972 Paris Summit, 10 Bull. EC (1972) 14, at para. 3. 6 See Declaration on the European Identity, 12 Bull. EC (1973) 118, at point 2502. 7 The Heads of State or Government referred inter alia to ‘the attachment to common values and principles’, such as democracy, the rule of law, social justice and respect for human rights, ‘the increasing convergence of attitudes to life’, ‘the awareness of having specic interests in common’, ‘the determination to take part in the construction of a united Europe’ and the willingness ‘to play an active role in world affairs’. For an overview of the criteria of European identity, see Constantinesco, ‘Le rôle du Conseil Européen dans la formation d’une identité européenne’, in M.T. Bitsch et al. (eds), Institutions européennes et identités européennes (1998) 435. 8 Supra n. 6, at para. 3. 9 See De Witte, supra n. 3, at 133.

pre-maastricht intervention in the cultural domain

9

the unity-in-diversity paradigm gradually gained resonance.10 The European Parliament, already favourably-disposed to inter-state cultural cooperation in 1964,11 and taking the view that European cultural heritage was the cornerstone of European cultural diversity and unity, was the rst to transpose this theme into action. The measures proposed aimed at preserving Europe’s cultural legacy via the creation of a cultural assets inventory, the channelling of nancial resources to restoration activities and the ght against theft and illicit trafcking of works of art.12 These were later complemented by ‘the promotion of cultural exchanges of every type as an excellent means of making the citizens of the Community more aware of European identity’.13 Stressing the need for initiatives ‘designed to make the culture of other Community countries available to broader sections of the population’,14 the Parliament invited the Commission to facilitate, in particular, translation of literary works and organisation of cultural events. The now renowned 1975 Report on European Union, prepared by the Bel-gian Prime Minister Leo Tindemans at the request of the European Council, advocated greater Community involvement in people’s everyday life, especially in the elds of education, culture, news and communications.15 In its wake, a series of experimental cultural actions were launched on the basis of budget appropriations, increased from ECU20,700 in 1976 to ECU100,000 in 1977. Yet, it was feared, certain Member States, preferring to keep their domestic cultural layers intact or contain Community expenditure, might nd such an upsurge in activities disturbing.16 Thus the Commission was led to stress the limited competence enjoyed by the Community in the cultural domain. In 1977, Directorate General XII-Research, Science and Education published a communication, addressed to the Council, Community action in the

10 For detailed analysis of the unity-in-diversity rationale, see Pantel, ‘Unity-in-Diversity: Cultural Policy and EU Legitimacy’, in T. Banchoff and M.P. Smith (eds), Legitimacy and the European Union: The Contested Polity (1999) 46. 11 See Résolution du Parlement Européen sur la question de la création d’une Université européenne, Journal Ofciel des Communautés Européennes 64, 27/5/1964, p. 1272, at para. 4. 12 Resolution of the European Parliament of 13 May 1974 on measures to protect the European cultural heritage, OJ C 62, 30/5/1974, p. 5. 13 Resolution of the European Parliament of 8 March 1976 on Community action in the cultural sector, OJ C 79, 5/4/1976, p. 6, at para. 3. 14 Ibid., at para. 6. 15 L. Tindemans, Report on the European Union, Bull. EC (1976), Supplement 1/76. 16 This was certainly true for Germany, where competence for cultural matters rests with the Länder; Denmark, alarmed by the possible erosion of national autonomy; and the UK, ever keen to conne the budgetary repercussions of Community activities.

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cultural sector.17 This was prepared by a small division that had since 1973 been entrusted with the task of exploring the implications of Community law on cultural goods, services and practitioners. The paper claried that Community interference in cultural affairs did not amount to the launch of a fully-edged Community cultural policy. It was, rather, merely a consequence of the application of the EEC Treaty rules to the cultural sector, dened as ‘the socio-economic whole formed by persons and undertakings dedicated to the production and distribution of cultural goods and services’, with the aim of creating ‘a more propitious economic and social environment’ in support of cultural activities at the European level.18 In the Commission’s view, ‘[ j]ust as the “the cultural sector” [was] not in itself “culture”, Community action in the cultural sector [did] not constitute a cultural policy’.19 Further cautious statements made by the Commission sought to counterbalance the reticence of national authorities as to the appropriateness of a stable Community cultural intervention. According to the Commission, cultural action undertaken via a stricter application of the EEC Treaty provisions on free movement and the adoption of rules on taxation, copyright and social security, would serve only to progressively overcome economic and social difculties encountered by cultural operators. Resolution to act in the cultural sphere should be seen against the backdrop of international organisations already present in the eld. The delineation of areas requiring Community measures—which were presented as essentially those concerned with ‘practical matters’—would prevent duplication of work and institutional rivalry with UNESCO and the Council of Europe, so ensuring an optimal division of labour.20 Echoing calls made by the European Parliament, the Commission further noted that, ‘over and above the application of the Treaty to the cultural sector’ the European institutions should contribute to the preservation of the Community’s cultural richness, and the development of cultural exchanges as an instrument of ‘show[ing] the similarities, links and afnities between all the countries and regions of the Community, and at the same time, the various national and regional contributions to that culture’.21 A two-pronged approach was hence proposed: rst, a reinforced socio-economic interest in the cultural sector, on the basis of EEC Treaty provisions lacking cultural-

17

European Commission, Communication to the Council, Community action in the cultural sector, Bull. EC (1977), Supplement 6/77. See, in this respect, Di Lusignano, ‘Communauté et culture’, Revue du Marché Commun et de l’Union européenne (1994), No. 376, 181. 18 Ibid., European Commission, at 5. 19 Ibid. 20 Ibid., at 6. 21 Ibid., at 19–21.

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specic rhetoric; secondly, a series of genuine cultural actions which, viewed through the unity-in-diversity paradigm, would focus primarily on heritage protection and cultural interaction. Surprisingly, the legal basis of the second facet of the Community’s cultural role was barely discussed. Funding required for implementation was pushed through by the Parliament exercising its budgetary powers over non-obligatory expenditure in a way which would probably nowadays be seen as problematic.22 The Commission, in its turn, could easily invoke the same socio-economic arguments used for the rst strand of the Community’s cultural action by emphasising opportunities generated for employment growth, economic and regional development. In 1982, the same Commission service (meanwhile transferred to the Commission’s General Secretariat) published a second communication, entitled Stronger Community action in the cultural sector, addressed on this occasion to both the Council and the European Parliament.23 The Commission once more took the position that the Community would not ‘encroach on the responsibilities of governments or of other international organisations’, but ‘would rmly keep within the bounds of competence assigned to it’.24 The Community would bear ‘the same economic and social responsibilities towards the cultural sector’ as it bore towards other areas of economic activity under the Treaties.25 There should be no expectation, therefore, that the Community would ‘become involved in academic argument over the denition, purpose and substance of culture, or to arrogate any executive powers or even the slightest guiding function’.26 Community intervention in the cultural eld would not coordinate domestic cultural policies.27 Instead, it would facilitate the trans-frontier circulation of cultural goods and help improve the living and working conditions of cultural operators. To silence any queries concerning the legal basis of the Community’s genuine cultural activities (especially important in view of the steadily increasing endowments for culture secured by the European Parliament)28 the Commission advanced an account of the legal justication for heritage protection, offering an intriguing glimpse of the powers enjoyed in the eld.

22 Kearns, ‘Culture and EU Law: The Exploration of an Interface’, in R. Craufurd Smith (ed.), Culture and European Union Law (2004) 385, at 386. 23 European Commission, Communication to the Council and Parliament, Stronger Community action in the cultural sector, Bull. EC (1982), Supplement 6/82. 24 Ibid., at 5. 25 Ibid., at 8. 26 Ibid. 27 Ibid. 28 The nancial support attributed to cultural activities reached ECU706.500 in 1982.

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Authority for the launch of any such initiative, in its view, sprang from ‘the fact that it is a contribution to a rich resource that generates economic activity (tourism, scientic research, art publishing etc.) and that conservation is itself an economically and socially viable activity for the rms and workers connected with it’.29 As for cultural exchanges—described as ‘a natural area of Community action’—their legal foundation stemmed from their ability to ‘quicken the will to unite the nations of Europe expressed in the rst recital of the Preamble to the EEC Treaty and the last of the objectives set out in Article 2’,30 and their contribution ‘where possible, to improving the living and working conditions of cultural workers’.31 The unity-in-diversity paradigm, assumed as renewing the dynamism of integration, was again trenchantly espoused. Cultural events designed to ‘enlarge the audience and decentralise culture’ would progressively ‘reveal the underlying unity of cultural afnities, relationships and resemblances in a diversity that there can be no question of dulling’.32 Interestingly, in relation to heritage protection, it was stressed that, ‘although the traditional concept of “national heritage” must not be abolished for any particular works of art, it should be gradually expanded for quite a number of others to culminate in a new concept of “Community heritage”, indicating that works taken to another Community country will less and less be felt as a loss to the country of origin’.33 Following the Solemn Declaration on the European Union, signed by the Heads of State or Government in Stuttgart on 19 June 1983,34 and which advocated greater Community engagement in cultural cooperation, the possibility of a formal codication of the Community’s forays into the cultural eld began to take a prominent position in Parliament thinking.35 Although the calls to

29

Supra n. 23, at 13. Ibid. Article 2 of the EEC Treaty read: ‘The Community shall have as its task, by establishing a common market and progressively approximating the economic policies of Member States, to promote throughout the Community a harmonious development of economic activities, a continuous and balanced expansion, an increase in stability, an accelerated raising of the standard of living and closer relations between the States belonging to it’. 31 Supra n. 23, at 26. 32 Ibid. 33 Ibid., at 8. 34 See Solemn Declaration on European Union of 19 June 1983, in Texts concerning Culture at European Community Level, Ofce for Ofcial Publications of the European Communities (1994) 201. 35 See Art. 61 of the Draft Treaty on the European Union, presented by the Parliament on 14 February 1984 (OJ C 77, 19/3/1984, p. 36), which, placed under the heading ‘Policy for Society’, stipulated: 1. The Union may take measures to: – promote cultural and linguistic understanding between the citizens of the Union, – publicise the cultural life of the Union both at home and abroad, – establish youth exchange programmes. 30

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raise nancial support for culture to 1% of the Community’s budget met with much resistance,36 the Ministers of Culture became accustomed to discussing culture-related issues under the auspices of the Council.37 A number of ad hoc actions in support of culture and the arts started to operate on the basis of resolutions,38 adopted either by the Ministers responsible for Cultural Affairs meeting within the Council or under a mixed format, the Council and the Ministers responsible for Cultural Affairs meeting within the Council, so as to avoid the vexed question of proper power allocation.39 It was in this context that the so-called European City of Culture initiative, aimed at enhancing ‘the expression of a culture which, in its historical emergence and contemporary development, is characterised by having both common elements and a richness born of diversity’, emerged.40 In spite of the general development of cultural activities, low turn-outs in the 1984 European Parliamentary elections highlighted the lack of a strong public commitment to the European polity. Seeking to enhance the prole of European construction at the level of popular consciousness, the 1985 Second Adonnino Report for a People’s Europe 41 suggested measures to ‘strengthen and promote the Community’s identity and its image both for its citizens and for the rest of the world’.42 Amongst various remedies identied, preference was expressed for highly symbolic measures, such as the promotion of European sporting competitions and literary awards, the creation of a European Youth Orchestra, the selection of an appropriate emblem and ag, the organisation

2. The European University Institute and the European Foundation shall become establishments of the Union. 3. Laws shall lay down rules governing the approximation of the law of copyright and the free movement of cultural works. 36 Resolution of the European Parliament of 18 November 1983 on stronger Community action in the cultural sector, OJ C 342, 19/12/1983, p. 127. 37 Two informal meetings took place in Naples (September, 1982) and Athens (November, 1983). The rst formal meeting of the Ministers responsible for Cultural Affairs was held on 22 June 1984 at Luxembourg. 38 See Resolution of the Council and of the Ministers responsible for Cultural Affairs meeting within the Council of 18 December 1984 on greater recourse to the European Social Fund in respect of cultural workers, OJ C 2, 4/1/1985, p. 2, Resolution of the Ministers responsible for Cultural Affairs meeting within the Council of 13 June 1985 concerning a European sculpture competition, OJ C 153, 22/6/1985, p. 3, and Resolution of the Ministers responsible for Cultural affairs meeting within the Council of 20 December 1985 on special conditions of admission for young people to museums and cultural events, OJ C 348, 31/12/1985, p. 2. 39 Forrest, ‘La dimension culturelle de la Communauté Européenne: Les ministres de la culture explorent le terrain’, Revue du Marché Commun (1987), No. 307, 326, at 327. 40 Resolution of the Ministers responsible for Cultural Affairs meeting within the Council of 13 June 1985 concerning the annual event ‘European City of Culture’, OJ C 153, 22/6/1985, p. 2. 41 P. Adonnino, Second Report on a People’s Europe, Bull. EC (1985), Supplement 7/85. 42 See the Conclusions of the Presidency of the European Council meeting at Fontainebleau, A People’s Europe, Bull. EC (1985), Supplement 7/85.

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of a Euro-lottery and circulation of postage stamps with Community-inspired designs. Recommendations for more people-centred actions were also made, for instance, the launch of exchange programmes in education or the establishment of a common audiovisual area with a European multilingual television channel. Admittedly, early attempts to bring culture within the European sphere in order to galvanise public support for the European idea resulted in an array of dispersed, selective initiatives, targeting almost randomly-dened areas of cultural activity. A soft law approach was endorsed as the best way to proceed, and support for architectural and archaeological preservation, conservation of works of art and artefacts, sponsorship of cultural activities and translation of books represented the main action themes.43 Notably, whereas the Parliament’s stance continued to be profoundly hedged with unity-in-diversity qualications, the Council, though sceptical of any attempt to foster a European cultural identity, was still willing to sustain national authorities burdened with the heavy cost of maintaining major cultural sites and institutions: socio-economic features of the action taken were underlined and any reference to the desirability of European cultural unity was avoided. The line of action chosen did not affect the spectrum of Community competences in the slightest. The Single European Act (SEA) did not bestow any cultural powers on the Community: concentrated on more-economic driven objectives, a cultural amendment was dropped due to political turmoil.44 To give the process new impetus, the Commission, in a communication entitled A fresh boost for culture in the European Community, sought to convince national authorities that increased Community cultural activity was both ‘a political and economic necessity given the twin goals of completing the internal market by 1992 and progressing from a people’s Europe to European Union’.45 According to the Commission, the sense of being part of European culture was ‘one

43 See Resolution of the Ministers with responsibility for Cultural Affairs meeting within the Council of 13 November 1986 on the protection of Europe’s architectural heritage, OJ C 320, 13/12/1986, p. 1, Resolution of 13 November 1986 on business sponsorship of cultural activities, OJ C 320, 13/12/1986, p. 2, Resolution of 13 November 1986 on the conservation of works of art and artefacts, OJ C 320, 13/12/1986, p. 3, Resolution of the Council and of the Ministers responsible for Cultural Affairs meeting within the Council of 9 November 1987 on the promotion of translation of important works of European culture, OJ C 309, 19/11/1987, p. 3, Resolution of the European Parliament of 28 October 1988 on the conservation of the Community’s architectural and archaeological heritage, OJ C 309, 5/12/1988, p. 423, and Resolution of 28 October 1988 on the teaching of Community languages in the European Community, OJ C 309, 5/12/1988, p. 427. 44 De Zwaan, ‘The Single European Act: Conclusion of a Unique Document’, 23 Common Market Law Review (1986) 747, at 759. 45 European Commission, Communication on a fresh boost for culture in the European Community, COM (1987) 603, at 1.

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of the prerequisites for that solidarity which is vital if the advent of the large market, and the considerable changes it will bring about in living conditions within the Community, is to secure the popular support it needs’.46 Though drafted primarily in economic terms, the Commission’s document embraced cultural diversity as the principal factor in a viable conception of European cultural unity. Its notion was, in fact, expanded to accommodate both national and regional cultural features. In the Commission’s view, ‘the keystone of the ambitious construction which aims at the European Union’ was ‘the unity of European culture as revealed by the history of regional and national cultural diversity’.47 For the Parliament, in turn, any commitment to culture was to involve ‘making the most of all aspects of this diversity, thereby turning European culture into a culture of cultures by creating the most fertile environment possible’.48 To facilitate the work of both the Commission and the Council, a Committee on Cultural Affairs and a Committee of Cultural Consultants were set up, signalling an eagerness to place culture and cultural diversity on the Community’s agenda in earnest.49 The need for multi-cultural standards to be rmly embedded in the Union’s constitutional texts was openly acknowledged by the European Council, meeting in Rome on 14–15 December 1990, which invited the Intergovernmental Conference on Political Union to give due consideration to ‘safeguarding the diversity of the European heritage and promoting cultural exchanges’.50 Proposals for the inclusion of culture in the Treaty with strict respect for cultural differences were made by France, the Netherlands, Spain, Denmark and Germany,51 supported by the Commission and the European Parliament, which cautioned the need for subsidiarity in this area.52 A Treaty article on culture, it was stated, should indeed refrain

46

Ibid. Ibid., at 3. 48 Resolution of the European Parliament of 17 February 1989 on a fresh boost for Community action in the cultural sector, OJ C 69, 20/3/1989, p. 180, at point E. 49 The Committee on Cultural Affairs, consisting of representatives of the Member States and Commission ofcials, was established in order to assist the Council and/or the Ministers of Culture in the preparation of their cultural activities. The Committee of Cultural Consultants, composed of leading gures in the arts, was set up to help the Commission formulate a general Community-based cultural strategy. See 5 Bull. EC (1988) 39, at point 2.1.91, and 11 Bull. EC (1988) 45, at point 2.1.146, respectively. 50 See Conclusions of the European Council meeting held in Rome on 14–15 December 1990, 12 Bull. EC (1990) 7, at point 1.8. 51 See R. Corbett, The Treaty of Maastricht: From Conception to Ratication: A Comprehensive Reference Guide (1993), at 51. 52 See European Commission, Formal Opinion of 21 October 1990 pursuant to Article 236 of the EEC Treaty on the proposal for an amendment of the Treaty establishing the European Economic Community with a view to a political union, Bull. EC (1991), Supplement 2/91, 47

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from introducing a common cultural policy, aimed ‘at the kind of centralisation that can only result to uniformity’.53 1.2 The Substantive Cultural Dimension of Community Law in the Pre-Maastricht Context Looking behind the rhetorical formulas deployed concerning culture as an integrative tool, likely to strengthen popular identication with the European idea, the Community had little choice but to intervene in cultural matters, in any case. Notwithstanding unanimous agreement reached among the Member States that competence to dene and implement cultural policies should remain within the national sphere, the economic provisions of the EEC Treaty, applicable to all elds of economic activity, were bound to affect the cultural sector and therefore unsettle domestic cultural prerogatives. The nature of the powers attributed to the Community has been decisive in this respect. As is commonly known, in addition to the sectoral powers conferred, focused on substantive policy sectors, the Community has equally been vested with powers of a functional nature, dened by reference to an objective to be achieved, namely the establishment of the common market.54 In exercising such powers, the European institutions in several instances transcended competence boundaries set by the EEC Treaty, intruding on state policies not transferred to the Community as such.55 In the cultural eld, not only did the objective of establishing the common market affect Member States’ entitlement freely to devise and realise their cultural policies. It also proved crucial for the adoption of measures with a clear cultural connotation. In order to provide some illumination regarding the way in which the elaboration of the economic provisions of the EEC Treaty enabled a substantive Community intervention in cultural matters,56 so leading to the adoption of what is now Article 151 EC, it is essential to recall the modes in which Community law manifests itself, namely market integration and policy integration,

and Resolution of the European Parliament of 12 July 1990 on the principle of subsidiarity, in R. Corbett, cited above, 119, at 120. 53 Ibid., European Commission, at 147. 54 Note that for the establishment of the common market, both specic powers, relating to the various freedoms of movement, and general powers for its completion have been transferred to the Community. 55 See De Witte, ‘The Scope of Community Powers in Education and Culture in the Light of Subsequent Practice’, in R. Bieber and G. Ress (eds), The Dynamics of EC Law (1987) 261, at 262–263. 56 See, generally, De Witte, ‘The Cultural Dimension of Community Law’, in Collected Courses of the Academy of European Law (1993), Vol. IV-1, 229.

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also known as negative and positive integration.57 Market integration requires national measures restricting the free movement provisions of the Treaty be abolished. Domestic laws and regulations impeding trade ows and hampering mobility must be eliminated. As a second step, policy integration brings into alignment or replaces national rules to the extent necessary for proper functioning of the common market. Harmonisation measures are adopted to approximate or coordinate pre-existing domestic barriers to trade, whose variation in domestic legal systems obstructs trade integration and/or causes distortions of competition, despite being in themselves lawful and legitimate on public policy grounds either expressly recognised in the Treaty or held in high regard by the European judiciary.58 Community legislation serves primarily to avoid market fragmentation, but may also opt to address the national interests involved, though not necessarily in an identical manner, so as to compensate for what has been called a ‘regulatory gap’ in the Community system.59 In general terms, the ‘regulatory gap’ thesis runs as follows: should the European legislator abstain from catering for domestic public policy concerns when adopting harmonising legislation, the protection of such public policy interests would also cease to be possible at the national level. This is because, in accordance with the case-law of the European Court of Justice (ECJ),60 the Member States may no longer claim derogation from the common market freedoms, once Community law has harmonised the relevant subject matter.61 As a result, was the European legislator to harmonise lawful barriers to trade, without establishing a corresponding Community regulatory regime protective of such otherwise legitimate domestic public policy objectives, a framework for their attainment would be lacking.

57 See J.M.E. Loman et al., Culture and Community Law: Before and After Maastricht (1992), at 14–18, and De Witte, ‘Cultural Policy: The Complementarity of Negative and Positive Integration’, in J. Schwarze and H.G. Schermers (eds), Structure and Dimensions of European Community Policy (1988) 195, at 200–201. 58 Weatherill, ‘The Internal Market’, in S. Peers and A. Ward (eds), The EU Charter of Fundamental Rights: Politics, Law and Policy (2004) 183, at 191–192. 59 For the ‘regulatory gap’ thesis, see Trubek, ‘Consumer Law, Common Markets and Federalism: Introduction and General Concepts’, in M. Cappelletti, M. Seccombe and J. Weiler (eds), Integration Through Law: Europe and the American Federal Experience (1987), Vol. 3, 1, at 2–4, and De Witte, ‘Non-Market Values in Internal Market Legislation’, in N.N. Shuibhne (ed.), Regulating the Internal Market (2006) 61, at 69–70. 60 See, in particular, Case 148/78, Criminal proceedings against Tullio Ratti, [1979] ECR 1629, at para. 36. See, more recently, Case C-255/04, Commission v France, [2006] ECR I-5251, at para. 43, where the Court stated with respect to free provision of services that ‘[t]he freedom to provide services may . . . be restricted by national regulations justied on the grounds set out in Article 46(1) EC in conjunction with Article 55 EC or by overriding reasons in the public interest . . ., to the extent that there are no Community harmonising measures providing for measures necessary to ensure those interests are protected’. 61 De Witte, supra n. 59.

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Of course, when substituting Member States’ laws and regulations with common rules that abide by public policy precepts, the Community is not formally required to match domestic protective regulatory density. Minimum common standards, setting ‘Europeanised’ limits on market freedoms, might accordingly diminish regulatory protection by comparison with that granted by some domestic jurisdictions. The European legislator may also decide, in a given case, simply to overlook public policy anxieties to facilitate market integration. On other occasions, policy integration may have to respond to exemplied or even new regulatory needs raised by the advent of the common market. In a widened market space, it may appear necessary not only to replace vanishing national rules but also to increase protection or adopt an approach genuinely defensive of public policy interests, by creating positive obligations for the Member States to enact rules or grant new rights to Community nationals, in order to counteract any adverse consequences of market integration. Positive integration, instead of merely mirroring domestic public policy prerogatives, may lower, maintain or reinforce domestic protection standards. In balancing the economic objectives of the Treaty with non-market public policy values, the Community institutions generally enjoy a wide margin of discretion. The content of legislation enacted is usually conditioned by the availability of options for reconciling potentially divergent interests, depending on the factual circumstances surrounding each case and the institutional and political dynamics at play in the harmonisation process. As to the actual use made of the market integration technique in the cultural eld, action taken by the Council took the form of a series of liberalising directives invalidating national discriminatory provisions obstructing freedom of establishment and free provision of services in respect of the lm industry62 and various literary and artistic activities.63 The ECJ, however, has played the 62 See Council Directive 63/607/EEC of 15 October 1963 implementing in respect of the lm industry the provisions of the General Programme for the abolition of restrictions on freedom to provide services, OJ 159, 2/11/1963, p. 2661, Second Council Directive 65/264/EEC of 13 May 1965 implementing in respect of the lm industry the provisions of the General Programmes for the abolition of restrictions on freedom of establishment and freedom to provide services, OJ 85, 19/5/1965, p. 1437, Council Directive 68/369/EEC of 15 October 1968 concerning the attainment of freedom of establishment in respect of activities of self-employed persons in lm distribution, OJ L 260, 22/10/1968, p. 2, and Council Directive 70/451/EEC of 29 September 1970 concerning the attainment of freedom of establishment and freedom to provide services in respect of activities of self-employed persons in lm production, OJ L 218, 3/10/1970, p. 37. 63 See Art. 3(g) of Council Directive 67/43/EEC of 12 January 1967 concerning the attainment of freedom of establishment and freedom to provide services in respect of activities of self-employed persons concerned with: 1. Matters of ‘real estate’ (excluding 6401) (ISIC Group ex 640); 2. The provision of certain ‘business services not elsewhere classied’ (ISIC Group 839), OJ 10, 19/1/1967, p. 140.

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central role in steps towards market integration via deletion of protectionist barriers to cultural trade. Called upon to verify the compatibility of domestic legislative or administrative schemes of a discriminatory nature that restricted the free ow of cultural goods, services and operators at an early stage, the Court provided ample support for the creation of a common cultural market. Following the famous Italian Art Treasures judgment,64 which claried that the principle of free movement of goods applies to works of art as to any other products the object of a commercial transaction, it was made abundantly clear to national authorities that attempts to escape internal market obligations on the basis of protectionist cultural arguments would not succeed.65 Plainly, culture and commerce are not mutually exclusive. Cultural expressions may form the object of commercial activities which, enriched with a transnational dimension, fall within scope of Community law. Though unnoticed by most, the EEC Treaty had made this point already. A provision allowing for national restrictions to the free circulation of goods justied on grounds of the ‘protection of national treasures possessing artistic, historic or archaeological value’ would have been unnecessary, if cultural goods were not encompassed by the general prohibition of quantitative restrictions and all measures having an equivalent effect for imports and exports between the Member States, contained in ex-Articles 30 and 31 EEC (now Articles 28 and 29 EC). From the outset, there was no a priori exclusion of cross-border cultural ows from the Community’s purview. The free movement rules,66 the competition provisions of the EEC Treaty67 and the customs union prescribed by ex-Article 9 EEC (now Article 23 EC)68 applied to the cultural sector as to any other sector of economic activity. By demanding compliance with the EEC economic provisions, the Court’s jurisprudence brought to light the limits placed by Community law upon domestic cultural autonomy. National

64

Case 7/68, Commission v Italy, [1968] ECR 423. On the Court’s pre-Maastricht case-law in the cultural eld, see Craufurd Smith, ‘Community Intervention in the Cultural Field: Continuity or Change?’, in supra n. 22, 19, at 28–40. 66 See, in this respect, Joined Cases 60/84 and 61/84, Cinéthèque SA and others v Fédération nationale des cinemas français, [1985] ECR 2605 (free circulation of goods), Case 197/84, P. Steinhauser v City of Biarritz, [1985] ECR 1819 (freedom of establishment), Case 155/73, Sacchi, [1974] ECR 409 (free provision of services), and Written Question No. 621/89 by James Ford to the Commission of the European Communities, Archaeological restrictions in Spain, OJ C 69, 19/3/1990, p. 27 (free movement of workers). 67 See Joined Cases 43/82 and 63/82, VBVB and VBBB v Commission, [1984] ECR 19, Case 243/83, Binon, [1985] ECR 2015, Case 262/81, Coditel SA, Compagnie générale pour la diffusion de la télévision, and others v Ciné-Vog Films SA and others, [1982] ECR 3381, Case 22/79, Greenwich lm production v SACEM, [1979] ECR 3275, and Case 127/73, BRT v SABAM, [1974] ECR 51. 68 See, supra n. 64. 65

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authorities were constrained to abolish or reconsider measures that could impede the ‘free circulation of culture’ in a common market area. To approach the reasoning of the Court from a ‘culture-friendly’ angle might seem an unusual undertaking. Yet, the establishment of an open, borderless space, where cultural goods, services and operators could circulate unhindered, could also be seen as signicantly increasing prospects of cultural interaction, favouring the diffusion of varied cultural patterns on EEC territory and widening the range of cultural choices available to Member States’ nationals. Indeed, it could be argued that respect for the fundamentals of the common market, though motivated by market integration precepts, simultaneously promoted a multi-cultural paradigm for the new market-driven economy, so prompting the Member States to open themselves to new cultural points of reference. At any rate, the development of the Court’s Cassis de Dijon doctrine concerning the conditions under which the Member States may legitimately undertake market regulation to full public policy needs, notwithstanding consequent restriction of intra-Community trade,69 provided some protection for national measures enacted as part of domestic cultural policy strategies. The Court did not ignore arguments advanced by the Member States in favour of preserving or highlighting their cultural characteristics. Rather it sought, via extensive use of the jurisprudential tool of mandatory requirements in the public interest, to mitigate the effect of free movement prohibitions on domestic regulatory practice of fundamental cultural signicance70—the condition of its support being that the measures under review should apply without distinction on the basis of origin and be necessary, appropriate and proportional to the cultural goals pursued at the national level. Turning to positive integration, the functional nature of Community powers proved decisive for the introduction of legislation with a direct impact upon national action designed to cater for domestic cultural needs. Following the ECJ’s Casagrande ruling which recognised that, when an act falls within the 69

Case 120/78, Rewe Zentrale v Bundesmonopolverwaltung fur Branntwein, [1979] ECR 649. Protecting the national historical and artistic heritage (Case C-180/89, Commission v Italy, [1991] ECR 709), facilitating the widest possible dissemination of knowledge of a country’s patrimony (Cases C-154/89, Commission v France, [1991] ECR I-659, and C-198/89, Commission v Greece, [1991] ECR 727), safeguarding the freedom of expression of the various (in particular, social, cultural, religious and philosophical) components of a Member State (Cases C-353/89, Commission v the Netherlands, [1991] ECR 4069, and C-288/89, Stichting Collectieve Antennevoorziening Gouda and others v Commissariaat voor de Media, [1991] ECR 4007), promoting the national language (Case 379/87, Groener v Minister for Education and the City of Dublin Vocational Education Committee, [1989] ECR 3967) or encouraging the provision of quality television services (Case C-353/89 Commission v the Netherlands, [1991] ECR 4069) were accepted as some of the grounds on which restrictions to the free movement rules could be justied. Relevant case-law will be examined in detail in Part B ‘Internal Market and Culture’. 70

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functional powers of the Community it may be legitimately adopted, even if it impinges on policy areas beyond the sectoral Community competences ascribed by the Treaty,71 several legislative measures, crucial from a cultural standpoint, were authorised. Reference could be made to Regulation (EEC) 3911/92 on the export of cultural goods and Directive 93/7/EEC on the return of cultural objects unlawfully removed from the territory of a Member State, which are eminently cultural in their subject matter;72 the Sixth Value Added Tax (VAT) Directive and Directive 92/77/EEC on VAT rates approximation, which allow for preferential tax treatment of certain cultural goods and services;73 and the 1989 Television without Frontiers Directive, whose specic content requirements can be construed as enhancing plurality of content.74 Such enactments were not intended as cultural policy instruments. They formed part of the drive to complete the common market and ensure proper functioning of its internal and external facets. Their essentially economic animus is revealed by a consideration of the legal bases used, respectively ex-Articles 99 and 100, 57(2) and 66, 113 and 100a EEC (now Articles 93 and 94, 47(2) and 55, 133 and 95 EC), the economic avour of each of which is more than pronounced. Nevertheless, by the measures introduced, the European institutions also sought to cope with the cultural issues raised. Particular choices made by the European legislator may certainly be criticised, but without doubt the legislative tools adopted allowed for clear cultural policy decisions to be reached by the Community.75 The same can be said of certain support measures enacted on the basis of the residual competence clause of ex-Article 235 EEC (now Article 308 EC),

71 Case 9/74, Casagrande v Landeshauptstadt München, [1974] ECR 773, at para. 12. The Casagrande ruling was conrmed in Matteucci, where the Court took the position that the application of Community law could not be ruled out on the ground that it would affect domestic cultural policies pursued on the basis of a cultural agreement signed between Belgium and Germany. See Case 235/87, Annunziata Matteucci v Communauté française de Belgique and Commissariat général aux relations internationales of the Communauté française of Belgium, [1988] ECR 5589, at para. 14. 72 Council Regulation (EEC) No. 3911/92/EEC of 9 December 1992 on the export of cultural goods, OJ L 395, 31/12/1992, p. 1, and Council Directive 93/7/EEC of 15 March 1993 on the return of cultural objects unlawfully removed from the territory of a Member State, OJ L 74, 27/3/1993, p. 74. 73 Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes—Common system of value added tax: uniform basis of assessment, OJ L 145, 13/6/1977, p. 1, and Council Directive 92/77/EEC of 19 October 1992 supplementing the common system of value added tax and amending Directive 77/388/EEC (approximation of VAT rates), OJ L 316, 31/10/1992, p. 1. 74 Council Directive 89/552/EEC of 3 October 1989 on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities, OJ L 298, 17/10/1989, p. 23. 75 The legislative acts mentioned will be discussed in Part B, ‘Internal Market and Culture’, in order to examine the exact level of the weight afforded to cultural considerations and the cultural policy choices made by the European institutions.

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such as the MEDIA programme, launched to help the fragmented European audiovisual industry expand its production and distribution capacity,76 and the LINGUA programme, which sought to improve foreign language teaching and learning,77 so as to enable the nationals of the Member States ‘to overcome linguistic difculties which impede the free movement of persons, goods, services and capital’.78 The market justication for the action taken, namely the need to ensure the harmonious development of economic activities throughout the Community as part of the operation of the common market, did not prevent the European legislator from taking cultural factors into account as well.79 Venturing into highly sensitive areas, belonging predominantly to the national sphere, the Community found itself submerged into a rather controversial debate over the allocation of competences. The fact that, through market and policy integration, the European institutions were operating a de facto cultural policy, without any explicit competence to do so, sparked strong criticism in those Member States, which saw the economic-driven—even if culture-oriented—Community action as an attempt to erode domestic cultural powers. The passage of the SEA exacerbated such fears. Whereas the Member States had arguably limited inuence with respect to ECJ rulings ultimately compelling them to remove restrictive domestic measures, unanimity requirements in Council decision-voting allowed for an effective use of veto rights each time Community-based action was perceived as impinging too far on national cultural sovereignty. The shift to qualied majority decision-making prescribed by the SEA could seriously hamper individual Member States’ ability to make their voices heard within the Council and to obstruct the legislative process in case of undesired cultural initiatives by the Commission. It was in this context that a need to openly acknowledge, via a Treaty amendment, the value and importance of cultural diversity started to gain

76 Council Decision 90/685/EEC of 21 December 1990 concerning the implementation of an action programme to promote the development of the European audiovisual industry (Media, 1991 to 1995), OJ L 380, 1/12/1990, p. 37. 77 Council Decision 89/489/EEC of 28 July 1989 establishing an action programme to promote foreign language competence in the European Community (Lingua), OJ L 239, 16/8/1989, p. 24. 78 Ibid., 7th indent. 79 According to the 1st indent of the Media Decision (supra n. 76), ‘it is extremely important to strengthen efforts, including cooperation, to develop Europe’s audiovisual capacity . . . so as to provide an opportunity of demonstrating the richness and diversity of European culture’. The 8th indent of the Lingua Decision (supra n. 77) stipulates, in turn, that ‘greater foreign language competence will . . . enhance understanding and solidarity between the peoples which go to make up the Community, while preserving the linguistic diversity and cultural wealth of Europe’.

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recognition. European integration’s impact on national cultural spheres could no longer be ignored. Market and cultural issues had proved themselves inextricably intertwined, with Member States unable to deter Community intervention in the cultural sector. At the same time, it was evident that not all kinds of Community cultural activity need be undesirable. The European institutions had gone to great lengths to stimulate regional cultural life, on a platform of support provided by the Structural Funds, facilitating heritage conservation and encouraging production of local cultural output, without meeting any resistance on the part of the Member States. Having to choose between a transfer of cultural powers to the Community and the maintenance of the status quo, which could result in national cultural concerns being overshadowed by market forces, the Member States opted for a middle road. A complementary cultural competence was entrusted to the Community, supportive of domestic action and founded on the protection and promotion of domestic cultural distinctiveness. In the Member States’ view, a Treaty article on culture and cultural diversity, through a clearly-delineated division of roles, could signal for the European legislator the direction to follow, if a balancing exercise between potentially conicting interests was required. Concern for cultural specicity, until then echoed mainly in soft law policy documents, risked to be afforded little weight or be completely overridden by other Community policy objectives in default. In addition, a broad-based commitment to the preservation of cultural diversity inserted in the Treaty could substantially inuence outcomes in cases before the Court of Justice, encouraging in its reasoning a renewed emphasis on domestic cultural policy concerns. The Member States’ willingness to spell out the importance of cultural diversity by stating it as a positive value in the Treaty was favourably received by the European institutions. The European Parliament, a staunch supporter of Community cultural action from the 1970s onwards, predictably enough ascertained that the balanced development of the internal market necessitated the identication of objectives which ‘respect and enhance the pluralism and diversity which characterise European society’.80 The Commission, aware of the commercial importance of the cultural industries81 and ever alert to the principle of enumerated powers and its implications for the selection of the appropriate legal basis for the adoption of Community measures, appreciated the considerable pressure it would have to withstand whenever cultural

80

See Resolution of the European Parliament of 11 July 1990 on the Intergovernmental Conference in the context of Parliament’s Strategy for European Union (Martin II Report), in supra n. 51, 112, at 115. 81 See supra n. 45, at 2–3.

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concerns jeopardised the economic focus of the legislation enacted. As for the Council, the likelihood of having to deal with tensions, each time negotiations affected domestic cultural prerogatives, or worse, to bear the political cost of a failure to act in non-cultural-related elds, should a Member State decide to block discussions precisely because its cultural concerns had not been given serious consideration in other policy contexts, supported the inclusion in the Treaty of a provision on the protection of cultural diversity to alleviate some of the main deterrents to decision-making. Responding to such calls, the Treaty of Maastricht brought culture formally within the spectrum of Community activities. Community competences were extended to embrace the cultural domain, but respect and promotion of cultural specicity was recognised as a distinct and legitimate EC objective, intended to guide the Community in its cultural action, and reshape EC decision-making in other policy areas, as will later be shown.

Chapter Two

Community Cultural Competences: An Appraisal of Article 151 EC

In line with the resolve to ‘mark a new stage in the process of European integration’,1 the fth recital of the Preamble to the Treaty on European Union (EU) proclaims the desire of the Member States to ‘deepen the solidarity between their peoples while respecting their history, their culture and their traditions’. Article 6(3) TEU follows the same spirit, stating that ‘[t]he Union shall respect the national identities of its Member States’. The EC Treaty, receptive to the widespread demand of an appropriately articulated Community cultural competence, founded on the primacy of national cultural values and practices, aspires to make ‘a contribution to . . . the owering of the cultures of the Member States’.2 Article 151 EC, which marks the rst express conferment of direct cultural powers upon the Community, provides the basis for the development of cultural activities at the EC level.3 Preservation and promotion of cultural diversity forms the mainspring of Article 151 EC as originally drafted and subsequently modied by the Treaty of Amsterdam. Providing a number of safeguards against homogenisation of national and regional cultural characteristics, the role of the provision appears to be more about setting boundaries than giving the green light to the Community further to delve into cultural affairs. One might be tempted, therefore, to argue that the main purpose of Article 151 EC is not to establish

1

See 1st indent of the Preamble to the Treaty on European Union. See Art 3(1)(q) EC. 3 For a detailed discussion of Article 151 EC, see B.F. Lévy, Les compétences culturelles de la Communauté Européenne (2004), at 275–352, Craufurd Smith, ‘Community Intervention in the Cultural Field: Continuity or Change?’, in R. Craufurd Smith (ed.), Culture and European Union Law (2004), 19, at 49–53, N.N. Shuibhne, EC Law and Minority Language Policy: Culture, Citizenship and Fundamental Rights (2002), at 107–114 and 126–154, P. Sticht, Culture européenne ou Europe des cultures? Les enjeux actuels de la politique culturelle en Europe (2000) 52–59, De Witte, ‘The Cultural Dimension of Community Law’, in Collected Courses of the Academy of European Law (1993), Vol. IV–1, 229, at 291–299, J.M.E. Loman et al., Culture and Community Law: Before and After Maastricht (1992), at 192–201, and J.A. McMahon, Education and Culture in European Community Law (1995), at 164–172. 2

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a ‘common’ cultural policy, but to foreground Community efforts rooted in the protection and promotion of individual Member States’ diverse cultural systems. This conviction is substantiated by the Charter of Fundamental Rights of the European Union which determines in Article 22 that ‘[t]he Union shall respect cultural, religious and linguistic diversity’. Arrangements which might jeopardise the cultural richness of the Member States are to be avoided through recourse to a set of explicit and implicit powers. Article 151 EC sets the stage, stating, in paragraph 1, that ‘[t]he Community shall contribute to the owering of the cultures of the Member States, while respecting their national and regional diversity and at the same time bringing the common cultural heritage to the fore’. Whereas the legal basis for the launch of initiatives may be found in paragraph 5, paragraphs 2 and 3 determine the areas where the Community may explicitly develop its cultural activities. Internal Community cultural action must be aimed at encouraging cooperation between the Member States and, if necessary, supporting and supplementing their cultural endeavours, in order to improve knowledge and dissemination of the culture and history of European peoples, safeguard the cultural heritage of European signicance, promote non-commercial cultural exchanges and facilitate literary and artistic creation, including in the audiovisual sector. With regard to the external facet of EC cultural action, the Community is invited, in conjunction with the Member States, to foster cooperation with third countries and international organisations active in the cultural sphere, in particular with the Council of Europe. The implicit cultural powers of the Community unfold in paragraph 4 of Article 151 EC, the so-called cross-sectional or policy-linking cultural clause, according to which ‘[t]he Community shall take cultural aspects into account in its action under other provisions of this Treaty, in particular in order to respect and to promote the diversity of its cultures’. By requiring the integration of cultural reasoning in the elaboration of the various EC Treaty provisions, Article 151(4) EC reveals that the cultural policy pursued by the Community extends beyond the content of paragraphs 2, 3 and 5 of Article 151 EC alone. Cultural considerations acquire a horizontal dimension, assuming the status of a cross-cutting concern to be reected in overall Community practice.

2.1 Explicit Community Cultural Powers Embarking on a drafting exercise for a Treaty article on culture was not easy. Introducing an explicit cultural competence at the supranational level could be viewed as a potential basis for the Community to take positive measures

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in support of Member States’ cultural activities. It could also be seen as a strategic move, on the part of the Community, to expand its reach into areas falling primarily within the autonomy of the Member States, raising contentious questions over the cultural purposes pursued. The cautious language of Article 151 EC represents an attempt to respond to domestic concerns with respect to the latter. 2.1.1

Article 151(1) EC: The EC Cultural Agenda

Paragraph 1 of Article 151 EC stipulates that the Community’s task is strictly limited to that of contributing to the owering of the cultures of the Member States. The term ‘contribute’ does not preclude the shaping of independent Community action in the absence of, or even parallel to, the adoption of domestic cultural measures.4 Yet this word makes clear that the role assigned to the Community is one of a secondary nature, with Member States retaining primary responsibility for action in the cultural eld. In exercising its secondary powers, the Community is constrained to focus its activities on measures specically designed to stimulate domestic cultural activity, and enjoined to refrain from jeopardising the preservation and future development of Member States’ cultural systems. Respect for national and regional diversity, thus diversity between and within the Member States, must be ensured. From this perspective, Article 151(1) EC enlarges the scope of Article 6(3) TEU, which makes reference only to national identity as the cultural backbone of each Member State. Protection is equally granted to sub-national cultures alongside the prevailing national culture. The concurrent duty of the Community to bring the common cultural heritage to the fore might prove a source of anxiety for those who fear a top-down imposition of a hegemonic European culture. At rst sight, such vague phrases (which, it should be noted, are not Community-specic)5 make little sense in the context of a binding legal text, and seem to hold potential to re-open 1970s debates on European identity6 and the support that culture may lend in building popular identication with the European polity.

4

N.N. Shuibhne, cited above, at 127. See, for example, Art. 1 of the European Cultural Convention, signed in 1954 under the auspices of the Council of Europe, available at: http://conventions.coe.int/Treaty/EN/Treaties/Html/018.htm, which states that ‘[e]ach Contracting Party shall take appropriate measures to safeguard and to encourage the development of its national contribution to the common cultural heritage of Europe’. 6 On the discourse on European identity, see B. Nelson, D. Roberts and W. Veit, The Idea of Europe: Problems of National and Transnational Identity (1992), Gowland et al., ‘Epilogue: A European Identity?’, in D.A. Gowland, B.C. O’Neil and A.L. Reid (eds), The European Mosaic: Contemporary 5

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It has been argued that ‘there is a long history of shared inuences and experiences, a heritage, which has not touched all parts of Europe or all Europeans equally . . . but which is felt and experienced in varying ways and degrees by those whose home is Europe, and which is recognised—whether approvingly or disapprovingly—by many from outside’.7 Is this what ‘the common cultural heritage’ of Article 151(1) EC is meant to stand for? It is doubtful. To talk in terms of a single European historical culture may quickly lead to unsustainable generalisation, precisely because several historical narratives of Europe are possible. And, although there is a strong belief that Europeans are, at least partially, united by the shared experiences of the sufferings and divisions caused by war,8 there is no indication in the preparatory documents leading to the EC Treaty that the Member States sought to allude to such memories. Moreover, while it may be possible to point to some shared European cultural traits, for instance, in the arts,9 the cultural systems of the Member States—national and regional—display remarkable diversity, as is fully recognised and afrmed by the EU constitutional texts. In the absence of shared traditions and cultural myths upon which a European culture can be based,10 some would contend the futility of the Community’s task to bring ‘the common cultural heritage to the fore’. It seems, indeed, that no serious thought was given at the time of the draft-

Politics, Economics and Culture (1996) 287, Fitzpatrick, ‘New Europe and Old Stories: Mythology and Legality in the European Union’, in P. Fitzpatrick and J.H. Bergeron (eds), Europe’s Other: European Law between Modernity and Postmodernity (1998) 27, T. Kostakopoulou, Citizenship, Identity and Immigration in the European Union (2001), Risse, ‘European Identity and the Heritage of National Cultures’, in R.S. Peckham (ed.), Rethinking Heritage: Cultures and Politics in the EU (2003) 74, R.K. Herrmann, T. Risse and M.B. Brewer, Transnational Identities: Becoming European in the EU (2004), Mayer and Palmowski, ‘European Identities and the EU—The Ties that Bind the Peoples of Europe’, 42 Journal of Common Market Studies (2004) 573, Craufurd Smith, ‘Article 151 EC and European Identity’, in R. Craufurd Smith (ed.), supra n. 3, 277, and M. Bruter, Citizens of Europe? The Emergence of a Mass European Identity (2005). 7 Wintle, ‘Cultural Identity in Europe: Shared Experience’, in M. Wintle (ed.), Culture and Identity in Europe (1996) 9, at 13. 8 Guibernau, ‘Introduction: Unity in Diversity in Europe’, in G. Guibernau (ed.), Governing European Diversity (2001) 1, at 21–22. 9 See Kearns, ‘Culture and EU Law: The Exploration of an Interforce’, in R. Craufurd Smith (ed.), supra n. 3, 385, at 390. 10 At any rate, though desirable the formation of a true community of Europeans may be, it cannot be expected to automatically ow from the convergence of domestic cultural practices. Rationalising national cultural specicities in order to highlight a cultural heritage common to the nationals of the Member States is likely to have exactly the opposite effect of what it purports to achieve: alienate these same peoples. A Community cultural policy promoting a European cultural identity, arguably ‘no more than an effort to spread a favourable image of Europe, without any substance backing it’, can be ‘of dubious value, and . . . even . . . counterproductive’, if perceived as too political and instrumental. See, in this respect, De Witte, ‘Building Europe’s Image and Identity’, in A. Rijksbaron et al. (eds.), Europe from a Cultural Perspective (1987) 132, at 137.

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ing of the EC Treaty to what ‘a common cultural heritage’ signied. The language used by Article 151(1) EC can be construed in many different ways, its interpretation incumbent upon the European institutions in the pursuit of their cultural activities. Arguably, this might disclose the underlying motivation for the adoption of such an open-ended phrase: to allow the Community considerable scope to dene the notion of ‘common cultural heritage’ when adopting specic policy measures on the basis of Article 151 EC. On an alternative reading, one could argue that the ‘common cultural heritage’ refers to the rich variety of cultures that have developed on European territory and which, though distinct, may be perceived as being common to all European peoples. It is widely considered that Europe is an outstanding repository of cultural practices and patterns, a patchwork of different cultures, in need of protection.11 Whilst the Member States should not be expected to lose interest in the preservation of their own cultural characteristics, they could, nonetheless, become more sensitive as regards the conservation of the cultural patrimony of their partners. From this point of view, protecting and promoting a ‘common cultural heritage’ depends crucially on shared commitment to preserving and embracing diversity. Further questions as to the concrete meaning of Article 151(1) EC can be seen to abound in light of the lack of any guidance as to the concept of culture in the EC context.12 Electing to refrain from clarifying the concept of culture obviously guarantees wide scope in the implementation of Article 151 EC. It has been suggested that ‘[t]he evolving nature of the European Community and Union requires that neither culture nor its values should remain static’.13 A strictly-dened notion of culture (difcult to articulate in any case) could have thwarted the development of a forward-looking EC cultural policy, responsive to the cultural needs of the Member States at any given moment. Bearing in mind that it is the Member States that have signed and ratied the EC Treaty, the absence of a precise denition might have been a deliberate attempt on their part to encourage exibility, allowing for the use of Community channels whenever a specic cultural issue poses a common challenge. After all, cultures, whether national or regional, constantly mutate in content. Should Community action be felt to overstepping domestic cultural 11

See D. Dunkerley et al., Changing Europe: Identities, Nations and Citizens (2002), at 121–123. Culture may represent different things in different contexts. It may be regarded as the accumulated material heritage of humankind; it may be identied with the process of artistic and scientic creation; or it may be viewed as the sum total of the material and spiritual activities of a given social group, which distinguishes it from other similar groups. See Stavenhagen, ‘Cultural Rights: A Social Science Perspective’, in A. Eide, C. Krause and A. Rosas (eds), Economic, Social and Cultural Rights (2001) 85, at 87–91. 13 Ross, ‘Cultural Protection: A Matter of Union Citizenship or Human Rights?’, in N.A. Neuwahl and A. Rosas (eds), The European Union and Human Rights (1995) 235, at 237. 12

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requirements, the Member States have made sure that they possess appropriate tools to bring contentious Community initiatives to a crashing halt. The Commission, in its 1996 report on the consideration of cultural aspects in European Community action, drew upon the denition of culture formulated at UNESCO’s World Conference on cultural policies, according to which ‘culture consists of all distinctive, spiritual and material, intellectual and emotional features which characterise a society or a social group’.14 Noting, however, that ‘on this basis, the entire European structure, the Treaties themselves and all the texts they have generated may be regarded as cultural expression and works’,15 it refused to take responsibility for a concrete denition. Stressing that ‘it is not for an institution to dene the content of the concept of culture’,16 the Commission declared that a pragmatic approach would be followed that would not be tied to any one denitional variation. Perhaps contrary to expectations, the various EC cultural policy documents use a denition of culture which is not conned to ‘high culture’ focused on specic cultural disciplines, such as literature, ne arts and classical music. The understanding of culture at the Community level extends to new, innovative forms of cultural expression, intangible heritage assets, mass-produced cultural products and popular, everyday culture, with the European institutions desisting, so far, from the exercise of aesthetic judgement.17 2.1.2 European Cultural Cooperation: The Internal and External Dimension In accordance with paragraphs 2 and 3 of Article 151 EC, explicit Community cultural action may operate both internally and externally. In its external dimension, the Community and the Member States are required to foster cooperation with third countries and the competent international organisations in the sphere of culture. Internal action, postulated by paragraph 2, must aim at encouraging cooperation between the Member States. Evidently, the central theme of all EC-based cultural activities is cultural cooperation.

14 European Commission, First Report on the consideration of cultural aspects in European Community action, COM(1996) 160, at Intro., p. 3. 15 Ibid. 16 Ibid. 17 See, for instance, Annex I and Annex II of Decision 508/2000/EC of the European Parliament and of the Council of 14 February 2000 establishing the Culture 2000 programme, OJ L 63, 10/3/2000, p. 1, which refer inter alia to music, the performing arts, the plastic and visual arts, photography, architecture, literature, books, reading, multimedia products, cultural heritage, including movable and non-movable heritage (museums, collections, libraries and archives), archaeological heritage, sub-aquatic heritage, architectural heritage and all cultural sites and landscapes, children’s culture, live cultural events and street art.

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2.1.2.1 Article 151(2) EC: themes of cultural cooperation and European added value Under Article 151(2) EC the Community is conceived as having a purely coordinating role, and inducing national authorities to combine forces in the cultural eld. Clearly, it must refrain from imposing a set of cultural values from above, or accepting the predominance of one partner’s cultural ideals. Rather the juxtaposition of all parties’ cultural essentials, with mutual recognition of differences, is to be promoted. In its relevant endeavours, the Community may focus not only on areas which have received signicant domestic attention but also on cultural themes which may, for whatever reason, have remained at the fringes of national or regional cultural agendas. If necessary, the Community may support and supplement national cultural action in certain strictly-dened areas: improving knowledge and dissemination of the culture and history of European peoples; preserving and safeguarding cultural heritage of European signicance; advancing non-commercial cultural exchanges, namely non-prot cultural exchanges;18 and fostering artistic and literary creation, including in the audiovisual sector. Whereas the word ‘supplement’ reects the proactive role envisaged for the European institutions, which may extend beyond Member States’ achievements in the areas mentioned, the ‘if necessary’ phrase invokes the principle of subsidiarity, which allows the Community to take action, when lacking exclusive competence, ‘only if and insofar as the objectives of the proposed action cannot be sufciently achieved by the Member States and can therefore, by reason of the scale or effects of the proposed action, be better achieved by the Community’.19 Although the explicit reference to subsidiarity indicates a tentative and, possibly, imprecise method for the Member States to prevent the expansion of Community cultural action, the ‘if necessary’ language does not fundamentally alter the Community’s general task of making a contribution to the owering of the cultures of the Member States. What the provision, overall, seems to require is adequate justication for the determination of the Community as the main actor to adopt measures in the elds of Article 151(2) EC. This is what is often referred to, in EU parlance, as European ‘added value’. The themes listed in Article 151(2) EC represent the core of EC cultural policy.20 Despite the lack of an express statement of their exhaustiveness, it has been argued that their incorporation in the Treaty primarily serves to circumscribe Community cultural action, drawing a clear dividing line between

18

See Bekemans and Balodimos, ‘Le traité de Maastricht et l’éducation, la formation professionnelle et la culture’, 2 Revue du Marché Unique Européen (1993) 99, 121–122. 19 See Art. 5 EC. 20 See N.N. Shuibhne, supra n. 3, at 135.

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what may be achieved at the EC level, and what may not.21 Alternatively, they could be seen as a sort of guideline for EC cultural policy-making, isolating those activity elds where Community-driven coordination may produce signicant benets in terms of efciency or enhanced impact. Whatever position one may adopt on this point, Article 151(2) EC’s broad, open-ended terms allow for the launch of a wide range of cultural initiatives.22 A few remarks on the short-listed areas may be instructive. First of all, they substantially correspond to the cultural domains covered by Community support measures adopted prior to the entry into force of the Maastricht Treaty. In this respect, Article 151(2) EC codies such previously employed funding mechanisms, converting them from ‘pilot actions’ to stable elements of Community cultural policy proper.23 More importantly, the activity areas of Article 151(2) EC, largely inspired by Member States’ internal cultural experience, guarantee the development of Community cultural action in line with domestic cultural needs and priorities. Measures to diffuse cultural information, facilitate access to culture, preserve heritage assets, encourage cultural exchanges and reinforce cultural creation usually form the nucleus of national cultural policies. Targeting these same themes at a higher regulatory level would seem to have a strong chance of a positive reception by the Member States. Far from being antagonistic toward national cultural policies, in its early days, EC cultural policy needed to be vocal about its compatibility with them in order to gain support. Likewise, only if it addressed issues ranking high on domestic cultural agendas would it succeed in securing the broad acceptance it needed to proceed beyond its embryonic phase. Of course, an EC cultural policy is not intended to duplicate domestic cultural strategies, nor is it meant to substitute for national cultural action.24 Its main objective is to provide an additional framework, where cultural aspects of Community interest, or which present implications at the supranational level may be appropriately addressed. This is the prism through which the

21

See J.M.E. Loman et al., supra n. 3, at 195. Note that the Commission, though not commenting upon the limiting or non-limiting function of the areas listed in Article 151(2) EC, took the view that ‘increased selectivity will mean fewer Community measures but greater visibility’. See Commission Communication on new prospects for Community cultural action, COM(1992) 149, at 3. 22 See Craufurd Smith, supra n. 3, at 51. 23 See De Witte, supra n. 3, at 291. 24 As precisely stated by the Ministers of Culture meeting within the Council, ‘[a]ctions should not supplant or compete with activities organised at national or regional level but provide added value and promote interchange between them’. See Conclusions of the Ministers of Culture meeting within the Council of 12 November 1992 on guidelines for Community cultural action, OJ C 336, 19/12/1992, p. 1, at para. 5.

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themes contained in paragraph 2 of Article 151 EC should be viewed: they elucidate the salience of cultural concerns in a context which extends beyond domestic cultural considerations and so justies Community action. With regard to heritage protection, for instance, in recent times, the importance of a ‘common cultural heritage to humankind’ has gained full recognition.25 The preservation of cultural heritage has been gradually perceived as of a value transcending geographical boundaries and domestic jurisdictions, to become part of the cultural patrimony of humanity in the interest of the whole international community. The EC can denitely make a precious contribution in this respect by sustaining its constituent units in the preservation of the integrity of the cultural legacy, tangible or intangible, located in their territory. Moreover, heritage conservation, when conducted in an appropriate, sustainable manner, may offer major spin-off benets in terms of the revitalisation of local economies, in particular as regards the promotion of cultural tourism, artisanal activities and job creation. By focusing appropriately on opportunities for economic growth, it may bring issues of culture into the mainstream of economic investment and practice. Community support for an adequate, yet cautious use of cultural resources is apt to generate economic activity and foster regional development, thus promoting economic and social cohesion in the Community. The reference to heritage of European signicance could be troubling for some. Although much of the preceding discussion with respect to the common cultural heritage applies equally here, economic considerations are also very important.26 A heritage of ‘European signicance’, whose conservation and management require the allocation of substantial nancial resources, is unlikely to be opposed by the Member States when it is conceived in a wider context with no hierarchy drawn or imposed. Mention of domestic, national or regional, cultural assets could, by contrast, have given vent to competing interests among the Member States, undermining the impact and efciency of the action taken. As to the cultural dissemination and cultural exchange activity areas of Article 151(2) EC, notwithstanding the reference made to ‘the culture and 25 See, for example, the Preamble to the 1972 UNESCO Convention concerning the protection of the world cultural and natural heritage, available at: whc.unesco.org. 26 The endorsement of a common heritage of European importance might also encourage increased access to cultural wealth. It is pertinent that Raphael, the rst EC heritage protection programme, called for both preservation tools and measures rendering heritage ‘more easily accessible to members of the public (including those who face particular problems of access)’. See 3rd indent of Decision 2228/97/EC of the European Parliament and of the Council of 13 October 1997 establishing a Community action programme in the eld of cultural heritage (Raphael), OJ L 305, 8/11/1997, p. 31.

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history of European peoples’, which might raise contentious questions over which populations and communities are conceived as European, the added value of Community action lies in the fact that both cultural interaction and diffusion of cultural and historical information may help bring people closer together. In an era of increased cultural tension and dispute, the launch of exchange and awareness-raising measures is a key instrument to enhance mutual respect and promote a spirit of tolerance and cultural solidarity. The promotion of an environment conducive to exposure to different cultures may indeed help combat racism and xenophobia in Europe. But beyond this, it may also prompt EU citizens actively to exploit the fruits of the establishment of the common market. A better knowledge of other cultures may favour one’s decision to establish in a Member State other than the state of origin, or experience culturally-diverse products and services.27 With respect to the encouragement of literary and cultural creation, action taken centres on promoting socio-economic conditions required for an active engagement in cultural production. The launch of initiatives at EC level to strengthen mobility of cultural practitioners, improve training facilities, and the production of cultural content, generally, is anticipated to lead to a wider variety of cultural options for the European citizen. Given an extended range of cultural goods and services, individuals and various migrant communities within the EC have a greater chance of opting for cultural activities and products tting their cultural prole. Support for cultural creation that addresses areas where there are gaps in meeting consumer expectations may also help satisfy diverse cultural needs and stimulate cultural preferences, thus further assisting self-development through the discovery of new cultural frames. Finally, given culture’s economic dimension, assistance to increase cultural output, especially when coupled with effective distribution channels, may entail major economic benets and economies of scale. On one side, it can improve the competitiveness of the Community’s cultural industries, when compared to powerful operators present on the international scene. On the other, it may sustain those Member States of limited linguistic reach or with vulnerable cultural production structures to face competition from Member States with stronger cultural industry capacities.

27 The discussion can be seen to feed into a much broader debate, when consideration is given to the positive inuence that initiatives on cultural dissemination and interaction may have on general EC policy practice. Allowing for a process of cross-fertilisation that draws on all dimensions of joint activities, cultural interaction may facilitate the identication of common responses to common needs, or lead to better appreciation of the preoccupations of other countries in certain policy domains, thus setting the stage for fruitful compromise.

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2.1.2.2 Article 151(3) EC: EC contribution to international cultural cooperation Discussion of the Community’s external cultural competence has been riven with contradictions. The loose language of Article 151(3) EC exemplies the often poor drafting of EC Treaty provisions. In contrast with other EC clauses, empowering the Community and the Member States, within their respective spheres of competence, to cooperate with third countries and international organisations, and granting explicit treaty-making powers to the Community for that purpose,28 Article 151(3) EC simply devolves the role of enhancing international cultural cooperation to both the Community and the Member States, without further clarications. Given the lack of express reference to the conclusion of international agreements of cultural subject matter, Article 151(3) EC does not seem to confer a general power on the Community to enter into treaties with third countries or international organisations in the eld of culture per se. This conviction is substantiated by the exclusion of harmonisation of the laws and regulations of the Member States contained in paragraph 5 of Article 151 EC. Were Article 151(3) EC to be construed as granting powers for international law-making in the eld of culture, this would allow for the circumvention of the prohibition of Article 151(5) EC, as the conclusion of an international agreement would amount in practice to such harmonisation.29 To this, it might be counter-argued that it should be possible for the Community to conclude agreements for the purpose of cultural cooperation, as it is difcult to envisage how the European institutions might give effect to the role assigned by Article 151(3) EC if deprived of treaty-making powers.30 An interpretation of the notion of ‘cooperation’ as including the conclusion of international treaties is, in fact, plausible. In light of the doctrine of implied powers,31 one could also construe Article 151 EC as authorising the Community to conclude international agreements that enable it to contribute to the owering of the cultures of the Member States, by stimulating cultural cooperation.32 Taking into consideration that, according to the doctrine of implied powers, the spectrum of the external Community competences must be aligned to the internal competences provided by the EC Treaty, it can be assumed that the

28 See, for instance, Arts 174(4) and 181 EC on environmental protection and development cooperation. 29 P. Eeckhout, External Relations of the European Union: Legal and Constitutional Foundations (2004), at 95–96. 30 See J.M.E. Loman et al., supra n. 3, at 199. 31 See, in particular, Case 22/70, Commission v Council, [1971] ECR 263. 32 Supra n. 29, at 102.

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Community may conclude treaties that encourage cultural cooperation in the areas of Article 151(2) EC.33 The UNESCO Convention on the protection and promotion of the diversity of cultural expressions is highly pertinent in this respect.34 Adopted by the General Conference of UNESCO on 20 October 2005, it aims to preserve cultural diversity worldwide, and allows the Community to become party to it.35 The recent Council Decision of 18 May 2006 on the conclusion of the Convention by the Community includes Article 151 EC amongst its legal bases.36 Whereas mention of other EC provisions is understandable, since the Convention, by establishing a series of rights and obligations at both the national and international levels, is likely to affect many areas of Community competence, recourse to Article 151 EC reveals that, for the European institutions, Article 151 EC contains a treaty-making power. Whether this is so in view of the doctrine of implied powers, or on the basis of a broad interpretation of the meaning of cultural cooperation under Article 151(3) EC, is of limited practical signicance. Certainly, the Member States may invoke the principle of subsidiarity to deter the conclusion of agreements they suspect of pursuing goals of cultural homogenisation or see as intruding on domestic cultural sovereignty. No less importantly, they may independently promote cultural cooperation with third countries and international organisations, and conclude treaties on any given cultural topic, including those for which the Community has already exercised its treaty-making powers. When taking autonomous action, they are bound, however, under Article 10 EC, to abstain from taking measures which could jeopardise attainment of the cultural objectives of the EC Treaty. Consultation and appropriate coordination ought to prevent such a scenario eventuating. To conclude, as regards paragraph 3 of Article 151 EC, due consideration must be afforded to the fact that, in the external dimension of its cultural activities, the Community is explicitly required to foster cooperation with the Council of Europe. Express reference to the Council of Europe was warranted by the need to evolve from a situation of previous mutual ignorance to a stage of fruitful collaboration with strict respect for the contribution that each institution can make to a cultural discourse in Europe.37 In view

33

J.M.E. Loman et al., supra n. 3, at 199. UNESCO Convention on the protection and promotion of the diversity of cultural expressions, Paris 20 October 2005, available at: http://unesdoc.unesco.org/images/0014/ 001429/142919e.pdf. 35 Ibid., Art. 27(3). 36 See Council Decision of 18 May 2006 on the conclusion of the Convention on the protection and promotion of the diversity of cultural expressions, OJ L 201, 25/7/2006, p. 15. 37 C. Brossat, La culture européenne: dénitions et enjeux (1999), at 319–340. 34

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of the ‘constant tendency for the stronger organisation—the European Community—to invade the territory of the weaker’,38 it was felt that cooperation and mutual supportiveness should be included as a positive statement in the EC Treaty. 2.1.3

Article 151(5) EC: Instruments and Procedures

The last paragraph of Article 151 EC is a clear illustration of Member States’ efforts to tighten relevant language to prevent an outward expansion of the Community’s cultural policy. The provision refers to legal instruments that may be used to pursue the objectives of Article 151 EC, restricting these to incentive measures and recommendations. Although incentive measures are to be adopted under the co-decision procedure, in which both the European Parliament and the Council retain legislative powers, with the additional requirement that the Committee of the Regions be consulted, any harmonisation of the laws and regulations of the Member States is excluded.39 The soft law approach embodied in Article 151(5) EC is further constrained by the principle of unanimity, required to underpin all action undertaken. The legislative tools selected for development of EC cultural policy indicate the high level of national sensitivity in this area.40 Given Article 151 EC’s numerous guarantees protecting Member States’ cultural diversity, such a strict connement of powers is, arguably, unreasonable. The quest for unanimity with respect to recommendations, the weakest form of Community legislation and which are not legally binding, is particularly striking. As for incentive measures, the process risks stagnating not only when a Member State exercises its veto right, an occasional occurrence, but more often as an outcome

38 De Witte, ‘Cultural Linkages’, in W. Wallace (ed.), The Dynamics of European Integration (1990) 192, at 203. 39 In accordance with the Conclusions of the European Council meeting in Edinburgh on 11–12 December 1992, the use of Article 308 EC (ex-Article 235 EEC) for harmonisation measures in pursuit of the specic objectives laid down in Article 151 (ex-Article 128) EC is ruled out. However, ‘[t]his does not mean that the pursuit of other Community objectives through Treaty articles other than 126 to 129 [now Articles 149–152 EC] might not produce effects in these areas’. See R. Corbett, The Treaty of Maastricht: From Conception to Ratication: A Comprehensive Reference Guide (1993) 493, at 497. 40 Shaw, ‘Twin-Track Social Europe—The Inside Track’, in D. O’ Keeffe and P.O. Twomey, Legal Issues of the Maastricht Treaty (1994) 295, at 310. Note, however, that such strict connement of Community action may prove inadequate to appropriately safeguard national cultural prerogatives against Community inuence. Incentive measures, which usually take the form of funding programmes, can exert a great deal of power over domestic authorities, which may feel compelled to modify their cultural agendas in order to gain access to Community nancial resources. See, in this respect, E. Steyger, National Traditions and European Community Law (1997), at 88.

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of the peculiar combination of unanimity Council voting with co-decision.41 The legislative history of incentive measures enacted on the basis of Article 151(5) EC witness deep difculties encountered in the search for an agreement between the Parliament and the Council that Council members could accept unanimously. This is the reason why Article 151(5) EC was added to the list of the Treaty provisions which, in the course of the Nice negotiations, were to be considered for qualied majority voting (although ultimately this was not positively followed-up).42 As the situation stands, it is certain that any cultural initiative suspected of overstepping the strictly-dened cultural mandate of the EC Treaty can be easily ‘thrown into the Brussels dustbin’. This has both advantages and disadvantages. On the one hand, unanimity guards against the erosion of national cultural autonomy and ensures that consideration is afforded to all the various cultural interests that might be at play in a given situation. On the other hand, the fth paragraph of Article 151 EC may severely thwart the development of Community cultural action when it is genuinely needed. Indeed, as it has been noted, ‘one should . . . attempt not merely to “prevent” the Community from entering the [cultural] eld, but also to “steer” its policy into the appropriate direction’, in particular since ‘both national and regional identities may sometimes better be protected by closer formal interaction at the European level than by separate policies of each Member State’.43 2.1.4

EC Cultural Policy in practice

But what kind of explicit cultural policy does the EC pursue? And what institutional arrangements have been made to facilitate the development of this policy? In broad terms, Community cultural action has taken the form of supportive measures that seek to foster creativity and encourage diffusion of cultural content by channelling nancial resources to projects carried out by cultural institutions and operators. The design and subsequent elaboration of support instruments introduced is attributable primarily to the European

41 When the Conciliation Committee is convened, the members of the Council or the representatives of the Member States within that body have to decide unanimously. It is highly questionable whether consensus on the instrument discussed will be found at this stage, since it is usually the unanimity requirement for Council voting that impedes the reach of an agreement between the Parliament and the Council in the rst place. 42 Attempts in the direction of replacing unanimity with qualied majority have similarly been made by the European Convention during the drafting of a Constitution for Europe. See Section III, Art. III-181 in conjunction with Section I, Art. I-22 of the Treaty establishing a Constitution for Europe, OJ C 310, 16/12/2004, p. 1. 43 Supra n. 38, at 205.

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Commission’s Directorate General Education and Culture (DG EAC).44 Of rather limited inuence as an institutional actor, compared to the various heavyweight internal divisions of the Commission, DG EAC addresses cultural matters under Direction C—Culture, Multilingualism and Communication. Management tasks are delegated to the Education, Audiovisual and Culture Executive Agency, located in Brussels.45 Cultural discourse at the EC level is enriched by the contribution of the European Parliament in the process, in particular that of its Committee on Culture, Youth, Education, the Media and Sport. In contrast with the Committee of the Regions, possessing a mere advisory role, the Parliament can exert greater inuence on policy decisions due to the application of the co-decision procedure for enactment of incentive measures. It has been particularly active, for example, in advocating increased protection for less-diffused cultures and less-widely spoken languages.46 Notwithstanding the tendency of the Council and the Commission to favour the formation of major cultural networks and large-scale prestigious cultural events, the Parliament has also sought to encourage cooperation between small and medium-sized cultural operators, in order to improve access to, and participation in, cultural activities for as many citizens as possible.47

44 Inter-service cooperation requires that all other interested Directorates-General also be consulted. 45 See Commission Decision 2005/56/EC of 14 January 2005 setting up the Education, Audiovisual and Culture Executive Agency for the management of Community action in the elds of education, audiovisual and culture in application of Council Regulation (EC) No. 58/2003, OJ L 24, 27/1/2005, p. 35, and Commission Decision 2007/114/EC of 8 February 2007 amending Commission Decision 2005/56/EC setting up the Education, Audiovisual and Culture Executive Agency for the management of Community action in the elds of education, audiovisual and culture in application of Council Regulation (EC) No. 58/2003, OJ L 49, 17/2/2007, p. 21. The responsibilities of the agency mainly involve drawing up calls for proposals, selecting projects, signing project agreements, and monitoring projects’ nancial discipline. They do not entail political decision-making. 46 See, for instance, European Parliament, Report of 21 October 1998 on the proposal for a European Parliament and Council Decision on establishing a single nancing and programming instrument for cultural cooperation (Culture 2000 programme), Committee on Culture, Youth, Education and the Media, Rapporteur: Nana Mouskouri, A4–0370/98, Legislative Resolution of 7 April 1995 embodying Parliament’s opinion on the proposal for a European Parliament and Council Decision establishing a support programme in the eld of books and reading (Ariane), OJ C 109, 1/5/1995, p. 289, and Decision at second reading T4–0506/1996 of 22 October 1996 on the common position adopted by the Council with a view to the adoption of a European Parliament and Council Decision establishing a support programme in the eld of books and reading—Ariane (co-decision procedure), OJ C 347, 18/11/1996, p. 25. 47 See, in particular, European Parliament, Legislative Resolution of 25 October 2005 on the proposal for a Decision of the European Parliament and of the Council establishing the Culture 2007 programme (2007–2013), P6_TA(2005)397, Recommendation of 13 October 1999 for second reading on the common position adopted by the Council with a view to the adoption of a European Parliament and Council Decision on establishing a single

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However, it is the Council, which enjoys ‘the last word’, since the unanimity principle enables the Member States to fall back on their ‘veto’ should they deem Community cultural action inappropriate. In most instances, serious dissent has not concerned the nature and scope of the Community’s cultural measures, but rather relevant budgets.48 2.1.4.1

A policy of funding opportunities

Between 1996 and 1999 three sectoral framework programmes were adopted, comprising the rst generation of cultural funding tools: Kaleidoscope, offering nancial assistance to artistic and cultural activities; Ariane, supporting books and reading, including translations; and Raphael, which focused on cultural heritage protection.49 Concentrating largely on what might be viewed as the ‘tangible’ aspects of culture, the measures enacted sought to give concrete meaning to the areas short-listed in Article 151(2) EC, encouraging artistic and literary creation, promoting mutual knowledge and dissemination of the culture and history of the European peoples, facilitating the establishment of contacts supportive to cultural exchanges and safeguarding cultural heritage of European signicance. The access dimension of initiatives launched was particularly highlighted, with the

nancing and programming instrument for cultural cooperation (Culture 2000 programme), Committee on Culture, Youth, Education, the Media and Sport, Rapporteur: Vasco Graça Moura, A5–0026/199913, and Decision at second reading T4–0507/1996 of 22 October 1996 on the common position established by the Council with a view to the adoption of a European Parliament and Council Decision establishing a Community action programme in the eld of cultural heritage—The Raphael programme (co-decision procedure), OJ C 347, 18/11/1996, p. 29. 48 See European Parliament, Report of 25 January 2000 on the joint text approved by the Conciliation Committee for a European Parliament and Council Decision establishing a single nancing and programming instrument for cultural cooperation (Culture 2000 programme), Parliament Delegation to the Conciliation Committee, A5–0009/2000, Report of 3 July 1997 on the joint text approved by the Conciliation Committee on a European Parliament and Council Decision establishing a support programme, including translation, in the eld of books and reading (Ariane), Parliament Delegation to the Conciliation Committee, A4–0237/1997, and Report of 5 September 1997 on the joint text, approved by the Conciliation Committee, for a European Parliament and Council Decision establishing a Community action programme in the eld of cultural heritage (RAPHAEL), Parliament Delegation to the Conciliation Committee, A4–0267/1997. 49 Decision 719/96/EC of the European Parliament and of the Council of 29 March 1996 establishing a programme to support artistic and cultural activities having a European dimension (Kaleidoscope), OJ L 99, 20/4/1996, p. 20, Decision 2085/97/EC of the European Parliament and of the Council of 6 October 1997 establishing a programme of support, including translation, in the eld of books and reading (Ariane), OJ L 291, 24/10/1997, p. 26, and Decision 2228/97/EC of the European Parliament and of the Council of 13 October 1997 establishing a Community action programme in the eld of cultural heritage (Raphael), supra n. 26.

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aim of enabling different European audiences, including the less-favoured, to appreciate culture.50 The mechanisms used primarily involved the elaboration of support instruments for cooperation projects, carried out in partnership or via cultural networks, and skills improvement of professionals working in the cultural eld. Whereas Ariane focused on literary, dramatic and reference works,51 Kaleidoscope addressed performing, visual and applied arts.52 Raphael, in turn, engaged the theme of heritage protection, nancing projects involving museums and art collections, libraries and archives, archaeological, architectural and underwater cultural assets, assemblages and cultural sites.53 The European dimension of relevant activities resided mainly in the inclusion of a ‘cross-border’ element among the eligibility criteria for a project to gain nance, specically, the implication of operators from various Member States. Alternatively, it was reected in the implementation of projects of considerable scope and scale, or of an innovatory and exemplary nature, designed to facilitate the spread of Member States’ cultures, while creating added value in socio-economic terms. Thus, far from purporting to establish a frontier-free, homogenous European culture, the rst series of incentive measures, albeit endowed with modest resources,54 sought to promote highquality cultural activities and recognise the economic potential of sustainable use of cultural resources.55 With a view to increasing the effectiveness and consistency of Community cultural action, a single nancing and programming instrument for cultural cooperation was introduced in 2000, the Culture 2000 programme.56 This followed wide-ranging consultation, culminating in an EU Cultural Forum held 50

See 4th indent and Art. 2(d) of Decision 719/96/EC (Kaleidoscope), 6th indent and Art. 1 of Decision 2085/97/EC (Ariane), and 3rd indent and Art. 3(c) of Decision 2228/97/EC (Raphael), cited above. 51 See Art. 1 of Decision 2085/97/EC (Ariane), supra n. 49. 52 See Annex of Decision 719/96/EC (Kaleidoscope), supra n. 49. 53 See Art. 2 of Decision 2228/97/EC (Raphael), supra n. 26. Note, however, that according to the 15th indent of the Decision, Community action should also take into account the changing nature of the denition of heritage, encouraging multidisciplinary approaches. 54 Kaleidoscope, adopted in 1996 for a period of three years, beneted from a total budget of ECU26.5 million, which rose to ECU36.7 million when the programme was extended in 1999. Ariane, adopted in 1997 for a period of 2 years, was allocated a total budget of ECU11.3 million. Raphael, adopted in 1997 for a period of 4 years, enjoyed an overall budget of ECU30 million. 55 It has been argued that the European institutions, uncertain about what European culture actually meant, sought to conceptualise it via the ‘par excellence’ (projects of an exemplary nature) or ‘addition’ (projects with partners from various Member States) models. See Banús, ‘Cultural Policy in the EU and the European Identity’, in M. Farrell, S. Fella and M. Newman (eds), European Integration in the 21st Century: Unity in Diversity? (2002) 158, at 163. 56 Decision 508/2000/EC of the European Parliament and of the Council of 14 February 2000 establishing the Culture 2000 programme, supra n. 17.

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on 29 and 30 January 1998. Preceded by a number of pilot actions in 1999, the programme operated from 1 January 2000 until 31 December 2004, with a total budget of €167 million. Its duration was subsequently extended to December 2006, with a nancial allocation of up to €236.5 million.57 With a goal of establishing ‘a cultural area common to the European people’58 that is open, varied and founded on the principle of subsidiarity, Culture 2000 encouraged cooperation between cultural operators in all artistic and cultural disciplines. Amongst its key objectives were the ‘promotion of mutual knowledge of the culture and history of European peoples’, stimulating ‘creativity and the transnational dissemination of culture’, facilitating ‘new forms of cultural expression’, ‘sharing . . . the common cultural heritage’, recognising ‘the role of culture in socioeconomic development’, fostering ‘intercultural dialogue’, and improving ‘access to and participation in culture in the European Union for as many citizens as possible’.59 Complementary to national initiatives, the programme provided assistance for three distinct types of cultural action: specic innovative and/or experimental actions; integrated actions covered by structured, multi-annual cultural cooperation agreements; and special cultural events with a European and/or international dimension.60 The rst category related to projects carried out in partnership for a period of one year61 by operators from at least three different states participating in the programme, and which ‘place[d] the main emphasis on facilitating access to culture and wider cultural participation by the people in Europe, in all their social, regional and cultural diversity’.62 Community support, set at 60% of the total project budget, ranged from €50,000 to €150,000 per year. Attention was channelled towards the recovery and valorisation of heritage assets; the development of appropriate conservation tools and guidelines; the diffusion of cultural knowledge through translation; the production and distribution of cultural content; the organisation of festivals and exhibitions;

57 Decision 626/2004/EC of the European Parliament and of the Council of 31 March 2004 amending Decision 508/2000/EC establishing the Culture 2000 programme, OJ L 99, 3/4/2004, p. 3. 58 Supra n. 17, recital 7. 59 Ibid., Art. 1. 60 In 2001, the so-called ‘5% rule’ was introduced, requiring a minimum nancial contribution by project leaders and co-organisers for all types of funded actions. See European Commission, Report to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions on the implementation of the ‘Culture 2000’ programme in the years 2000 and 2001, COM(2003) 722, at 4. 61 The one-year period could be extended to two supplementary years (supra n. 17, Annex I, point I.1.). 62 Ibid., Annex I, point I.1.(i).

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arts education; the improvement of training facilities; and the stimulation of social integration via the arts.63 The second action group covered projects possessing a European dimension, of up to three years’ duration, involving at least ve states participating in the programme, and enhancing circulation of cultural goods and cultural events, artists’ mobility, cultural training, heritage protection, dissemination of cultural information, the use of new technologies and multilingualism.64 Community assistance was xed at 60% of total project costs, with a ceiling of €300,000 per year in Community nance. The primary aim of the resources provided was to assist in the creation of sustainable cooperation structures that would operate as solid cultural foundations once EU funding terminated; or to develop exemplary cultural practices which could be widely exploited. ‘Special cultural events’ referred to projects of substantial scale and scope, devised to strike ‘a signicant chord with the people of Europe’ while ‘making them aware of the cultural diversity of the Member States’.65 Support here was limited to 60% of total project costs, with different funding ceilings applicable according to the nature of activities nanced. Figuring prominently amongst relevant projects were the European capitals of culture (previously funded by Kaleidoscope);66 the award of European prizes in the elds of architecture and heritage conservation; and the European heritage laboratories, which contributed to the development and dissemination of innovative methods for the preservation of cultural sites accessible to the general public.67 In accordance with Article 151(3) EC, which invites the Community, together with the Member States, to promote cultural cooperation at the

63 For a detailed presentation of the projects that received funding under Action I, see http://ec.europa.eu/culture/eac/culture2000/project_annuel/projects1_en.html. 64 Supra n. 17, Annex I, point I.2.(i), (ii), (iii), (iv), (v), (vi) and (vii). For information on the projects nanced under Action II, see http://ec.europa.eu/culture/eac/culture2000/pluriannuel/projects2_en.html. 65 Ibid., Annex I, point I.3. 66 Until 2004, the European Capitals of Culture (ECC) were chosen on an intergovernmental basis. Decision 1419/1999/EC of the European Parliament and of the Council of 25 May 1999 establishing a Community action for the European Capital of Culture event for the years 2005–2019 (OJ L 166, 1/7/1999, p. 1) provided that the ECC should be selected yearly by the Council on the basis of a Commission recommendation, following the opinion of a jury comprising seven prominent independent experts. Decision 1622/2006/EC of the European Parliament and of the Council of 24 October 2006 establishing a Community action for the European Capital of Culture event for the years 2007 to 2019 (OJ L 304, 3/1/2006, p. 1) created a mixed selection procedure, involving experts nominated by the Member States and experts appointed by the European institutions. It also introduced stronger monitoring mechanisms. 67 In addition, four cooperation projects celebrating the 2004 EU enlargement and various seminars on issues of common cultural interest were organised by EU presidencies under Action III of Culture 2000. For further information, see http://ec.europa.eu/culture/eac/culture2000/special_events/, at enlargement_en.html and presidence_en.html respectively.

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international level, Culture 2000 allowed for cooperation with the countries of the European Economic Area (Iceland, Liechtenstein and Norway), the then acceding Bulgaria and Romania, Turkey, and EC partners that had concluded association or cooperation agreements containing cultural clauses.68 Joint actions with international organisations competent in cultural matters also came within the scope of the programme, on the basis of joint contributions, the European heritage days initiative, launched by the Council of Europe and supported by the EC, being a pertinent example.69 All Culture 2000 actions adopted either a vertical or horizontal approach, focusing on precise disciplines or trans-sectoral activities.70 In response to the demands of cultural practitioners, the Commission agreed to highlight one main cultural sector in 2002, 2003 and 2004,71 but the 2005 and 2006 calls for proposals once again broadened the scope of the activities nanced.72 In order to facilitate participation in the programme, ‘cultural contact points’ were established, on a voluntary basis, in most Member States.73 Alongside Culture 2000, during 2001, information and promotional measures were undertaken to encourage language learning,74 and from 2002 to 2004, various experimental cultural cooperation actions received Community funding.75 Further nancial support was channelled under budget lines A–3042,

68

Supra n. 17, Art. 7. Turkey participates in the programme since 2006. For a detailed description of the projects supported, consult http://ec.europa.eu/culture/eac/culture2000/ pdf/projets2005/action1_3rdC.pdf. 69 The European Heritage Days were rst launched in 1991. They take place in September, and promote access to monuments and sites that are usually closed to the public. 70 The latter could involve various cultural branches or different Community policies, such as education, youth, professional training and employment. 71 The rst two calls for proposals of Culture 2000 invited projects in all elds of cultural activity (OJ C 101, 8/4/2000, p. 17 and OJ C 21, 24/1/2001, p. 11). Precise cultural disciplines were selected for 2002 (visual arts), 2003 (performing arts) and 2004 (cultural heritage). See OJ C 230, 15/8/2001, p. 5, OJ C 148, 21/6/2002, p. 4 and OJ C 195, 19/8/2003, p. 20. 72 Under Action I (annual projects) and Action II (multi-annual projects), the programme nanced projects in the elds of music and performing arts, cultural heritage, plastic and visual arts, literature and translation. See Culture 2000: Call for proposals for 2005, OJ C 174, 6/7/2004, p. 21, and Culture 2000: Call for proposals for 2006, OJ C 172, 12/7/2005, p. 31. 73 Supra n. 17, Annex I, point V. 74 See Decision 1934/2000/EC of the European Parliament and of the Council of 17 July 2000 on the European Year of Languages 2001, OJ L 232, 14/9/2000, p. 1. Article 149 EC (education) and Article 151 EC (culture) constituted the legal basis of the act enacted. The 2001 European Year of Languages was a joint initiative of the Council of Europe and the European Commission to promote multilingualism. It was celebrated in 45 countries and co-ordinated in the UK by the National Centre for Languages. 75 The actions supported should involve some form of experimentation and serve as a basis for future cultural cooperation initiatives. To illustrate, in 2002, two experimental projects were nanced: the rst examined the feasibility of networking Member States’ music industries; the second was concerned with the development of a website providing information on artists’ mobility. For 2003 and 2004, specic calls for proposals were published. See European

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A–3015 and A–3035 to help preserve memorial sites of historical signicance, and to cover the management and operational costs of cultural organisations active at the European level, including the European Bureau for Lesser-Used Languages (EBLUL) and Mercator.76 In 2004, all these special actions were incorporated into a specic action programme, operational until December 2006 and with a total budget of €19 million, designed to support cultural bodies promoting awareness of Europe’s cultural wealth.77 To gain access to funding, eligible organisations ought to be legally established for more than two years in one of the Member States, and demonstrate an authentic European cultural dimension, either by comprising members or partners originating in at least seven different European countries, or by conducting activities involving or taking place in at least seven European states.78 In parallel, the Council sought to revitalise its own work in the cultural eld by adopting, in 2002, a cultural work plan, containing an indicative, non-exhaustive list of priority topics intended to provide guidance to subsequent presidencies.79 According to the implementation measures adopted,80 the Council should, initially, focus on the development of methods helping to identify and assess the added value of European cultural action,81 and

Commission, Call for proposals—Implementation of budget heading B3–2007 for 2003, ‘Preparatory actions for cooperation on cultural matters’, OJ C 217, 12/9/2003, p. 7, and Call for Proposals—DG EAC, No. 40/04, ‘Preparatory actions for cooperation on cultural matters’, Implementation of budget heading 15040203 for 2004, OJ C 174, 6/7/2004, p. 20. 76 At the request of the European Parliament, the Commission has been providing support for the European Bureau for Lesser-Used Languages since 1982. Mercator has beneted from Community funds since 1987. EBLUL represents all regional and minority language communities in the EU. Mercator disseminates information on the promotion of regional and minority languages via education and the media. 77 Decision 792/2004/EC of the European Parliament and of the Council of 21 April 2004 establishing a Community action programme to promote bodies active at European level in the eld of culture, OJ L 138, 30/4/2004, p. 40. 78 Funding allocation was conditional upon 20% of the total budget of the organisation being co-nanced by non-EU resources. See European Commission, Call for proposals, Permanent activities of bodies pursuing an aim of general European interest in the eld of culture or an objective forming part of the European Union’s policy in this area, OJ C 201, 18/8/2005, p. 5. 79 Council Resolution of 25 June 2002 on a new work plan on European cooperation in the eld of culture, OJ C 162, 6/6/2002, p. 5. The themes identied were: i) European added value; ii) access to, and visibility of, EC cultural action; iii) horizontal aspects; iv) dialogue among cultures; v) cooperation between Member States and participation of new Member States in cooperation; and vi) international cooperation in the eld of culture. 80 Council Resolution of 19 December 2002 implementing the work plan on European cooperation in the eld of culture: European added value and mobility of persons and circulation of works in the cultural sector, OJ C 13, 18/1/2003, p. 5. 81 The European added value of EC cultural action was understood as ‘the synergy effects which emerge from European cooperation and which constitute a distinctive European dimension in addition to Member State level actions and policies in the eld of culture’ (ibid., at para. 7).

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encouraging mobility of cultural operators and circulation of cultural works. The work plan agreed for the period 2005–2006 advocated, alongside the free movement theme, improvement of the competitiveness of the cultural industries, greater emphasis on the move towards a ‘digital cultural Europe’ and strengthened intercultural dialogue.82 No one would disagree that there are signicant gains to be obtained in terms of efciency and enhanced impact when identication of the cultural areas that merit attention takes place within the Council, a repository of awareness of hurdles encountered in the pursuit of domestic cultural policies. A result-driven framework that sets priorities, claries tasks and xes deadlines is likely to help the Council organise its activities appropriately. Nevertheless, there are grounds to believe that such work plans typically remain a dead letter, in particular since the resolution format used for their adoption does not bind the Council to take the measures prescribed. Equally, the action required is often conned to inviting the Member States to further reect on the issues raised. Usually the Commission is burdened with the task of assessing initiatives launched. To examine whether cultural action at the Community level was producing the expected benets, an evaluation exercise was carried out in 2001, and a Second Forum on Cultural Cooperation was organised, in which all relevant cultural actors and authorities were invited to participate. Documenting a dispersal of efforts and nancial resources, the results revealed the fragmented nature of Community intervention. Not only had Culture 2000 failed to forge any links with the actions providing support for European cultural organisations and the European cultural capitals, it also encompassed too many broadly-dened objectives which, combined with lengthy selection procedures and project administration difculties, were detrimental to overall coherence and effectiveness. An attempt to correct inconsistencies in the EC cultural action, a single nancing and programming cultural instrument, operational for seven years, was adopted on 12 December 2006.83 Building on Culture 2000’s experience, Culture (2007–2013) seeks to substitute a more coordinated approach to cultural cooperation, and improve programme management.84 The programme

82 See Press Release 14380/04, 2616th Council Meeting, Education, Youth and Culture, of 15–16 November 2004 (Brussels). 83 Decision 1855/2006/EC of the European Parliament and of the Council of 12 December 2006 establishing the Culture Programme (2007–2013), OJ L 372, 27/12/2006, p. 1. 84 The programme simultaneously aims to promote freedom of expression and sustainable development, encourage mutual understanding and tolerance within the EU and contribute to the elimination of all discrimination based on sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation. Ibid., Art. 12.

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distances itself from Culture 2000’s sectoral approach, adopting a global vision of the cultural sector as a whole, and concentrates on objectives considered to offer maximum added value at the European level: enhanced transnational mobility for people working in the cultural eld; increased cross-border circulation of artistic and cultural products; and reinforced intercultural dialogue.85 With a budget of €400 million,86 it provides for three levels of intervention, each addressing different and complementary strata of cultural cooperation.87 The rst strand consists of direct nancial support for projects of variable length and scale, which essentially encompass the three action facets of Culture 2000. Community assistance may cover up to 50% of total project costs for ‘multi-annual cooperation projects’, lasting from three to ve years, and involving operators from at least six states participating in the programme.88 A ceiling of €500,000 per year is xed.89 ‘Cooperation measures’, implicating operators from at least three countries participating in the programme, may also benet from Community funding, set at 50% of the total project budget, and ranging from €50,000 to €200,000 for a maximum of 24 months.90 Grants for ‘special actions’, devised to raise the visibility of EC cultural action both within and beyond the EU, cannot exceed 60% of project costs.91 The second strand targets interventions of a more structural nature, beyond a project-based approach, in the form of subsidies to highly specialised European organisations active in the eld of culture. Relevant institutions must carry out their activities at European level—alone or in the form of coordinated associations—and cover at least seven European countries. Funds are distributed on the basis of annual calls for proposals, and may not cover more than 80% of the bodies’ admissible yearly expenditure.92 The nal strand seeks to promote research, exchange of experience and best practice.93 It covers support for cultural contact points and studies developing comparative data on cultural cooperation in Europe. Activities maximising the impact of funded projects are also eligible for funding. Whether Culture will deliver improvements on the previous model of cultural cooperation remains to be seen. During the legislative process, the Parliament rmly took the position that efforts should be made to avoid over-emphasising 85 86 87 88 89 90 91 92 93

Ibid., Art. 3. Ibid., Art. 2. Funded projects need to pursue at least two of the programme’s objectives. Supra n. 83, Annex, point I.1.1. Ibid. Ibid., Annex, point I.1.2. Ibid., Annex, point I.1.3. Ibid., Annex, point 2. Ibid., Annex, point 3.

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large, consolidated cultural players at the expense of smaller organisations and institutions, thus to allow a broader range of cultural operators to participate in the programme.94 Divergences of opinion as to nancial allocation for Culture were also discernible, the Parliament favouring a substantial increase in appropriations.95 Whilst reaching a budget of €600 million proved unfeasible,96 the Council reduced the lowest possible number of operators for ‘cooperation measures’ from four (as originally suggested by the Commission)97 to three, and decreased minimum Community support from €60,000 to €50,000, so that projects with a lesser budget have access to the programme.98 2.1.4.2

The usual quest for unity-in-diversity

In developing the broad parameters of Community action in support of culture, calls for the need to strengthen a ‘sense of belonging to the EU’ have not been absent. Though the slogans of the 1970s might have been more meticulously elaborated, the rhetoric used has remained essentially the same: public identication with the European polity is still perceived as a key to European integration.99 Promoting European integration through culture appears to be an approach nding support amongst all European institutions. Noting that ‘[c]ultural policy forms part of the European enterprise and, in this respect, is an integration factor “within an ever closer Union between the peoples of Europe”’, the Commission, in its rst report on the consideration of cultural aspects in European Community action, observed that the EC cultural policy ‘must make a contribution to strengthening and expanding the inuence of the “European model of society built on a set of values common to all European societies”’.100 In its communication Making citizenship work, it went on to state that ‘[b]y fostering the mobility of citizens, artists, cultural and audiovisual

94 See European Parliament, I Report of 19 September 2005 on the proposal for a decision of the European Parliament and of the Council establishing the Culture 2007 programme, Committee on Culture and Education, Rapporteur: Vasco Graça Moura, A6–0269/2005. 95 Ibid. 96 The Commission proposed a nancial framework of €408 million for the implementation of the programme. The Council suggested a nancial envelope of €354 million. See European Commission, Proposal for a Decision of the European Parliament and of the Council establishing the Culture 2007 programme (2007–2013), COM(2004) 469, and Council, Common Position of 23 June 2006 adopted with a view to the adoption of a Decision of the European Parliament and of the Council establishing the Culture programme, 6235/06. 97 European Commission, cited above, at 21. 98 Council, supra n. 96. 99 It is pertinent that the very foundation of the Community’s cultural yearnings, namely unity-in-diversity, has been proclaimed as the Union’s motto by the Treaty establishing a Constitution for Europe. See Art. I–6a—The symbols of the Union, supra n. 42. 100 Supra n. 14, at Part V, p. 2.

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works and events, European citizens can take advantage not only of the opportunities offered by their rich and diverse cultural heritage but also of common elements in their “developing” European identity, an identity which complements those—national, regional, ethnic, religious—that citizens already have’.101 In the same spirit, the Council, in a resolution on the role of culture in the development of the EU, stressed that ‘the common dimensions and mutual knowledge of cultures in Europe, in a society based on freedom, democracy, solidarity and respect for diversity, are essential components of citizens’ support for, and participation in, European integration’.102 More conspicuously, the Parliament, in the Ruffolo report, took the view that ‘a European cultural policy, which in no way seeks uniformity, but can offer an identity born of the encounter between differences is of crucial importance for the development of a collective European consciousness’.103 It underlined that ‘[i]n an increasingly multi-ethnic Europe, cultural policy needs to be an integral part of economic and social development, to perform a role of social cohesion and mutual enrichment and to be a factor that is essential for belonging to a European citizenship’.104 Since for ‘citizens to give their full support to, and participate fully in, European integration, greater emphasis should be placed on their common cultural values and roots as a key element of their identity’,105 Culture 2000 nanced projects, aimed inter alia at ‘conserving, sharing, highlighting and safeguarding, at the European level, the common cultural heritage of European signicance’.106 Similarly, the EC action programme on European bodies active in the eld of culture included, amongst the institutions qualifying for funding, those ‘fullling the role of cultural “ambassador”, promoting awareness of Europe’s common cultural heritage’.107 Furthermore, European cultural capitals were explicitly required to ‘highlight artistic movements and styles shared by Europeans’, and to ‘optimise the opening up to, and understanding of others, which are fundamental cultural values’.108 According to the new

101 Commission Communication, Making citizenship work: Fostering European culture and diversity through programmes for youth, culture, audiovisual and civic participation, COM(2004) 154, at 5. 102 Council Resolution of 21 January 2002 on the role of culture in the development of the European Union, OJ C 32, 5/2/2002, p. 2. 103 European Parliament, Report of 16 July 2001 on cultural cooperation in the European Union, Committee on Culture, Youth, Education, the Media and Sport, Rapporteur: Giorgio Ruffolo, A5–0281/2001, at 5. 104 Ibid., at 7. 105 See 5th indent, supra n. 17. 106 Ibid., Annex I, point I.1(iv). 107 See Annex I.1., supra n. 77. 108 See Decision 1419/1999/EC, Art. 3, supra n. 66.

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cultural programme for the period 2007–2013, ‘[ p]romoting cultural and linguistic cooperation and diversity . . . helps to make European citizenship a tangible reality by encouraging direct participation by European citizens in the integration process’.109 The same approach is followed by the new support programme on active European citizenship.110 Europe for Citizens, founded on Articles 151 and 308 EC, builds upon an action programme for the period 2004–2006 that was launched on the basis of Article 308 EC and aimed at promoting active citizenship.111 Endowed with a total budget of €215 million,112 the programme aspires to give ‘citizens the opportunity to interact and participate in constructing an ever closer Union’, develop ‘a sense of European identity’, foster ‘a sense of ownership to the European Union’ and enhance ‘tolerance and mutual understanding’ with respect for cultural diversity.113 Structured on the basis of different action strands, it supports town-twinning activities, civil society initiatives, high visibility events, and various information-sharing actions, at the same time strengthening the institutional and structural capacity of European public policy research institutions and civil society organisations.114 Whereas European citizens are the ultimate target group of all EU actions, the rhetoric incorporated in the EC cultural tools, in particular, assumes that, without some common bonds amongst Europeans, it would be impossible to achieve the deep-rooted support crucial to the long-term success of the European polity. The argument may not be that far-fetched, in the sense that good performance and efcient problem solving require a common base upon which choices made can be attained. In default, cooperation risks becoming a lifeless exercise between elites, meaningless for the public at large.

109 See 1st indent, supra n. 83. On the growing emphasis on cultural policy as a tool to promote European citizenship and European integration, see Craufurd Smith, ‘From Heritage Conservation to European Identity: Article 151 EC and the Multi-Faceted Nature of Community Cultural Policy’, European Law Review 32 (2007) 48. 110 Decision 1904/2006/EC of the European Parliament and of the Council of 12 December 2006 establishing for the period 2007 to 2013 the programme ‘Europe for Citizens’ to promote active citizenship, OJ L 378, 27/12/2006, p. 32. See also Decision 1983/2006/EC of the European Parliament and of the Council of 18 December 2006 concerning the European Year of Intercultural Dialogue (2008), OJ L 412, 30/12/2006, p. 44, which, based on Article 151(5) EC, seeks, amongst others, to promote active European citizenship. Crucially, for the purpose of the Decision, the notion of active European citizenship does not cover only EU citizens as dened in Article 17 EC but any individual living permanently or temporarily on EU territory (9th indent). 111 See Council Decision 2004/100/EC of 26 January 2004 establishing a Community action programme to promote active European citizenship (civic participation), OJ L 30, 4/2/2004, p. 6. 112 Supra n. 110, Art. 11. 113 Ibid., Art. 1. 114 Ibid., Art. 3.

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The measures adopted, far from promoting uniformity, emphasise commonalities and allegiance. As the Parliament has noted, any so-called European cultural identity is one born of the juxtaposition of the cultural specicities of the Member States. It is ‘the product of interaction between a civilisation and a plurality of national, regional and local cultures’,115 and based on ‘cultural interdependence and . . . the capacity to identify and recognise the common elements of the various European cultural traditions, even in their most disparate forms’.116 As such, it is a minimalist conception of European self-consciousness, built on the persistence of diverse domestic cultural systems and endorsement of universal values. It does not purport to be prioritised, but rather adds to multiple layers of identity of which every individual partakes. On the basis of such considerations, it may be safely concluded that the Community does not seek to promote integration via cultural convergence, but on the basis of measures that recognise and openly afrm cultural differences amongst its constituent parties. Of course, the preservation of Member States’ cultural peculiarities is not identical with cultural segmentation and division. The Community’s cultural policy aims to avoid introspectivity of domestic cultures by placing them on a broader European footing, where they can be accessed, explored and appreciated, even by those who do not share and espouse them. Undoubtedly, cultural exchange may throw established cultural codes into question and rework frameworks of common cultural understanding. Intermingling of cultures presents possibilities for cultural mutation and change. Although such change should not necessarily be viewed as risking the loss of identity, as identity is not a monolithic notion in which different elements are unable to co-exist, it should be stressed that an alteration in cultural preferences is, rst and foremost, for individual decision. The Community does not indulge a preference for any one cultural pattern over another, but leaves the nal choice to the EU citizen. 2.1.5

Concluding Remarks

The impelling force of EC cultural action is strict respect for, and promotion of Member States’ cultural diversity. The Community’s prolonged efforts to stimulate cultural cooperation do not seek cultural homogenisation but are designed to facilitate mutual cultural knowledge and understanding via the establishment of sustainable cultural networks, and a quantitative and

115 Resolution of the European Parliament on Community policy in the eld of culture, OJ C 44, 14/2/1994, p. 184, at para. A. 116 Resolution of the European Parliament of 12 February 1993 on preserving the architectural heritage and protecting cultural assets, OJ C 72, 15/3/1993, p. 160, at para. L.

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qualitative growth in the cultural goods and services available on European territory. It may, however, be wondered what the added value of the Community’s cultural activities is. Does cultural action undertaken at EC level pursue objectives that the Member States may or cannot sufciently achieve, in line with the principle of subsidiarity? What does EC cultural policy offer that domestic national policies do not? First springing to mind, when examining the concrete exercise of EC cultural powers, is the rm willingness of the European institutions to create trans-frontier cultural links. Certainly, cultural cooperation with non-nationals also forms part of domestic cultural agendas, mainly for historical, geographic or linguistic reasons. But such action, often superseded by activities centred on the preservation and enhancement of domestic cultural features, usually operates on a bilateral basis. The cross-border dimension of EC cultural policy, focusing on multilateral cultural exchanges, supplements Member States’ action in this regard, strengthening cultural bonds between overlapping, but utterly diverse, forms of cultural life. In this context, the Community broadly recognises the value of cultural diversity. Yet the notion is redened: respect for cultural diversity does not translate solely into safeguarding domestic cultural systems (as certain Member States, with a basically culturally protectionist orientation would prefer), but entails establishing a common, open cultural space through cultural interaction and exchange. Moving from cultural distinctiveness, read as cultural closure, to cultural distinctiveness viewed in terms of openness towards new cultural points of reference, EC cultural policy aspires to lay the groundwork for the emergence of multi-cultural societies, where cultures can be widely diffused and enjoyed. One of the most obvious limits of the EC cultural action is the scarcity of nancial resources.117 The discrepancy between ambitious objectives and the modest means supplied for their achievement has considerably impeded the creation of an integrated European cultural area. Additionally, strict interpretation of the subsidiarity principle, has, in practice, narrowed the scope of activities that may receive funding under the Community’s cultural programmes. As a result of the search for European added value, there is a pronounced inclination towards major networks and large-scale operations. Onerous eligibility conditions for projects to gain access to Community grants militate against smaller and medium-sized organisations’ ability to plan bids and develop partnerships. Greater exibility, in relevant respects, 117 The Member States are generally reluctant to allocate signicant nance for development of cultural actions under Article 151 EC. Already in 1992, the Ministers of Culture meeting within the Council noted that Community action in the cultural sector ‘as in other sectors, must respect budgetary constraints’. See supra n. 24, at para. 5.

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might encourage participation by a greater variety of operators, broadening the range of cultural activities supported. A lack of adequate information on the planning and administration of Member States’ cultural policies also prevents the European institutions from exploiting synergies and ensuring complementarity between EC cultural activities and Member States’ cultural action. Admittedly, a trend has recently manifested to approach culture from a broader perspective, and expand Community cultural activities in areas, which are not sufciently addressed at the national level, such as European citizenship and the positive role that culture can play in its enhancement. Nonetheless, a systematic examination of the nature and effects of Member States’ cultural endeavours would allow a stronger identication of policy areas requiring supplementary action at the Community level. Remedying administrative defects and establishing appropriate monitoring procedures would then serve to maximise results. Developments on the horizon may give grounds for optimism. On the basis of an extensive consultation carried out in 2006 with cultural decision-makers and operators, on 10 May 2007, DG EAC adopted a communication on a European agenda for culture in a globalising world, the rst-ever European cultural strategy.118 Afrming culture’s central role in the process of European integration, the communication presents the objectives of EC cultural action and proposes new working methods for the development of structured partnerships between the European institutions, the Member States and the cultural sector. Three major goals are identied to rejuvenate EC cultural activity: promotion of cultural diversity and intercultural dialogue; promotion of culture as a catalyst for creativity in the framework of the Lisbon Strategy for growth and jobs; and promotion of culture as a vital element in the Union’s international relations. The second and third objectives largely depend on exercise of the implicit cultural powers stemming from the EC Treaty and therefore are not discussed here. Regarding the rst objective, the Commission suggests reinforcing mobility of cultural practitioners, advancing circulation of artistic expressions and strengthening intercultural competences by raising cultural awareness and improving citizens’ linguistic skills. To deliver substantive policy results, DG EAC commits to pursue a structured dialogue with cultural stakeholders and improve acquisition of evidence-based cultural information. Steps in this direction include a thorough delineation of the cultural sector, the creation of a ‘cultural forum’ for the regular exchange of views and best practices, the development of

118 Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, COM(2007) 242.

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assessment methodologies and the encouragement of comparable national statistics. More importantly, DG EAC anticipates use of the open method of coordination (OMC), as a means to reinvigorate cultural cooperation. Having created an additional stimulus for policy-making in the elds of employment, social protection, education and youth, the OMC is said to offer an adequate framework for state cultural collaboration. A exible approach, based on the identication of general objectives and the introduction of a ‘light’ biennial reporting system, is foreseen. The European Parliament, the Economic and Social Committee and the Committee of the Regions are warmly invited to participate in the process. The cultural agenda put forward by the Commission provides new momentum for the adoption of coherent measures in the cultural eld. To that purpose, one needs to consider the impact of other Community policies on realisation of EC cultural objectives. Since, pursuant to Article 151(4) EC, cultural policy goals may be pursued under EC policy headings other than Article 151 EC, this study’s analysis now turns to the implicit facet of EC cultural action.

2.2

Implicit Community Cultural Powers

Article 151 EC’s emphasis on respect for, and promotion of, cultural diversity via the recognition of a set of multi-layer Community cultural powers was specically intended to counteract unrest, diffused in governmental circles, as to the effects of an EC cultural policy on national cultural prerogatives. During the period of debate prior to Maastricht, it was felt that an active Community cultural engagement, even if underpinned by cultural diversity precepts, would not sufce to countervail the adverse pressure exerted by other Community policies and actions on domestic cultural specicities. Repositioning culture as a cross-cutting issue was perceived by many as an adequate instrument to ensure that cultural considerations were not sidelined by other competing EC interests. Paragraph 4 of Article 151 EC, by proclaiming that ‘[t]he Community shall take cultural aspects into account in its action under other provisions of this Treaty, in particular in order to respect and to promote the diversity of its cultures’, introduces the concept of cultural mainstreaming at the EC level, allowing for accommodation of cultural concerns into overall Community action.119

119 See, generally, Cunningham, ‘In Defence of Member State Culture: The Unrealised Potential of Article 151(4) of the EC Treaty and the Consequences for EC Cultural Policy’, (2001) 34 Cornell International Law Journal 119, Christianos, ‘The effective judicial protection

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Cultural Mainstreaming: Destination Maastricht

The idea of cultural mainstreaming originated in the early 1980s, when the Community institutions slowly started to appreciate the intrinsic links between culture and political and socio-economic upheavals facing the Community. Although culture was initially viewed as an instrument which could help the European polity grow beyond its economic dimension, it was the interconnection of cultural matters with the establishment of the internal market which gradually revealed the need for an accurate examination of potential implications of economic action for cultural affairs. In contrast with the Commission, which saw the advent of the common market as a pivotal moment to boost the cultural sector by stimulating the provision of cultural goods and services and by improving the living and working conditions of cultural operators,120 the European Parliament noted its susceptibility, equally, to jeopardise the cultural diversity of the Member States. In its view, a systematic interpretation of the EEC Treaty in favour of commercial interests would lead to ‘a suffocation of cultural expression’.121 To preserve the cultural and linguistic diversity of Europe, optimum conditions for both cultural and economic development needed to be promoted.122 The Parliament’s calls caused a certain alarm in the Commission. The latter’s efforts to persuade the Member States as to Community competences in the cultural eld under the general provisions of the EEC Treaty risked facing a barrage of criticism, if the creation of a common market, the primary objective of European integration, was deemed to undermine Member States’ cultural wealth. Hoping to curb national opposition to the use of the general powers attributed to the Community for cultural purposes, the Commission

of culture in EC law’, in V. Christianos, Problèmes d’interprétation à la mémoire de C. N. Kakouris (2004) 21, and Psychogiopoulou, ‘The Cultural Mainstreaming Clause of Article 151(4) EC: Protection and Promotion of Cultural Diversity or Hidden Cultural Agenda?’, 12 European Law Journal (2006) 575. 120 The Commission advocated reinforced application of the economic rules of the EEC Treaty and adoption of specic measures in the areas of taxation, copyright, broadcasting and social security in order to create an environment conducive to cultural creation and diffusion that would allow the Community’s cultural industries to seize new opportunities in the wider market created. See European Commission, Communication to the Council, Community action in the cultural sector, Bull. EC (1977), Supplement 6/77, and Communication to the Council and Parliament, Stronger Community action in the cultural sector, Bull. EC (1982), Supplement 6/82. 121 Resolution of the European Parliament of 11 March 1982 on national nancial aids to lm-makers, OJ C 87, 5/4/1982, p. 82. 122 See Resolution of the European Parliament of 16 October 1981 on a Community charter of regional languages and cultures and on a charter of rights of ethnic minorities, OJ C 287, 9/11/1981, p. 106.

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sought to convince national authorities that the cultural ramications of any proposed instrument would be seriously explored. Initially, the Commission’s position was that the cultural repercussions of any EC action should be a matter for the Member States to address, via possible alteration or adaptation of their cultural policies, with the aim, in particular, of ensuring that ‘wider [cultural] dissemination does not lower standards and that the expression of various cultural identities is preserved’.123 But with its communication, A fresh boost for culture in the European Community, the Commission adopted a different view.124 Instead of leaving the issue for national authorities to cope with, the Commission announced that it would henceforth ‘be at particular pains to integrate the cultural dimension into the formulation and management of the various Community policies’, mainly on the basis of improved interdepartmental coordination.125 The rst mention of cultural mainstreaming alluded to both the denition and implementation of Community policies. Eager to implicate all Community institutions in the process, the Commission, in its opinion on the draft text for a Treaty establishing the European Economic Community with a view to political union, proposed the adoption of a provision compelling ‘the Union [to] have regard for the cultural dimension in its other policies’.126 Quickly forgotten under the pressure of reaching agreement on more pressing matters, this issue resurfaced a few months before signature of the EU Treaty.127 2.2.2 Article 151(4) EC: Nature and Scope of EC Cultural Mainstreaming Requirements Article 151(4) EC legitimises all informal cultural action undertaken in other Community areas prior to its entry into force. Of greater importance, it demands a more systematic approach to culture on the part of the Community. Requiring a break with the European institutions’ traditional sectoral decision-making model, the provision seeks to integrate sensitivity to the cultural issue in all Community policies and activities.128 Given the transversal nature

123

European Commission, Communication to the Council and Parliament, supra n. 120,

at 12. 124 European Commission, Communication on a fresh boost for culture in the European Community, COM(1987) 603. 125 Ibid., at 6. 126 European Commission, Formal Opinion of 21 October 1990 pursuant to Article 236 of the EEC Treaty on the proposal for an amendment of the Treaty establishing the European Economic Community with a view to a political union, Bull. EC (1991), Supplement 2/91. 127 See Dutch Presidency Draft Union Treaty, Working Document of 8 November 1991, in supra n. 39, 348, at 361. 128 M. Cornu, Compétences culturelles en Europe et principe de subsidiarité (1993), at 163–164.

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of culture, it would be ‘inadvisable (and indeed impossible) to seal off Article 128 [now Article 151 EC] as the sole legal basis relevant to cultural protection’.129 Taking cultural aspects into account, in order to protect and promote cultural diversity, with the Amsterdam amendment becomes a procedural requirement imposed on the European legislator. Compliance means that all Community acts and actions that may have a cultural impact must be compatible with EC cultural objectives,130 giving due weight to the protection and promotion of domestic, national or regional, cultural distinctiveness. Cultural diversity considerations are thus brought centre stage, amounting to a cross-cutting, horizontal EC policy principle that has to underpin all Community action.131 Interestingly, cultural diversity is seen in both negative (to respect) and positive (to promote) senses, so that the EC is not simply bound to refrain from interfering with its enjoyment, but is also duty-bound to take appropriate measures to encourage it. These preliminary remarks on the cultural policy-linking clause make the task of understanding the cultural mainstreaming exercise no easier. Article 151(4) EC, drafted vaguely, is open to different interpretations. First, the notion of cultural aspects raises difcult questions about the purposes to be served by the provision. It has been suggested that the general term ‘cultural aspects’ conrms that the EC cultural policy goes beyond Article 151 EC, to include, for instance, the protection of minority cultures.132 It should be noted, however, that it is possible to interpret the broadly-dened areas for cooperation contained in Article 151(2) EC as covering minority cultures’ protection as well. In view of the lack of EC harmonising powers in the cultural eld, it has been argued that the term ‘cultural aspects’ should be seen as a renvoi to national cultures, the Community being compelled to afford consideration to national cultural policies and choices with full respect for the discretion of the domestic legislator.133 Although it is commonly agreed that national cultural preoccupations should be placed higher on the agenda, it should be kept in mind that the Community has a specic, though strictly-dened, cultural

129 Ross, ‘Cultural Protection: A Matter of Union Citizenship or Human Rights?’, in N. Neuwahl and A. Rosas (eds), The European Union and Human Rights (1995) 235, at 237. 130 Resolution of the European Parliament of 30 January 1997 on the rst report of the Commission on the consideration of cultural aspects in European Community action, OJ C 55, 24/2/1997, p. 37, at para. 2. 131 At the same time, though, these do not preclude appropriate attention being paid to other EC cultural objectives. 132 See N.N. Shuibhne, supra n. 3, at 141. 133 Schmid, ‘Diagonal Competence Conicts between European Competition Law and National Regulation—A Conict of Laws, Reconstruction of the Dispute on Book Price Fixing’, 8 European Review of Private Law (2000) 155, at 163–164.

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mission of its own. Cultural objectives and priorities set at the Community level must not be left out in interpreting the cultural cross-sectional clause. As already stated, the Community is under a general duty to contribute to the owering of the cultures of the Member States, respecting their national and regional diversity,134 but may also supplement their action by acting independently in the areas specied by Article 151(2) EC. The fact that the Community is required to take cultural considerations into account in its action under other provisions of [the EC] Treaty merits attention. ‘Action’ is a substantially broad term, eliminating any grounds for a restrictive interpretation of Article 151(4) EC. It may relate to the stages of policy designation and subsequent implementation by the European institutions. It can also extend to the interpretation of Community law by the European Court of Justice.135 But to what degree should cultural mainstreaming take place in practice? Since the phrase shall take into account does not provide any indication of the weight to be given to cultural concerns, can it be argued that Article 151(4) EC imposes only a limited obligation, easily met by a supercial examination of cultural matters? Is the provision intended as a policy guideline, a mere procedural rule? Would it be possible, for example, to have a Community act annulled on the basis that cultural requirements had been disregarded or had been insufciently attended to? Arguably, the legal value of the clause ‘may range, according to various interpretations, from an integration clause inuencing the whole of the Community legal construction to a simple declaratory provision deprived of any mandatory effect’.136

134

See Art. 151(1) EC. Moreover, if one bears in mind that the implementation of Community policies and activities does not depend solely on the European institutions, but also on the Member States, then the cultural integration clause might be viewed as placing responsibility on national authorities for compliance as well. Although such a line of reasoning could be felt by many as somehow going too far, it is not easy entirely to dismiss the likelihood of Member States having to give consideration to the cultural prerogatives of their partners with the aim of preserving Europe’s cultural richness. There is, in fact, no shortage of cases where domestic authorities were required to protect the cultural interests of other Member States, even prior to adoption of Article 151(4) EC. See, for instance, Council Directive 93/7/EEC of 15 March 1993 on the return of cultural objects unlawfully removed from the territory of a Member State, OJ L 74, 27/3/1993, p. 74, which requires national authorities to carry out checks in relation to trade transactions that may affect the cultural patrimony of other Member States. 136 Mitsilegas, ‘Culture in the Evolution of European Law: Panacea in the Quest for Identity?’, in P. Fitzpatrick and J.H. Bergeron (eds), Europe’s Other: European Law Between Modernity and Postmodernity (1998) 111, at 123. Indeed, according to some, Article 151(4) EC is simply declaratory. See M. Niedobitek, The Cultural Dimension in EC Law (1997), at 25–28. 135

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The nal decision lies, of course, with the European Court of Justice (ECJ).137 Yet, what Article 151(4) EC seems to require is a genuine balancing of the various objectives pursued under the different EC Treaty provisions, via the integration of cultural reasoning in the Community’s decision-making practice. The cultural cross-sectional clause does not purport to suggest what the outcome of the consideration given to cultural aspects when taking action in other policy elds should be. It merely entrusts Community institutions with such a duty, which is hence a matter of assessment and evaluation. While an easy precedence of cultural concerns to the detriment of other legitimate EC objectives is not prescribed, the goals identied under the various EC policy elds must be attained in the most culturally-friendly way. In the case of seriously conicting interests, where equilibrium is not possible to nd, justications for the hierarchy drawn between the cultural and non-cultural goals of the Community should be provided, and caution exercised, avoiding arrangements that might jeopardise the attainment of cultural objectives in the long run.138 The very essence of Article 151(4) EC resides in the fact that other provisions of the Treaty (and not only Article 151 EC) may be used to adopt measures with a cultural dimension. As previously mentioned, this practice was followed prior to the entry into force of the Maastricht Treaty, despite receiving formal recognition by the ECJ only recently,139 in a legal basis dispute concerning Council Decision 96/664/EC.140 The European Parliament brought an action for annulment on the grounds that the contested decision, establishing a multi-annual programme to promote the linguistic diversity of the Community in the information society, should have been adopted on the basis of Article 151 EC, in addition to Article 157 EC, which enables the introduction of measures fostering industrial competitiveness. It was argued on behalf of the Parliament that the programme, in seeking to promote linguistic diversity, which forms part of the cultural heritage

137

Given the relative inexperience of the Court in cultural affairs, which predominantly belong to the national sphere, caution was urged, in the sense that the ECJ should avoid any kind of ideological reasoning in its judgments. See Lane, ‘New Community Competences under the Maastricht Treaty’, 30 Common Market Law Review (1993) 939, at 957–958. 138 See, in this respect, Christianos, supra n. 119, at 42–43, who argues that Community measures, prejudicial to cultural diversity, must be properly motivated, and show that the solution preferred to another one with lighter cultural implications is proportional to the aim pursued. 139 Case 42/97, European Parliament v Council of the European Union, [1999] ECR I–869. 140 Council Decision 96/664/EC of 21 November 1996 on the adoption of a multiannual programme to promote the linguistic diversity of the Community in the information society, OJ L 306, 28/11/1996, p. 40.

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in need of protection under Article 151(2) EC, pursued a cultural objective and ought, therefore, additionally to have been based on Article 151 EC. The choice of legal rubric was not merely academic; it would determine the role of the European Parliament in the legislative process. Under Article 157 EC, the Council was simply required to consult the Parliament, whereas, were Article 151 EC to provide an additional legal basis, the co-decision procedure would considerably strengthen the Parliament’s ability to inuence the content of the measure enacted. The Court referred to its settled case-law, according to which the choice of legal basis for a measure must be based on objective factors, amenable to judicial review.141 That consideration must be given to the aim and content of the measure adopted was noted.142 Distinguishing between the main or predominant ‘industrial component’ of the programme, which was to support the language industry by encouraging the provision of multilingual services, and its secondary or incidental ‘cultural component’, relating to the promotion of linguistic diversity, the Court sanctioned the Council’s choice of a single legal basis. It held that ‘the programme will have benecial effects for the dissemination of cultural works, in particular by improving the tools available for the task of translation’,143 but took the position that ‘these are indirect and incidental as compared with the direct effects sought, which are of an economic nature’.144 Marginalisation of languages could be understood as ‘the loss of an element of cultural heritage, but also as the cause of a difference of treatment between economic operators in the Community, who enjoy greater or lesser advantages depending on whether or not the language they use is widespread’.145 Such an interpretation was found to conform to Article 151(4) EC146 which, according to the Court, makes perfectly clear that ‘not every description of the cultural aspects of Community action necessarily implies that recourse must be had to Article 128 [now Article 151 EC] as the legal basis, where culture does not constitute an essential and indissociable component of the other component on which the action in question is based but is merely incidental or secondary to it’.147 On the basis of the Court’s qualications, Article 151 EC may only apply when the measures adopted specically govern cultural affairs. The insertion

141 142 143 144 145 146 147

See supra n. 139, at para. 36. Ibid. Ibid., at para. 62. Ibid., at para. 63. Ibid., at para. 50. Ibid., at para. 41. Ibid., at para. 42.

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of Article 151(4) in the EC Treaty entails the exclusion of Article 151 EC as an additional legal basis for the adoption of an incentive measure which has an incidental cultural component. Its mention in the body of the legislative act148 serves only to complement the choice of another Treaty article as the appropriate legal foundation, drawing attention to the implicit, subsidiary cultural dimension of the support measure introduced.149 The implications of Article 151(4) EC for the adoption of EC harmonising legislation will be explored in more detail under paragraph 2.2.3.1. At this stage of the analysis, though, it may already be safely concluded that the inclusion of Article 151(4) in the EC Treaty ensures that Article 151 EC does not preclude adoption, via recourse to other EC legal bases, of measures pursuing cultural objectives alongside other public policy goals. So construed, it seems that Article 151(4) EC has formally broadened the range of cultural activities at the supranational level, the Community having the possibility, but not the obligation, to make clear cultural choices under other EC policy headings. It goes without saying that, in this endeavour, it must remain within the boundaries of Article 151 EC, as regards the nature and scope of the action taken. Initiatives contradicting the cultural objectives of Article 151 EC, or disregarding cultural diversity values, may not be accepted. The precise level of the protection afforded, then, is strictly a matter of political will, as will be shown. 2.2.3 Article 151(4) EC and Other EC Policy-Linking Clauses: A Useful Comparison Article 151(4) EC is not unique in the EC Treaty system. It forms part of a series of cross-sectional clauses pertaining to various policy sectors. The rst provision of this type was inserted into the Treaty by the Single European Act (SEA), and read: ‘environmental protection requirements shall be a component of the Community’s other policies’.150 Its wording was subsequently reinforced by the Treaty of Maastricht,151 which introduced similar clauses for public health,152 economic and social cohesion,153 development cooperation154

148

See 9th indent, supra n. 140. See B.F. Lévy, supra n. 3, at 354–356. 150 See Title VII, Art. 130(r)(2) of the Single European Act, OJ L 169, 29/6/1987, p. 1. 151 See Title XVI, Art. 130(r)(2) of the Treaty on European Union, OJ C 191, 27/9/1992, p. 1, which provided that ‘[e]nvironmental protection requirements must be integrated into the denition and implementation of other Community policies’. 152 Ibid., Title X, Art. 129(1). 153 Ibid., Title XIV, Art. 130(b). 154 Ibid., Title XVII, Art. 130(v). 149

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and industrial policy.155 The Treaty of Amsterdam further extended the mainstreaming obligations of the Community including, amongst them, consumer protection,156 gender equality157 and employment.158 Close examination of these provisions reveals that they are not drafted in identical terms. Some are more powerful than others, in terms of legal strength and reach, differentially affecting their impact on EC policy development. In an attempt to inquire into their similarities and divergences, so as to place Article 151(4) EC in a wider context of policy-linking efforts at the Community level, paragraph 2.2.3.1 below examines the characteristics of EC mainstreaming provisions and the position they have assumed in judicial thinking. Paragraph 2.2.3.2 discusses institutional and procedural arrangements for their implementation. 2.2.3.1 EC policy-linking clauses and article 151(4) EC: defining variable mainstreaming obligations The best-known policy integration provisions of the EC Treaty are Articles 3(2) and 6 EC on gender equality and environmental mainstreaming. Article 3(2) EC stipulates that ‘[i]n all the activities referred to in . . . Article [3], the Community shall aim to eliminate inequalities, and to promote equality, between men and women’. Article 6 EC determines that ‘[e]nvironmental integration requirements must be integrated into the denition and implementation of the Community policies and activities referred to in Article 3, in particular with a view to promoting sustainable development’. Included in Part One, entitled ‘Principles’ of the EC Treaty, both provisions amount to general principles of Community law. The concepts of gender and environmental policy integration emerged in a context of modern policy adaptations to gender equality and environmental concerns on the international scene. Gender mainstreaming began to take shape following adoption of the Platform for Action of the 1995 Fourth World Conference on Women, held in Beijing. This committed the institutions of the United Nations (UN) to incorporating systematically a gender perspective in its policy-making.159 The signicance of the concept of environmental mainstreaming increased in parallel to that of sustainable development. The latter

155

Ibid., Title XIII, Art. 130(3). See Art. 2(27) (with respect to Art. 129a and, in particular, Art. 129a(2)) of the Treaty of Amsterdam amending the Treaty on European Union, the Treaties establishing the European Communities and related acts, OJ C 340, 10/11/1997, p. 1. 157 Ibid., Art. 2(2) (with respect to Art. 3 and, in particular, Art. 3(2)). 158 Ibid., Art. 2(19) (with respect to Art. 109p, and in particular, Art. 109p(2)). 159 See Burton and Pollack, ‘Mainstreaming Gender in Global Governance’, 8 European Journal of International Relations (2002) 339. 156

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entered public debate in 1972, when the UN Conference on Human Environment, convened in Stockholm, emphasised the interdependence of ecological and development goals.160 Based on the theory of intergenerational equity, it was elaborated further by the 1987 Brundtland report,161 which advocated a fair balance between environmental, economic and social objectives. Gender mainstreaming was readily endorsed at Community level, given a political environment, from 1995 onwards, favourable towards expansion of the equal opportunities portfolio, and effective strategic mobilisation of gender equality advocates at supranational level.162 As a result, the means for realisation of the general Community task, laid down by Article 2 EC, to promote equality between men and women, are not restricted to ensuring the application of ‘equal opportunities and equal treatment between men and women in matters of employment and occupation, including the principle of equal pay for equal work or work of equal value’,163 encouraging ‘equality with regard to labour market opportunities and treatment at work’164 and taking appropriate action to guarantee equality outside the employment eld.165 Pursuant to paragraph 2 of Article 3 EC, they extend to eliminating inequalities and promoting gender equality as paramount objectives of all Community policies and activities. With regard to environmental mainstreaming, the link between environmental protection, economic growth and social justice, under the concept of sustainable development, facilitated political consensus, so that mainstreaming gained quick acceptance within the Community as a response to previous failures to reconcile economic competitiveness with environmental protection.166 Consequently, the Community is not only to guarantee, in line with Article 2 EC, ‘a high level of protection and improvement of the quality of the environment’ by means of the competences enjoyed under Article 174 EC. According to Article 6 EC, it must also integrate environmental protection

160

See Lenschow, ‘Greening the European Union: An Introduction’, in A. Lenschow (ed.), Environmental Policy Integration: Greening Sectoral Policies in Europe (2002) 3. 161 General Assembly of the United Nations, Report 42/187 of the World Commission on Environment and Development of 11 December 1987. 162 See Burton and Pollack, ‘Mainstreaming Gender in the European Union’, 7 Journal of European Public Policy (2000) 432. 163 See Arts 141(1) and (3) EC. 164 See Art. 137(1) EC. 165 See Art. 13 EC. 166 DG Environment had made use of ‘top-down’ regulatory policy instruments, mostly ‘command-and-control’ measures, which imposed high costs on economic operators without succeeding in improving the general state of the environment.

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requirements into the denition and implementation of all its policies and activities, so as to promote, in particular, sustainable development.167 The public health policy-linking clause mirrors, almost word by word, the environmental mainstreaming clause. Ex-Article 129 EC represented a compromise between Member States reluctant to entrust the Community with public health duties and those favouring Community-based action in the eld.168 Accordingly, it established a weak mainstreaming obligation, to the effect that health protection requirements were to form a constituent part of other Community policies. New Article 152 EC now gives greater prominence to public health policy integration stating, in paragraph 1, that ‘[a] high level of human health protection shall be ensured in the denition and implementation of all Community policies and activities’.169 This reects Article 2 EC’s inclusion, amongst the Community’s tasks, of ‘raising of the standard of living and quality of life’. The consumer protection cross-sectional clause, inserted in paragraph 2 of Article 153 EC by the Treaty of Amsterdam, is in weaker terms. It provides that ‘[c]onsumer protection requirements shall be taken into account in dening and implementing other Community policies and activities’.170 Yet it carries a heavy political burden, having been introduced to appease consumer anxieties in the wake of the mad-cow disease crisis. Even prior to explicit inclusion of environmental, health and consumer protection mainstreaming clauses in the EC Treaty, attempts to integrate the interests of these policy areas in Community legislation were concretely expressed in Article 95(3) EC (ex-Article 100a(3) EEC), introduced by the SEA. According to this provision, as originally drafted, when proposing 167

Since pursuant to Article 174(2) EC, the Community’s environmental action is to aim at a high level of protection, it is apposite to argue that environmental mainstreaming must also be geared to attaining a high level of environmental protection. Ample support for such conviction is provided by the fact that the environmental cross-sectional provision, as formulated at Amsterdam, bought off demands for the introduction of a general citizen’s right to a healthy environment and specic proposals to amend various sections of the Treaty dealing with sectoral policy areas in order to accommodate therein explicit environmental and sustainability objectives. See, in this respect, Macrory, ‘The Amsterdam Treaty: An Environmental Perspective’, in D. O’ Keeffe and P. Twomey (eds), Legal Issues of the Amsterdam Treaty (1999) 171, at 174. On environmental mainstreaming, see generally N. Dhondt, Integration of Environmental Protection into Other EC Policies: Legal Theory and Practice (2003). 168 Hervey, ‘Mapping the Contours of European Union Health Law and Policy’, 8 European Public Law (2002) 69, at 72. 169 The protection and promotion of public health requirements in terms of safety or raising of the standard of living can be equally read in Articles 37 (common agricultural policy), 71 (transport), 137 (social policy), 153 (consumer protection) and 175 (environment). 170 The specic objective under the common agricultural policy of agricultural products reaching the consumer at reasonable prices, inserted in the original Treaty of Rome (Art. 33(1)(e) EC, ex-Art. 39(1)(e) EEC), could be seen as a rst, concrete example of mainstreaming consumer protection.

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harmonisation measures concerning health, safety, environmental protection and consumer protection, and aimed at establishing and ensuring the functioning of the internal market, the Commission needed to ‘take as a base a high level of protection’. Article 95(3) EC, as subsequently amended by the Treaty of Amsterdam, maintains this obligation on the Commission, however adding that attention must be afforded to new developments on the basis of scientic facts. The European Parliament and the Council are invited, within their respective powers, to comply with the same policy integration requirements. With regard to cohesion, the Treaty of Maastricht incorporated a mainstreaming clause asserting that the formulation and implementation of EC policies and internal market activities should take account of, and contribute to achievement of, economic and social cohesion objectives. In line with the Community task, under Article 2 EC, of promoting ‘economic and social cohesion and solidarity among Member States’, new Article 159 EC declares that ‘[t]he formulation and implementation of the Community’s policies and actions and the implementation of the internal market shall take into account the objectives set out in Article 158’ (that is, overall harmonious development of, and reduction of development disparities between, the various Community regions), and ‘shall contribute to their achievement’.171 In addition, Article 157(3) EC proclaims that the Community shall ‘contribute’ to the establishment of conditions necessary for industrial competitiveness172 ‘through the policies and activities it pursues under other provisions of [the EC] Treaty’, and in order to promote ‘a high degree of competitiveness’, as imposed by Article 2 EC. In accordance with Article 127(2) EC, ‘[t]he objective of a high level of employment shall be taken into consideration in the formulation and implementation of Community policies and activities’. Finally, Article 178 EC afrms that ‘[t]he Community shall take account of the objectives’ identied under its development cooperation policy173 ‘in the policies it implements which are likely to affect developing countries’.

171 The specic reference made to the implementation of the internal market is superuous, since it is included in the concept of Community policies and actions. 172 For that purpose, according to Article 157(1) EC, action is aimed at: speeding up the adjustment of industry to structural changes; promoting an environment favourable to initiative and to the development of undertakings throughout the Community, particularly small and medium-sized undertakings; encouraging an environment favourable to cooperation between undertakings; and fostering better exploitation of the industrial potential of policies of innovation, research and technological development. 173 According to Article 177(1) and (2) EC, the objectives of EC development cooperation policy are: the sustainable economic and social development of developing countries; the smooth and gradual integration of developing countries into the world economy; the campaign against poverty in developing countries; and the development and consolidation of democracy, the rule of law and respect for human rights and fundamental freedoms.

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Compared with the clauses mentioned above, Article 151(4) EC evidently does not possess the legal strength of Articles 3(2) and 6 EC. This is the case despite the fact that its scope may be construed as embracing all the areas of Community action dened in Article 3 EC, and allowing for accommodation of cultural considerations in both denition and implementation of Community policies and activities.174 Given their position in the EC Treaty, the gender equality and environmental mainstreaming provisions are not just guidelines or procedural rules for the development of Community action. First and foremost, their importance lies as general principles of Community law, crucial to the interpretation of Community law as a whole.175 More precisely, if a provision of Community law, primary or secondary, is open to more than one interpretation, the ECJ may opt for an interpretation of only positive or neutral effect on the environmental and gender interests involved.176 Any interpretation not favouring the proper integration of gender equality and environmental protection requirements in Community law or, ultimately, their reconciliation with other potentially conicting EC Treaty objectives, is inconsistent with the Treaty, in the absence of some justication on the basis of either specic Treaty exceptions or overriding reasons, for prioritisation of competing goals. Conversely, provided that Article 151(4) EC may serve to guide the Court in the interpretation of secondary Community legislation, the soft wording shall take into account can support an interpretation undermining Community cultural objectives as dened in Article 151 EC. This is because Article 151(4) EC cannot be construed as creating a clear legal compliance obligation throughout the sphere of Community activity. Indeed, far from demanding substantive policy integration as, for example, does the language of the public health cross-sectional clause (i.e. ‘a high level of human health protection shall be ensured’), Article 151(4) EC merely requires cultural aspects be taken into account. This is also true of the consumer 174 Note, for instance, that Article 178 EC limits the integration of development cooperation objectives in the implementation of Community policies that might affect developing countries. 175 This is because any specic Community provision must be seen within the context of the rst section of the Treaty entitled ‘Principles’. See Wasmeier, ‘The Integration of Environmental Protection as a General Rule for Interpreting Community Law’, 38 Common Market Law Review (2001) 159. 176 By way of illustration, in Concordia Bus Finland (Case C-513/99, [2002] ECR I-7213), which related to the interpretation of Article 36(1) of Council Directive 92/50/EEC on the coordination of procedures for the award of public service contracts (OJ L 209, 24/7/1992, p. 1), the Court held that the list of the criteria contained in the Directive, on which the contracting authority could base the award of contracts to the economically most advantageous tender, was neither exhaustive, nor conned to parameters of a purely economic value. According to the Court, the possibility of using environmental protection criteria in the context of a tendering procedure for the provision of urban bus transport services, such as the level of nitrogen oxide emissions or the noise level of buses, should not be excluded in light of Article 6 EC (see paras 57 and 64).

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protection, development cooperation, employment and economic and social cohesion EC policy-linking clauses. Contrariwise, ‘contribute’, featured in the industrial policy integration provision, envisages a proactive role for Community institutions in promoting industrial competitiveness via adoption of measures under other Community policies. The underlying logic of the mainstreaming clauses reviewed is that other EC Treaty provisions may be used to promote gender equality, environmental, cultural, health and consumer protection, industrial, cohesion and development cooperation objectives. Although they may not serve as the legal foundation of a Community act, they confer implicit powers on the Community to pursue, under other EC policy headings, objectives linked to the public policy interests they serve. Whereas the majority have not yet received signicant judicial attention, the European Courts’ extensive commentary on the environmental and public health policy-linking provisions offers insights for discussion of Article 151(4) EC. Legal basis disputes and article 151(4) EC In UK v Council, a case preceding the introduction of the public health integration clause in the EC Treaty, the Court ruled that ‘efforts to achieve objectives of the common agricultural policy . . . cannot disregard requirements relating to the public interest, such as the protection of consumers or the protection of the health and life of humans and animals, requirements, which the Community institutions must take into account in exercising their powers’.177 The UK had argued that Directive 85/649/EEC, prohibiting the use in livestock farming of certain substances with hormonal action,178 should have been based, in addition to Article 37 (ex-Article 43) EC, on Article 95 (ex-Article 100a) EC. The basis offered by the UK for this argument was that the Directive was intended not only to pursue agricultural policy objectives, but also to approximate domestic provisions in order to safeguard the interests and health of consumers. The Court rejected this view, favouring the Council’s choice of a single legal basis. Article 95 EC, it found, could not ‘be relied on as a ground for restricting the eld of application of Article 43 [now Article 37 EC]’, even where the legislation in question was ‘directed both to objectives of agricultural policy and to other objectives which, in the

177 Case C-68/86, UK v Council, [1988] ECR 855, at para. 12. See also Cases C-331/88, The Queen v Minister of Agriculture, Fisheries and Food and Secretary of State for Health, ex parte: Fedesa and others, [1990] ECR I-4023, at paras 14 and 16, and Case C-146/91, KYDEP v Council and Commission, [1994] ECR I-4199, at para. 61. 178 Council Directive 85/649/EEC of 31 December 1985 prohibiting the use in livestock farming of certain substances having a hormonal action, OJ L 382, 31/12/1985, p. 228.

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absence of specic provisions, are pursued on the basis of Article 100 [now Article 95] of the Treaty’.179 Since its introduction by the Treaty of Maastricht, the Court has frequently drawn on Article 152 EC to conrm this stance. In Beef Labelling,180 for instance, the Commission challenged the adoption of Regulation (EC) 820/97 regarding the labelling of beef and beef products on the basis of Article 37 (ex-Article 43) EC.181 The Commission submitted that the proper legal basis was provided by Article 95 (ex-Article 100a) EC, since the principal aim of the contested measure was the protection of human health. The Court’s position, however, was that the Regulation sought to achieve objectives of the common agricultural policy (CAP), namely reestablishment of the stability of the beef market following the BSE crisis, and had therefore rightly been adopted on the basis of Article 37 EC. For the Court, the conclusion in favour of Article 37 EC was not undermined by the fact that the system introduced entailed positive effects for protection of public health.182 Taking into account public health concerns, in the context of measures adopted under the CAP, was compatible with third sub-paragraph of Article 129(1) (now rst sub-paragraph of Article 152(1)) EC demanding that health protection requirements form a constituent part of the Community’s other policies.183 Turning to environmental mainstreaming, Huber184 related to the validity and interpretation of Council Regulation (EEC) 2078/92 on agricultural production methods compatible with the requirements of the protection of the environment and the maintenance of the countryside.185 Here, the Court held that ‘the fact that the legislation adopted was of a nature such as to promote more environmentally-friendly forms or production—which is certainly a genuine objective, but an ancillary one, of the common agricultural policy—[could] not in itself justify the legal basis . . . being constituted not only by Articles 42 and 43 [now Articles 36 and 37] but also by Article 130s [now Article 175] of the Treaty’.186 In the Court’s view, the primary goal of Regulation (EEC) 2078/92, i.e. transition to a more intensive, and

179

See Case C-68/86, supra n. 177, at para. 16. Case C-269/97, Commission v Council, [2000] ECR I-2257. 181 Council Regulation (EC) No. 820/97 of 21 April 1997 establishing a system for the identication and registration of bovine animals and regarding the labelling of beef and beef products, OJ L 117, 7/5/1997, p. 1. 182 Supra n. 180, at para. 61. 183 Ibid., at paras 48 and 62. 184 Case C-336/00, Huber, [2002] ECR I-7699. 185 Council Regulation (EEC) No. 2078/92 of 30 June 1992 on agricultural protection methods compatible with the requirements of the protection of the environment and the maintenance of the countryside, OJ L 215, 30/7/1992, p. 85. 186 Supra n. 184, at para. 36. 180

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higher quality, cultivation system, did not justify recourse to Article 175 EC as an additional legal basis. The environmental provisions of the Treaty (Articles 174 and 175 EC, ex-Articles 130r and 130s EC) conferred powers on the Community to undertake specic action on environmental matters, ‘while leaving intact its powers under other provisions of the Treaty’, which could serve for the enactment of measures ‘pursu[ing] at the same time one of the objectives of environmental protection’.187 In its version effective prior to entry into force of the Treaty of Amsterdam, the environmental mainstreaming clause precluded a Community measure from forming part of the Community’s environmental action, properly speaking, merely because such measure had complied with environmental protection requirements.188 Conversely, where a legislative act was found predominantly to attain environmental protection objectives, resort to other Treaty articles as the legal basis was excluded. Commission v Council189 related to an action for annulment of Council Directive 91/156/EEC amending Directive 75/442/EEC on waste.190 The Court ruled that the Council had rightly made use of Article 175 (ex-Article 130s) EC, notwithstanding that the legislation enacted would incidentally harmonise market conditions in the Community. The Directive had as ‘its main object to ensure, with a view to protecting the environment, the effective management of waste in the Community, regardless of its origin, and [had] only ancillary effects on the conditions of competition and trade’, inadequate to justify recourse to Article 95 EC.191 It is settled case-law that the choice of legal basis is a matter of legal principle and must rest on objective factors, amenable to judicial review, such as the aim and content of the measure enacted.192 Under the ‘centre of

187

Ibid., at para. 33. Ibid. See also, in this respect, paras 24 and 26–28 of Case C-405/92, Mondiet, [1993] ECR I-6133, relating to the validity of Article 1(8) of Council Regulation (EEC) No. 345/92 of 27 January 1992 amending for the eleventh time Regulation (EEC) No. 3094/86 laying down certain technical measures for the conservation of shery resources (OJ L 42, 18/2/1992, p. 15), where the Court held that ‘even if considerations of environmental protection were a contributory factor in the decision to adopt the regulation at issue, that does not of itself mean that it must be covered by Article 130s [now Article 175 EC] of the Treaty’. For the Court, the primary aim of the legislation adopted was to ensure the conservation and rational exploitation of shery resources while limiting the shing effort, objectives which come under Article 33 (ex-Article 39) EC of the CAP (rational development of production and availability of supplies). 189 Case 155/91, Commission v Council (Waste Directive), [1993] ECR I-939. 190 Council Directive 91/156/EEC of 18 March 1991 amending Directive 75/442/EEC on waste, OJ L 78, 26/3/1991, p. 32. 191 Supra n. 189, at paras 18–20. 192 See Cases C-300/89, Commission v Council (Titanium Dioxide), [1991] ECR I-2867, at para. 10, C-155/91, supra n. 189, at para. 7, and C-84/94, UK v Council (Working Time), [1996] ECR I-5755, at para. 25. 188

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gravity’ doctrine developed by the Court, if examination of a Community act shows that it has a twofold purpose or twofold component, and if one of these is identiable as main or predominant, whereas the other is merely incidental, the act must be founded on a sole legal basis, that is, that required by the main or predominant purpose or component.193 Exceptionally, if it is established that the act simultaneously pursues a number of objectives, indissociably linked, none secondary or indirect, the act must found on the various corresponding legal bases.194 Notably, in judicial proceedings relevant to the public health integration clause, the Court refrained from alluding to the centre of gravity thesis. Tobacco Advertising195 pertained to the validity of Directive 98/43/EC on the approximation of the laws, regulations and administrative provisions of the Member States relating to the advertising and sponsorship of tobacco products.196 In one of its most extensively discussed judgments, the Court afrmed that, pursuant to the health integration clause, harmonising measures under other provisions of the Treaty might impact on the protection of human health.197 Yet, it concluded, the Directive was not an internal market measure and was therefore not properly enacted on the basis of Articles 47(2), 55 and 95 (exArticles 57(2), 66 and 100a) EC.198 Keeping its silence on the issue of whether the legislative act was intended primarily to pursue public health policy objectives, the Court noted that the measure was concerned with the approximation of laws, regulations and administrative provisions of the Member States relating to the advertising and sponsorship of tobacco products, which ‘are to a large extent inspired by public health policy objectives’.199 Explicit exclusion of any harmonisation of national laws designed to protect and improve human health, contained in Article 152(4) (ex-Article (129(4)) EC, the Court cautioned, could not be circumvented by use of other Treaty articles as the legal basis.200 Answering the question of whether it could actually contribute to eliminating obstacles to trade and to removing distortions of competition in the negative, the Court annulled the Directive.

193 See Cases C-155/91, supra n. 189, at paras 19 and 21, and C-36/98, Spain v Council, [2001] ECR I-770, at para. 59. 194 See Cases C-300/89, supra n. 192, at paras 13 and 17, C-336/00, supra n. 184, at para. 31, C-94/03, Commission v Council, [2006] ECR I-1, at para 36, and C-178/03, Commission v Parliament and Council, [2006] I-107, at para. 43. 195 Case C-376/98, Germany v Parliament and Council, [2000] ECR I-8419. 196 Directive 98/43/EC of the European Parliament and of the Council of 6 July 1998 on the approximation of the laws, regulations and administrative provisions of the Member States relating to the advertising and sponsorship of tobacco products, OJ L 231, 30/7/1998, p. 9. 197 Supra n. 195, at para. 78. 198 Ibid., at para. 116. 199 Ibid., at para. 76. 200 Ibid., at paras 77 and 79.

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Though to a less clamorous reception, in a series of rulings on the validity of Directive 2001/37/EC on the approximation of laws, regulations and administrative provisions of the Member States concerning the manufacture, presentation and sale of tobacco products,201 the Court later contemplated the tantalising prospect of internal market measures mainly pursuing public health protection objectives. Commenting on the Council and European Parliament’s choice of legal basis, the Court stressed that ‘where the conditions for recourse to Article 95 as a legal basis are fullled, the Community legislature cannot be prevented from relying on that legal basis on the ground that public health protection is a decisive factor in the choices to be made’.202 In reaching this conclusion, the Court built upon the public health integration clause, which provides for a high level of protection of human health in the denition and implementation of all Community policies, and Article 95(3) EC, which expressly calls for a high level of human health protection to be ensured when adopting harmonising measures.203 At no point did the Court seek to determine whether the public health protection goal was predominant or ancillary to the internal market objective. Instead, it openly afrmed that public health considerations were the decisive factor for the enactment of legislation, at the same time noting that, if there are obstacles to trade, or it is likely that such obstacles will in future emerge,204 Article 95 EC authorises the Community to intervene by adopting appropriate legislation.205 Arguably, one explanation of the Court’s different approaches to the implications of the environmental and public health integration clauses for the

201 Directive 2001/37/EC of the European Parliament and of the Council of 5 June 2001 on the approximation of laws, regulations and administrative provisions of the Member States concerning the manufacture, presentation and sale of tobacco products—Commission statement, OJ L 194, 18/7/2001, p. 26. 202 See Case C-491/01, British American Tobacco (Investments) and Imperial Tobacco, [2002] ECR I-11453, at para. 62. See also Cases C-434/02, Arnold André, [2004] ECR I-11825, at paras 32–33, C-210/03, Swedish Match, [2004] ECR I-11893, at paras 31–32, and C-380/03, Germany v Parliament and Council, [2006] ECR I-11573, at paras 39 and 92. 203 Note that in British American Tobacco (Investments) and Imperial Tobacco (cited above), the Court added than even where a provision of Community law, adopted on the basis of Article 95 EC, guarantees the removal of all obstacles to trade in the area it harmonises, it is always possible for the Community legislature to adapt that provision in step with other considerations. With regard, in particular, to the protection of public health, the Court noted that Article 95(3) EC explicitly requires the Community to guarantee a high level of protection, taking account of any new development based on scientic facts (paras. 78–79). 204 For the Court, trade obstacles are likely to emerge, if the Member States have taken or are about to take divergent measures, which ensure different levels of protection and thereby prevent a product or a category of products from moving freely within the Community. 205 Case C-491/01, supra n. 202, at paras 67–73. See also Cases C-434/02 and C-210/03, supra n. 202, at paras 34 and 33 respectively, and Joined Cases C-154/04 and C-155/04, Alliance for Natural Health and others, [2005] ECR I-6451, at paras 30 and 32.

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application of the centre of gravity doctrine is as follows. The Community legislator is empowered to enact harmonising legislation when exercising its powers in the environmental eld.206 This privilege is not generally enjoyed with respect to measures under Article 152 EC.207 The limit of incorporation of environmental protection objectives in EC legislation results from bestowal of a specic environmental competence on the Community institutions, itself allowing for harmonisation. If a measure is primarily designed to achieve environmental policy objectives, it must fall within the environmental provisions of the EC Treaty, which are equipped with sufcient tools to ensure effective implementation. Conversely, in the eld of public health, where the Community may only supplement Member States’ health policies, a higher level of caution is exercised in the context of other EC policies. Of course, public health considerations may constitute the primary goal of harmonising legislation only if the Community legislature succeeds in establishing a credible link between the measure enacted and the Treaty article serving as its legal basis. Affording greater scope to public health objectives in Community action overall must not circumvent the prohibition of harmonisation in Article 152 EC. Concerning internal market legislation, in particular, the Community legislature must be able to discharge the case that harmonisation is necessary for the smooth functioning of the internal market. In fact, in the Tobacco cases, the Court was willing to accept Article 95 EC as the legal basis for the adoption of Directive 2001/37/EC only when a contribution to elimination of obstacles to free movement, or removal of distortions of competition, was also secured.208 Drawing a parallel with the public health integration clause, does Article 151(4) EC, which also forms part of a Community policy deprived of harmonisation powers, allow for adoption of harmonising measures under Treaty articles other than Article 151 EC, for which cultural considerations and, in

206

See Arts 174 and 175 EC. Article 152 EC retains in paragraph 4 the pre-Amsterdam power to adopt ‘incentive measures designed to protect and improve human health, excluding any harmonisation of the laws and regulations of the Member States’. However, it also provides the Community with powers to adopt: a) measures setting high standards of quality and safety of organs and substances of human origin, blood and blood derivatives; and b) by way of derogation of Article 37 EC, measures in the veterinary and phytosanitary elds which have as their direct objective the protection of public health. These may take the form of harmonising legislation. On EC competence in the eld of public health, see Hervey, ‘Community and National Competence in Health After Tobacco Advertising’, 38 Common Market Law Review (2001) 1421. 208 Supra n. 202. For the Court, a mere nding of disparities between national rules is not sufcient to justify use of Article 95 EC. There must be objective differences between the laws, regulations or administrative provisions of the Member States, which are such as to obstruct the fundamental freedoms and, therefore, have a direct effect on the functioning of the internal market. 207

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particular, cultural diversity concerns are a decisive factor? In other words, can the Community legislature enact a measure primarily intended to attain cultural policy objectives, under the internal market legal bases of Articles 40, 47(2), 55, 57(2), 66, 93, 94 and 95 EC? In Parliament v Council, the Court opted for the centre of gravity thesis, asserting its application to be in line with Article 151(4) EC.209 At rst sight, under the Court’s ruling, the cross-sectional cultural clause allows only for adoption of measures under other EC Treaty headings, whose cultural objectives are incidental or subsidiary to a primary non-cultural objective. Logically, this implies that when cultural considerations become central to the adoption of a measure, recourse must be made to Article 151 EC and, in particular, to Article 151(5) EC. But if the Tobacco Advertising judgment is read as clarifying that the centre of gravity doctrine applies only when the competing legal bases are compatible, allowing for the same integration technique (whether harmonisation or otherwise),210 the picture changes. The Court’s application of the choice-oflegal-basis rule in Parliament v Council could be explained by the fact that the dispute at hand concerned Articles 151 and 157 EC, which both preclude harmonisation. There is ample evidence that, had the Court been called to pronounce in a legal basis dispute pertaining to Article 151 EC and another EC Treaty provision allowing for harmonisation, it would have taken another approach. From this perspective, the following conclusion may be reached: not only does Article 151(4) EC enable the introduction of measures incidentally pursuing cultural objectives; it also permits the adoption of harmonising legislation primarily intended to attain cultural policy goals. The limit on the incorporation of cultural considerations in Community harmonising legislation depends on the ability of the European institutions to establish an acceptable link between the measure concerned and the Treaty article serving as its legal foundation. With specic regard to internal market legal bases, it must be demonstrated that the measure enacted passes a ‘minimum requirements’ test, namely that it will help remove disparities between the laws and regulations of the Member States that obstruct, or are likely to obstruct, the establishment and proper functioning of the common market. In no case must Article 151(4) EC be used to circumvent the strict procedural arrangements of Article 151(5) EC.

209 210

Supra n. 139, at paras 41–42. Supra n. 195.

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Hierarchy of public policy objectives and article 151(4) EC In light of the foregoing discussion, it may be queried whether Article 151(4) EC can be invoked to constrain measures considered to be lacking in cultural sensitivity. As far as Articles 6 and 152(1) EC are concerned, it is plain that any Community legislation causing environmental degradation or damage to health breaches a clear Treaty obligation, subject to annulment by the Court in accordance with Article 230 EC.211 This is true even though a breach may in practice be difcult to prove, given the discretional powers left to the European institutions in this respect. Indeed, it is settled-case law that, where a Community institution is called upon to make complex assessments, it enjoys a wide margin of discretion. Though subject to judicial review by the ECJ, the latter’s exercise, in this context, is restricted to verifying rst, that the measure in question is not vitiated by a manifest error or a misuse of powers, and secondly, that the competent authority did not clearly exceed the bounds of its discretion.212 This being so, the European Courts have been prepared to read into Articles 6 and 152(1) EC a substantial mainstreaming obligation for the Community institutions to prioritise objectives pertaining to the protection of the environment and health. Prior to insertion of the public health integration provision in the EC Treaty, the Court ruled that the primacy of public health considerations, in particular over economic objectives, derived from environmental mainstreaming requirements already embedded in Community law. In proceedings regarding a Commission decision to ban exports of bovine animals, meat and related products from UK territory during the BSE crisis, as part of the CAP,213 the Court found that ‘where there is uncertainty as to the existence or extent of risks to human health, the institutions may take protective measures without having to wait until the reality and seriousness of those risks become fully apparent’.214 This approach was ‘borne out by Article 130r(1) [now Article 174(1)] of the EC Treaty, according to which Community policy on the environment is to pursue the objective inter alia of protecting

211 The Commission, in a communication, Partnership for integration: A strategy for integrating environment into EU policies, clearly stated that ‘[a]dherence to the integration requirements is in principle subject to judicial control by the European Court of Justice as it is the case with the subsidiarity principle’. See COM(1998) 333, at 3. 212 See Cases C-331/88, The Queen v Minister of Agriculture, Fisheries and Food and Secretary of State for Health, ex parte: Fedesa and others, supra n. 177, at para 8, C-405/92, Mondiet, supra n. 188, at para. 32, C-180/96, United Kingdom v Commission, [1998] ECR I-2265, at para. 60, and C-120/97, Upjohn, [1999] ECR I-223, at para. 34. 213 Commission Decision 96/239/EC of 27 March 1996 on emergency measures to protect against bovine spongiform encephalopathy, OJ L 78, 28/3/1996, p. 47. 214 Case C-180/96, UK v Commission, supra n. 212, at para. 99.

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human health’, in conjunction with ex-Article 130r(2) (now Article 174(2)) EC, which ‘provides that that policy is to aim at a high level of protection and is to be based in particular on the principles that preventive action should be taken and that environmental protection requirements must be integrated into the denition and implementation of other Community policies’.215 Reviewing the proportionality of the measure adopted, in relation to the objectives pursued, the Court noted the Community legislature’s discretionary powers, corresponding to political responsibilities conferred on it by Articles 34–37 (ex-Articles 40–43) EC.216 No breach had occurred, as the adverse economic effects were justied by the need to protect public health.217 The Court of First Instance (CFI) has drawn expressly on Article 152(1) EC, since its introduction, to conrm the pre-eminence of public health considerations over economic interests.218 The Court of Justice, in its turn, made specic reference to the public health policy-linking provision, in annulling Commission Decision 2001/577/EC.219 The Commission had failed to undertake the requisite safety inspections before lifting a ban on exports on bovine products originating in Portugal, earlier imposed as an emergency measure against BSE, and justied on grounds of the protection of human health.220 In a recent dispute over a set of Commission decisions withdrawing national authorisations for the commercialisation of certain medical products, the CFI has gone so far as to proclaim that ‘the Community institutions are responsible, in all their spheres of activity, for the protection of the environment, public health and consumer safety’, and that choices made in the exercise of discretionary powers must ‘comply with the principle that the

215

Ibid., at para. 100. Ibid., at para. 97. 217 See also Cases C-180/96R, UK v Commission, [1996] ECR I-3903, C-183/95, Afsh, [1997] ECR I-4315, C-157/96, The Queen v Ministry of Agriculture, Fisheries and Food and Commissioners of Customs & Excise, [1998] ECR I-2211, and T-70/99, Alpharma v Council, [2002] ECR II-3495. In Afsh and Alpharma v Council, it was underlined that ‘the importance of the objective . . . of protection of human health may justify adverse consequences, and even substantial adverse consequences, for certain traders’ (paras 42 and 356 respectively). 218 Case T-155/99, Dieckmann & Hansen v Commission, [2001] ECR II-3143, at paras 49–50. 219 Commission Decision 2001/577/EC of 25 July 2001 setting the date on which dispatch from Portugal of bovine products under the Date-Based Export Scheme may commence by virtue of Article 22(2) of Decision 2001/376/EC, OJ L 203, 28/7/2001, p. 27. 220 Case C-393/01, France v Commission, [2003] ECR I-5405, at paras 41 and 60. According to the ECJ, the obligation of the European institutions to ensure a high level of human health protection does not necessarily require the highest level technically possible, in order to comply with Article 152(1) EC. See Case C-341/95, Bettatti v Safety Hi-Tech, [1998] ECR I-4355, at para. 49. 216

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protection of public health, safety and the environment is to take precedence over economic interests’.221 In spite of such dicta, it is plain that the cultural policy-linking clause does not bind the Community to prioritise cultural considerations. Nor, generally, does it prescribe a high level of cultural protection. It does not even oblige the Community to accommodate cultural concerns whenever they are raised. The Community institutions may opt for a low level of protection or completely ignore cultural issues at play. From this angle, Article 151(4) EC provides little basis for declaring legislative acts void. It functions more as a procedural rule, alternatively, as a policy guideline for the development of the Community’s activities, than as a substantive legal obligation for EC institutions to integrate cultural considerations into their actions. 2.2.3.2 EC policy-linking clauses and article 151(4) EC: tracing modes of implementation The EC policy-linking clauses, communicating a qualitative shift in its intended mode of operation, pose a challenge for the Community. Policy mainstreaming demands robust commitment from all Community institutions, a feeling of shared responsibility and, most importantly, a high level of institutional coordination, since new formats for the development of actions meeting various EC objectives in an integrated way, and without creating unnecessary administrative burdens, need to be established. Promoting synergies between various EC policies, adopting new structural organisational models, and developing implementation and monitoring methodologies are all crucial in this regard. Certainly, the real test of mainstreaming is whether policies that incorporate objectives linked to the interests protected by the EC cross-sectional clauses are delivered ‘on the ground’ (either by the Member States or the Community itself, acting as a central executive authority). Whereas for reasons of length and consistency as to the core subject of this study, implementation analysis will be undertaken in the following chapters only in relation to culture, institutional and procedural arrangements are 221 Joined Cases T-74/00, T-76/00, T-83/00 to T-85/00, T-132/00, T-137/00 and T-141/00, Artegodan and others v Commission, [2002] ECR II-4945, at paras 184 and 186. The Court built upon the precautionary principle, mentioned in the Treaty in connection with the Community’s environmental policy (Article 174(2) EC), but considered an autonomous, general principle of Community law, stemming from Articles 3(p), 6, 152(1), 153 and 174(2) EC (paras 183–184). It noted that the precautionary principle requires the competent Community authorities ‘to take appropriate measures to prevent specic potential risks to public health, safety and the environment, by giving precedence to the requirements related to those interests over economic interests’ (para. 84). See also, in this respect, Cases T-13/99, Pzer Animal Health v Council, [2002] ECR II-3305, at para. 114, and T-392/02, Solvay Pharmaceuticals v Council, [2003] ECR II-4555, at para. 121.

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the rst ‘port of call’ in creating effective policy ties. As will be shown, less attention has been devoted to these, in the case of Article 151(4) EC, than for other EC mainstreaming provisions. EC institutional and procedural arrangements for policy mainstreaming To comply with mainstreaming requirements, Community institutions had rstly to review their organisational structures. The burden of institutional innovation has been borne principally by the Commission. Its services have been profoundly restructured, via the creation of inter-service consultation groups and networks of specialised contacts, to provide a forum for information exchange, discussion of cross-cutting issues, and to coordinate unit positions. Commitment to policy linkage has been expressed at the highest level in relation to gender equality. In 1995, a Group of Commissioners on Equal Opportunities was set up to give political impetus to the gender mainstreaming and equal opportunities action of the Commission. The following year, an inter-service group on gender equality was established, with the aim of coordinating the activities of the various Commission departments. This institutional gender equality apparatus was complemented by numerous expert groups and networks, operating within the Commission’s Directorate Generals (DGs); an advisory committee on equal opportunities for women and men, providing expertise and information on Member States’ gender-related policies; and the high-level group on gender mainstreaming, which identies priorities for improved integration of gender equality considerations at national level. The formation of a Group of Commissioners on Fundamental Rights, NonDiscrimination and Equal Opportunities in 2005 seeks to invigorate delivery of gender-sensitive policies. Substantial effort was also devoted to organisational adaptation intended to strengthen integration of environmental, health and consumer protection concerns in overall Community action. In 1990, the European Environmental Agency was created, with a view to providing the Community with objective, reliable environmental information.222 In 1994, an environmental network was established, whose membership originally comprised the Directors General from key DGs, but was widened in 1997, to involve all Commission services. Inter-service groups tackling health, environmental and consumer protection issues were given the go-ahead, in particular, amongst DGs defending

222

Council Regulation (EEC) No. 1210/90 of 7 May 1990 on the establishment of the European Environment Agency and the European Environment Information and Observation Network, OJ L 120, 11/5/1990, p. 1. See, in this respect, N. Hawke, Environmental Policy: Implementation and Enforcement (2002), at 33.

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potentially competing interests,223 and several scientic committees were set up to satisfy the Commission’s requirements for independent scientic advice.224 Various consultative groups, involving representatives of consumer organisations, were founded to promote consumer participation in the work of standard-setting bodies in the elds of transport, energy, telecommunications and sheries. In 1999, health and consumer protection matters were concentrated within a single Commission DG Health and Consumer Protection. The European Food Safety Authority was created in 2002, and a European Centre for Disease and Control in 2004.225 Integration of health and consumer policy considerations into other EC policy sectors was strongly favoured by DG Health and Consumer Protection, which, as a fresh institutional actor, was eager to strengthen its position within the Commission. Many Commission services were positive in their reception of increased cross-DG cooperation towards environmental mainstreaming, contrasting earlier responses to DG Environment, perceived as geared to imposing strict sectoral environmental standards in a rather aggressive fashion.226 Establishing cooperation channels between the Commission and a broad range of public and private environmental, health and consumer protection advocates proved rather easy. The institutionalisation and consolidation of existing practice was all that was required, as the Commission already developed its policy proposals in close collaboration with consultative bodies, to gather feedback and assess the feasibility of proposals. Procedural commitments were entered into, so as to prevent a ‘patchwork’ approach to policy integration. The Commission called for a systematic integration ab initio of the interests, preserved by the EC cross-sectional clauses,

223 To give an example, a unit dealing with industrial and environmental matters was set up in June 1993 to improve coordination between DG Environment and DG Enterprise. See A. Weale et al., Environmental Governance in Europe: An Ever Closer Ecological Union? (2000), at 117–123. 224 See European Commission, Decision 97/404/EC of 10 June 1997 setting up a Scientic Steering Committee, OJ L 169, 27/6/1997, p. 85, Decision 97/579/EC of 23 July 1997 setting up Scientic Committees in the eld of consumer health and food safety, OJ L 237, 28/8/1997, p. 18, and Decision 2004/210/EC of 3 March 2004 setting up Scientic Committees in the eld of consumer safety, public health and the environment, OJ L 66, 4/3/2004, p. 45. 225 See Regulation (EC) No. 178/2002 of the European Parliament and of the Council of 28 January 2002 laying down the general principles and requirements of food law, establishing the European Food Safety Authority and laying down procedures in matters of food safety, OJ L 31, 1/2/2002, p. 1, and Regulation (EC) No. 851/2004 of the European Parliament and of the Council of 21 April 2004 establishing a European Centre for disease prevention and control, OJ L 142, 30/4/2004, p. 1. 226 See Favoino, Knill and Lenschow, ‘New Structures for Environmental Governance in the European Commission: The Institutional Limits of Governance Change’, in C. Knill and A. Lenschow (eds), Implementing EU Environmental Policy: New Directions and Old Problems (2000) 39, at 43.

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into the formulation of all relevant EC policies and actions. Detecting links between the various EC policies, exploiting synergies, elaborating indicators and selecting topics in need of in-depth impact assessment, were endorsed as the best route forward.227 The eld of environmental mainstreaming provides an illustration. Following insertion of Article 6 EC in the Treaty, the Commission, in response to the calls of the 1997 Luxembourg European Council,228 published a communication, Partnership for Integration, announcing its intention to review the environmental dimension of all EC policies.229 Henceforth, according to the Commission’s plans, all key policy initiatives should integrate environmental concerns on the basis of a detailed environmental assessment mechanism.230 Each DG should, furthermore, draw up its own policy statement on the environment, showing in what areas, and by what means, it would integrate environmental objectives into policy-making.231 The Council was called on to single out priority actions and develop monitoring tools, and the European

227 See the various Commission reports on the integration of health protection requirements in Community policies, COM(1995) 196, COM(1996) 407, COM(1998) 34 and COM(1999) 587, the Communications, Community policies in support of employment, COM(1999) 167 and COM(1998) 354, and the Communication, Incorporating equal opportunities for women and men into all Community policies and activities, COM(1996) 67. See also Commission Communication, Consumer Policy Action Plan (1999–2001), COM(1998) 696, and Commission Report on the ‘Action Plan for Consumer Policy 1999–2001’ and on the ‘General Framework for Community activities in favour of consumers 1999–2003’, COM(2001) 486. 228 The Luxembourg European Council stressed ‘its conviction that environmental protection requirements must be integrated into the Community’s policies and activities, in particular with a view to promoting sustainable development’, and invited the Commission to ‘submit a strategy to it, before its June 1998 meeting, for achieving that goal’. See para. 56 of the Presidency Conclusions to the Luxembourg European Council, 12–13 December 1997, available at: http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/ec/ 032a0008.htm. 229 Supra n. 211. 230 The integration strategy proposed by the Commission replaced the previous ‘green star’ scheme, operational since 1993, according to which each Commission DG, when preparing its contribution to the annual Commission work programme, should attribute a green star at its proposals with signicant environmental implications, indicating that a more detailed environmental evaluation was required. 231 See, in particular, Commission Communications and Staff Working Papers: Community Action Plan to integrate environmental protection requirements into the Common Fisheries Policy, COM(2002) 186, Community Guidelines on State aid for environmental protection, OJ C 37, 3/2/2001, p. 3, Integrating environment and sustainable development into economic and development policy, COM(2000) 264, Air transport and the environment, COM(1999) 640, Fisheries management and nature conservation in the marine environment, COM(1999) 363, Single market and the environment, COM(1999) 263, Directions towards sustainable agriculture, COM(1999) 22, Strengthening environmental integration within Community energy policy, COM(1998) 571, Environment and employment, COM(1997) 592, Environmental integration in the external policies of the General Affairs Council, SEC(2000) 271, and Integrating environment and sustainable development into energy and transport policies, SEC(2001) 502.

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Council to undertake periodic reviews of environmental integration into key policies. With the launch of the Cardiff process by the European Council, which requested the development and implementation of sectoral environmental strategies by several Council formations, environmental mainstreaming became rmly anchored in the European agenda.232 Resolve, in recent years, further to reect upon the Community’s general objectives and goals has prompted renewed interest in policy mainstreaming. In sight of the Lisbon goal of transforming the Union into ‘the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion’,233 calls to achieve greater coherence between Community policies, programmes and instruments have become more pronounced. The adoption, in 2001, by the Gothenburg European Council of an EU Sustainable Development Strategy, designed to raise economic, social and environmental Community standards, reinforced the role of policy-linking initiatives. Gender equality, environmental protection, industrial competitiveness, and employment growth are the ‘big winners’ of this re-focusing of EC objectives.234 The revamping of the Lisbon strategy across the themes of growth and jobs seeks to drive the process forward.235 Article 151(4) EC: effective reforms for cultural mainstreaming? In 1992, the Ministers of Culture meeting within the Council already concluded the need for standard practice taking account of cultural aspects at the earliest possible stage of preparation of any new action or policy.236 Two years later, the European Parliament invited the Commission to draw up 232

The Cardiff European Council asked the Council congurations ‘Transport’, ‘Energy’, and ‘Agriculture’ to initiate the process. At the Vienna summit (December 1998), the European Council required three other Council formations (‘Development’, ‘Internal Market’, and ‘Industry’) to dene strategies of their own. The European Council in Köln ( June 1999) invited the ‘General Affairs’ Council, the ‘ECOFIN’ Council and the ‘Fisheries’ Council to do likewise. For detailed analysis, see Grimeaud, ‘The Integration of Environmental Concerns into EC Policies: A Genuine Policy Development?’, 9 European Environmental Law Review (2000) 207, and Klatte, ‘The Principle of Integration after 25 Years of Community Environmental Policy’, 9 Revue des Affaires Européennes (1999) 370. 233 See Presidency Conclusions to the Lisbon European Council, 23–24 March 2000, at para. 5, available at: http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/ en/ec/00100–r1.en0.htm. 234 Public health and consumer protection horizontal policy activities also appear considerably strengthened, given strong political will to raise Community living standards. 235 See European Commission, Communication to the Spring European Council, Working together for growth and jobs: A new start for the Lisbon Strategy, COM(2005) 24, and Communication to the Council and the European Parliament, Common actions for growth and employment: The Community Lisbon programme, COM(2005) 330. 236 Conclusions of the Ministers of Culture meeting within the Council of 12 November 1992 on guidelines for Community cultural action, OJ C 336, 19/12/1992, p. 1, at paras 7–8.

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studies on the cultural dimension of EC policies and develop a plan of action, together with the Committee on Culture, Youth, Education and the Media, in order to examine ‘their cultural compatibility’.237 In response, in 1996, the Commission submitted its rst report on the consideration of cultural aspects in European Community action.238 This, focused mainly on measures adopted prior to inclusion of Article 151(4) in the EC Treaty, unsurprisingly revealed that cultural mainstreaming followed an ad hoc approach. With a view to improving implementation of Article 151(4) EC, both the Council and European Parliament stressed the need for establishment of effective synergies between the various elds of Community action.239 Introduction of coherent procedures by which the cultural impact of EC activities could be regularly evaluated and reviewed at all appropriate levels was requested. Insights were to be drawn from experiences gained in the eld of environmental and public health policy integration.240 The failure of cultural organisations to build alliances with the various units of the Commission, which would have encouraged modes of governance that facilitate joint policy formulation, alongside less than robust institutional commitment to horizontal policy coordination, resulted in weak follow-up to the 1996 preliminary assessment. Cultural mainstreaming did not gain broad acceptance in post-Maastricht decision-making, and organisational and procedural arrangements better accommodating cultural concerns in Community activities were not instituted. Internal structural reforms to induce Commission services to reect on their measures’ cultural impact and to facilitate cooperation with the cultural unit faced much resistance, being perceived as unnecessary bureaucratic burdens. The Commission’s sectoral organisational model, with entrenched policy habits and persisting regulatory traditions impeded DG EAC from making its voice heard. Despite minimal efforts towards constructive inter-service dialogue, the cultural Directorate General, equipped with limited nancial and human resources, failed to establish effective forms of coordination with other Commission DGs. The inability of private and public cultural actors to join forces to exert a stronger inuence on decision-making at the supranational level was also decisive. In contrast with the network-style policy development model followed

237 European Parliament, Resolution of 20 January 1994 on Community policy in the eld of culture, OJ C 44, 14/2/1994, p. 184, at paras 6 and 8. 238 European Commission, supra n. 14. 239 See Council Resolution of 20 January 1997 on the integration of cultural aspects into Community actions, OJ C 36, 5/2/1997, p. 4, and European Parliament, supra n. 130. 240 Council Resolution on the integration of cultural aspects into Community actions, cited above.

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for gender equality and environmental protection, the cultural discourse taking place within the European institutions proved highly fragmented alongside cultural branches and disciplines. This undermined identication of clear targets and objectives, and resulted in cultural proponents lacking a coherent, harmonious stance. The contribution of the Council and the European Parliament to implementation of Article 151(4) EC was also disappointing. Notwithstanding frequent verbal support for cultural mainstreaming, integration of cultural considerations in EC action engendered controversy where immediate tradeoffs were detected. Granted, the Parliament sought to advocate a higher level of cultural protection, and the same could be fairly said of the Council when meeting in its education, youth and culture formation. Yet political manoeuvring within other Council congurations buried debate, and sectoral policy interests were placed to the fore. Doubtless, EC cultural policy proper did not adequately encourage complementarity with other Community policies and actions, or, at least, did not persuasively promote it. Some preliminary efforts were made to create cooperation platforms, and to highlight issues of common interest between the rst generation of cultural programmes and other Community measures, in particular in relation to job creation, improvement of professional skills, social inclusion, the advent of the information society, regional development and the stimulation of research activities.241 However, it was Culture 2000, the rst single cultural cooperation programme, which critically attempted to provide support for cultural mainstreaming. Its main goal, the creation of a ‘common cultural area’, was closely associated with the objective of furthering ‘an effective linkage with measures implemented under other Community policies which have cultural implications’ by ‘taking into account the role of culture in socioeconomic development’.242 Despite this ambition, the integration issue received short shrift. Efcient implementation was impeded by the great variety of the programme’s goals, and the limited allocation of resources to horizontal actions, conned to a mere 10% of the programme’s budget. The Community’s re-focusing on sustainable modes of governance also diverted attention from cultural mainstreaming. Consensus grew around the

241

See supra ns 26 and 49. See Art. 1, supra n. 17. Two specic studies, one on new strategies to exploit the employment potential of culture, another concerning the economy of culture were launched. See MKW Wirtschaftsforschung GmbH, Exploitation and development of the job potential in the cultural sector in the age of digitalisation (2001), available at: http://ec.europa.eu/culture/ eac/sources_info/studies/exploit_emploi_en.html, and Kea European Affairs, The Economy of culture in Europe (2006), available at: http://ec.europa.eu/culture/eac/sources_info/ studies/economy_en.html. 242

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idea that due weight ought to be afforded to economic, social and environmental matters in the context of all Community policies and actions. But culture was ostensibly left outside this process, and synergies remained unexploited. The contended absence of strong political commitment to cultural mainstreaming was corroborated by the lack of procedural mechanisms enabling the European institutions to delve into the cultural consequences of their action. Cultural impact assessment methods and indicators were not developed to measure the cultural effects of policy proposals;243 neither was ex-post evaluation of the legislation enacted carried out. Against this background, the Council, in its resolution on the role of culture in the development of the European Union, invited the Member States and the Commission to cooperate to ‘update the assessment of the implementation of Article 151(4)’.244 Five months later, it adopted a new work plan on European cultural cooperation with an indicative, non-exhaustive list of priority cultural topics. In this it called for horizontal activities, underlining the economic and social dimension of culture.245 During the Greek Presidency, in spring 2003, the Council went one step further, requiring the Commission and the Member States to examine methods for developing the exchange of good practices in relation to the economic and social dimension of culture.246 The Parliament also sought to draw attention to the pertinence of the cultural industries for the success of the Lisbon process.247 Following extensive consultation with cultural stakeholders from all over Europe, the Commission, in its 2007 cultural agenda, suggested incorporating culture in the framework of the Lisbon Strategy for growth and jobs.248 Underlining its signicance for Europe’s economy and competitiveness, the 243

As part of the implementation of the EU Sustainable Development Strategy, a unied system for ex-ante impact assessment of all major policy proposals (that is, those presented in the annual policy strategy or later in the work programme of the Commission) was introduced in 2002, in the context of the Better Regulation Action Plan (see European Commission, Communication on Impact Assessment, COM(2002) 276, and Communication, Action Plan ‘Simplifying and improving the regulatory environment’, COM(2002) 278). Devised to permit sound analysis of proposed measures’ economic, social and environmental effects, this new sophisticated tool integrates all previous sector-type impact assessments on business competitiveness, environmental and health protection, gender equality and employment, into a single global instrument. The fact that it lacks a cultural dimension clearly illustrates the limited signicance enjoyed by Article 151(4) EC. 244 Council Resolution of 21 January 2002 on the role of culture in the development of the European Union, OJ C 32, 5/2/2002, p. 2. 245 See supra n. 79. 246 Council Resolution of 26 May 2003 on the horizontal aspects of culture: Increasing synergies with other sectors and Community actions and exchanging good practices in relation to the social and economic dimensions of culture, OJ C 136, 11/6/2003, p. 1. 247 European Parliament, Resolution of 4 September 2003 on cultural industries, OJ C 76E, 25/3/2004, p. 459, at point AM. 248 Supra n. 118, at 9–10.

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Commission envisaged stronger synergies between culture and education, enhancement of cultural capacity building and development of creative partnerships between the cultural sector and other sectors of the economy, so as to bolster cultural investments’ social and economic impact. Furthering cultural exchanges with third countries, and integrating a cultural dimension in all external EU policies and programmes was also proposed. Next to new participatory forms of policy-making, including the OMC, to better serve mainstreaming, the Commission promised to strengthen inter-service coordination and deepen examination of the interface between cultural diversity and other Community policies.249 An inventory of existing, direct and indirect, Community cultural action was prepared as a rst step in analysis.250 Arguably, the renewed emphasis on the economic and social facet of culture may facilitate integration of cultural considerations in the design and conduct of Community policies, making cultural issues more amenable to institutional review. Accumulation of EC mainstreaming requirements may, however, hamper such a process. Lurking behind the numerous policy-linking clauses of the EC Treaty is the danger of a ‘mainstreaming overload’, resulting in incapacity or unwillingness of the Community to take all crosssectional provisions equally seriously. Such a scenario has not materialised with regard to Article 151(4) EC. While there are no grounds to believe that its poor implementation is due to the concentration of EC attention on other policy areas that qualify for mainstreaming, any new endeavour in cultural policy integration may stumble against the prioritisation of other policy elds. The soft wording of Article 151(4) EC cannot compete with the legal weight and value of the environmental and gender policy-linking clauses, the strong language of the public health integration provision and the political appeal of policy integration for employment and industrial objectives. Of course, energies for mainstreaming may vary from sector to sector, depending on nancial resources available, personalities involved and opportunities to render compatible or balance potentially competing objectives, especially since a great majority of the elds of Community action possess a cultural dimension or produce effects in the cultural sphere. The next section identies policy areas where synergies may be further exploited, at the same time highlighting instances where conict with EC cultural policy objectives may arise.

249

Ibid., at 13. Commission Staff Working Document, Inventory of Community actions in the eld of culture, Accompanying document to the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee of the Regions, Communication on a European agenda for culture in a globalising world, SEC(2007) 570. 250

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Policy Linkages with Culture

Policies in many areas of Community competence are closely interrelated. Cultural considerations in the past played a decisive role in Community decision-making, and continue to do so. This demonstrates that EC cultural policy proper is actually a ‘side-show’, with most Community cultural action deriving indirectly from other EC policies.251 Integration of cultural concerns in EC judicial and regulatory practice based on the internal market and competition rules of the EC Treaty will be discussed in more detail in later chapters in order to inquire into the level of cultural mainstreaming achieved and the main difculties encountered in the process. For the present, this section explores links established between culture and other EC policy sectors. Recent initiatives in the elds of regional development, agriculture, environment, education and vocational training, research and external relations serve as case-studies. The evidence provided depicts Article 151(4) EC’s potential for future policy developments. 2.2.4.1

Regional development and culture

To strengthen economic and social cohesion, the Community, pursuant to Article 158 EC, aims to reduce ‘disparities between the levels of development of the various regions and the backwardness of the least favoured regions or islands, including rural areas’. Article 159 EC provides for the support of such action by the Structural Funds, the European Investment Bank and other existing nancial instruments. Heralded as the primary tool to ensure the Community’s harmonious development, the Structural Funds provide most nance connected with culture.252 From 2000 to 2006, the Structural Funds consisted of the European Regional Development Fund (ERDF), the European Social Fund (ESF), the European Agricultural Guidance and Guarantee Fund (EAGGF) and the Financial Instrument for Fisheries Guidance (FIFG).253 Reformed in 1999,

251 Sandell, ‘Cultural Issues, Debate, and Programmes’, in P. Barbour (ed.), The European Union Handbook (2002) 256, at 260. 252 European Commission, Communication to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions, Cohesion policy and culture, COM(1996) 512, at 12. 253 For the period 2000–2006, the ERDF contributed to assisting regions whose development was lagging and to promoting economic and social conversion in areas experiencing structural difculties. The ESF provided support under the European employment strategy to boost employment growth in the Community. The EAGGF sought to improve the efciency of structures for producing, processing and marketing agricultural and forest products. The FIFG targeted restructuring in the sheries sector. See Council Regulation (EC) No. 1260/99 laying down general provisions on the Structural Funds, OJ L 161, 26/6/1999, p. 1, Regulation (EC) No. 1783/1999 of the European Parliament and of the Council of 12 July 1999

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with a view to increased effectiveness and simplied operation, they sustained attainment of three priority goals: promoting the development and structural adjustment of regions whose development was lagging behind (objective 1); encouraging economic and social conversion of areas facing structural difculties (objective 2); and modernisation of policies and systems of education, training and employment (objective 3). Multiplying platforms for the launch of cultural initiatives, the programmes and projects nanced under objective 1 created fertile ground for cultural organisations and institutions to thrive. This represented a signicant addition to more ‘classical’ measures linked to heritage preservation and management.254 In regions under objective 2 of the Structural Funds, resources were channelled to improvement of living conditions in urban and rural areas by raising the availability of cultural goods and services, and preserving landscape resources.255 Objective 3 efforts were typically oriented towards increasing employment levels through active labour market policies. Steps to enhance access to cultural training, education and counselling were frequent,256 likewise measures to facilitate entry and integration into the cultural market of less advantaged, socially excluded, groups.257

on the European Regional Development Fund, OJ L 213, 13/8/1999, p. 1, Regulation (EC) No. 1784/1999 of the European Parliament and of the Council of 12 July 1999 on the European Social Fund, OJ L 213, 13/8/1999, p. 5, Council Regulation (EC) No. 1257/1999 of 17 May 1999 on support for rural development from the European Agricultural Guidance and Guarantee Fund (EAGGF) and amending and repealing certain Regulations, OJ L 160, 26/6/1999, p. 80, and Council Regulation (EC) No. 1263/1999 of 21 June 1999 on the Financial Instrument for Fisheries Guidance, OJ L 161, 26/6/1999, p. 54. 254 Under the 2000–2006 Greek operational programme for culture, approved by the Commission with a total budget of €414.3 million, measures to improve museum infrastructure and heritage conservation were combined with measures designed to strengthen the supply of cultural goods and services via the development of viable cultural networks. In the same vein, under the Portuguese ‘Culture’ operational programme with total costs amounting to €327.467 million, rehabilitation of buildings classied as historical heritage sites and revitalisation of major museums were supplemented by measures intended to foster better access to cultural activity by improving cultural facilities and promoting dissemination of cultural information. See programme descriptions, available at: http://ec.europa.eu/comm/regional_policy/country/ prordn/details.cfm?gv_PAY=GR&gv_reg=ALL&gv_PGM=, at 2000GR161PO026&LAN=5 and 1999PT161PO006&LAN=5 respectively. 255 See, in this respect, the programmes nanced under the Structural Funds for the development of the Öarna region in Sweden, East Flanders in Belgium, Niedersachsen in Germany and the Alsace region in France available at: http://ec.europa.eu/comm/regional_policy/ country/prordn/index_en.cfm. 256 See, for example, the AFOS and HISTORICAL PHOTOGRAPHY RESTORATION AND CONSERVATION projects, available at: http://ec.europa.eu/employment_social/esf/ en/member/examples/ltuexamp/italy2.htm and http://ec.europa.eu/employment_social/esf/ en/member/ms/regions/che_it/toscana.htm. 257 See the GABRETA, ANCIENT CRAFTING BUILDS A FUTURE, CREATIVE JOBS FOR YOUNG PEOPLE IN MADEIRA and PROMOTING LOCAL COMMERCE AND CRAFTSMEN projects, available at: http://ec.europa.eu/employment_social/esf2000/docs/

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Funded projects and their cultural dimensions varied widely. Some projects focused on conservation and better management of tangible and intangible heritage assets, such as the unication of archaeological sites surrounding the Acropolis hill in Athens258 and the revival of fair traditions in Spain and Portugal.259 Attempts were also made to create spaces for cultural enjoyment: the historic Lasipalatsi building in Helsinki (Finland) was converted into a lm and media centre,260 and old buildings in Catania and Lecce (Italy) were transformed into local museums with modern access facilities.261 INTERREG III, URBAN II, EQUAL and LEADER+, the four Community initiatives launched under the Structural Funds, nanced cultural projects as well.262 INTERREG III, intended to stimulate trans-European cooperation, specically required the incorporation of cultural considerations in the implementation of its three strands: cross-border, transnational and interregional cooperation.263 Funds directed to cross-border cooperation nanced the establishment of economic and social centres through joint strategies for sustainable territorial development in neighbouring areas. Transnational cooperation sought to promote a higher degree of territorial integration across large groupings of European regions. As to interregional cooperation, the aim in view was to improve the effectiveness of regional development policies and instruments through large-scale information exchange and sharing of experience. Support centred on renovation of historic urban centres,

d-20–en.pdf, http://ec.europa.eu/employment_social/esf/en/ member/examples/youexamp/ german2.htm, http://ec.europa.eu/comm/employment_social/esf2000/docs/pt2_en. pdf and http://ec.europa.eu/comm/employment_social/esf2000/docs/fr5_en.pdf. 258 From total project costs amounting to €3.85 million, the EC contributed €2,887,500. See project description, available at: http://ec.europa.eu/comm/regional_policy/projects/stories/ details.cfm?pay=GR&the=9&sto=875&lan=5. 259 From total project costs amounting to €21,000, the EC contributed €15,750. See project description, available at: http://ec.europa.eu/comm/regional_policy/projects/stories/details. cfm?pay=PT&the=9&sto=555&lan=5. 260 From total project costs amounting to €9 million, the EC contributed €2.7 million. See project description, available at: http://ec.europa.eu/regional_policy/projects/stories/details. cfm?pay=FI&the=9&sto=874&lan=5. 261 From total project costs amounting to €34.579 million, the EC contributed €17,485,148. See project description, available at: http://ec.europa.eu/comm/regional_policy/projects/stories/details.cfm?pay=IT&the=9&sto=1198&lan=5. 262 See Arts 2(4) and 20 of Council Regulation (EC) No. 1260/1999 of 21 June 1999 laying down general provisions on the Structural Funds, supra n. 253. 263 European Commission, Communication to the Member States laying down guidelines for a Community initiative concerning trans-European cooperation intended to encourage harmonious and balanced development of the European territory (INTERREG III), OJ C 226, 10/9/2004, p. 2.

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heritage protection and management, encouragement of craft activities and tourism, and rehabilitation of cultural landscapes.264 URBAN II concerned economic and social regeneration in urban and rural areas.265 Regularly nanced under its priority objectives ‘mixed-use and environmentally friendly browneld redevelopment’, ‘entrepreneurship and employment pacts’ and ‘development of the potential of information society technologies’ were projects addressing ‘the protection and improvement of buildings and open spaces in rundown areas and the preservation of the historic and cultural heritage’; ‘the provision of cultural, leisure and sport amenities, when they contribute to creating sustainable jobs and social cohesion’; and the ‘preservation and dissemination of culture’.266 Approved programmes promoted upgrading of cultural infrastructure, restoration of cultural buildings and provision of increased training opportunities for heritage-related professions in Strasbourg (France), and the historic centre of the city of Genoa (Italy).267 EQUAL formed part of the EU strategy for more and better jobs.268 With ESF resources, it served as a test-bed for the development, dissemination and delivery of innovative employment policies, tackling discrimination and inequality affecting the labour market. Structured on the basis of the four pillars of the EU employment guidelines (employability, entrepreneurship, adaptability and equal opportunities), EQUAL operated on the basis of proposals presented by the Member States, and approved by the Commission 264 Ibid., points 11, 14 and 19. The Community contributed, for instance, to economic development of the border region between Italy and Greece, directing funding to the joint exploitation of natural and cultural resources See programme description, available at: http:// ec.europa.eu/regional_policy/country/prordn/details.cfm?gv_PAY=GR&gv_reg=ALL&gv_P GM=2001RG160PC016&LAN=5. The Structural Funds contributed €84.477 million out of total programme costs amounting to €157.9 million. 265 European Commission, Communication to the Member States laying down guidelines for a Community initiative concerning economic and social regeneration of cities and of neighbourhoods in crisis in order to promote sustainable urban development (URBAN II), OJ C 141, 19/5/2000, p. 8. 266 Ibid., Art. 12 and Annex I. 267 See programme descriptions, available at: http://ec.europa.eu/comm/regional_policy/ country/prordn/index_en.cfm?gv_pay=ALL&gv_reg=ALL&gv_obj=13&gv_the=ALL. The Structural Funds contributed €9.7 million for the Strasbourg programme with total project costs amounting to €20 million, and €16 million for the Genoa programme with a total budget of €29.5 million. 268 European Commission, Communication to the Member States establishing the guidelines for the Community Initiative EQUAL concerning transnational cooperation to promote new means of combating all forms of discrimination and inequalities in connection with the labour market, COM(2000) 853, and Communication to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions, establishing the guidelines for the second round of the Community Initiative EQUAL concerning transnational cooperation to promote new means of combating all forms of discrimination and inequalities in connection with the labour market, ‘Free movement of good ideas’, COM(2003) 840.

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in the form of Community initiative programmes. It was implemented by transnational cooperation partnerships. Under its employability strand, EQUAL sought to facilitate entry and return to the labour market, and to combat racism and xenophobia. A cultural dimension was embodied in nance for projects stimulating access to employment in the cultural sector.269 Besides supporting the emergence and further development of cultural industries active at local level, EQUAL embraced a wider notion of culture and cultural diversity by directing funding to projects fostering employability of under-privileged groups, mainly through enhanced professional and linguistic skills. It nanced projects assisting immigrants and refugees to enter the Danish and German labour markets,270 and contributed to professional and social integration of Roma, Sinti and North African populations in Austria, France, Italy and the Czech Republic.271 The Monita project, whose objective was to encourage female artists belonging to ethnic minorities to pursue artistic careers in Finland, perhaps illustrates the ‘highwater mark’ of signicance achieved by cultural considerations.272 The entrepreneurship strand of EQUAL aspired to open up business opportunities through development of adequate tools for identication of new employment possibilities in urban and rural areas. Most effort was invested in diversifying local economy through cultural activities.273 Projects to ameliorate working conditions for artists also beneted from Community assistance.274 EQUAL’s adaptability theme targeted lifelong learning, inclusive work practices and economic structural adjustment for rms and employees. Various projects encouraging sustainable exploitation of heritage assets275 and the revalorisation of local know-how in trade sectors with traditional production

269 See the VAUCLUSE INN ART EN SCENE SOLIDAIRE, ARTISTS IN ACTION, STRATEGIE PER L’OCCUPAZIONE NELLE AREE DI MONTAGNA and the RADICI projects, available at: https://equal.cec.eu.int/equal/jsp/index.jsp?lang=en. 270 See the WORKING CULTURES, PROINTEGRATION and INTERCULTURAL CENTRE FOR COMPETENCE projects, available at: https://equal.cec.eu.int/equal/jsp/ index.jsp?lang=en. 271 See the NEWC_BASELINES, KNOWLEDGE OF ONE’S IDENTITY, MEDITERRANEAN STATIONS, VARIANTY and ROMA CULTURAL HOUSE projects, available at: https://equal.cec.eu.int/equal/jsp/index.jsp? lang=en. 272 See the MONITA project, available at: https://equal.cec.eu.int/equal/jsp/dpComplete. jsp?national=61&lang=en&cip=FI. 273 See the HERMYONE, SABER&ARTE, CRESCER PARA A IGUALDADE, HERCULIA and ARCHEORETE projects, available at: https://equal.cec.eu.int/equal/jsp/index. jsp?lang=en. 274 See the ART WORKS project, available at: https://equal.cec.eu.int/equal/jsp/dpComplete.jsp?cip=AT&national=3–01%2F100. 275 See the VAL SAMOGGIA and ELIOS projects, available at: https://equal.cec.eu.int/ equal/jsp/advancedSearch.jsp.

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techniques were supported under it.276 EQUAL’s equal opportunities facet, generally aiming at reconciling family and professional life, and reducing gender gaps in employment, allowed for the launch of projects improving women’s position, as regards leading roles in cultural-related business.277 Whereas the contribution of LEADER+ to promotion of cultural-related activities within the Community will be presented under paragraph 2.2.4.2 on agriculture, as it is closely linked to the second pillar of the CAP on rural development, cultural projects also received funding under the so-called ‘innovative actions’ of the ERDF and the ESF, adopted to create a laboratory for experimentation on regional development in Europe.278 One of the strategic themes for selection of ERDF innovative projects for 2000–2006 was ‘regional identity and sustainable development’.279 Activities reinvigorating cultural tourism and upgrading traditional products and services via intensive use of new technologies received funding.280 Innovative actions under the ESF sought to overcome structural handicaps by enhancing the role of local heritage in boosting employment.281 In July 2006, the Council and the European Parliament adopted a new package of regulations to support regional growth for the period 2007–2013, founded on three priority objectives: convergence; regional competitiveness and employment; and European territorial cooperation.282 With the aim of 276 See the SAVOIR FAIRE TRADITIONNELS ET METIERS D’AVENIR, RECURSOS HUMANOS Y PATRIMONIO, ROTAS DO LINHO DO OURO, ROTAS DE CERAMICA and EX-LIBRIS projects, available at: https://equal.cec.eu.int/equal/jsp/advancedSearch. jsp. 277 See the CULTUR-CIVITAS project, available at: https://equal.cec.eu.int/equal/jsp/ dpComplete.jsp?cip=ES&national=ES328. 278 See Art. 4 of Regulation (EC) No. 1783/1999 of the European Parliament and of the Council of 12 July 1999 on the European Regional Development Fund and Art. 6 of Regulation (EC) No. 1784/1999 of the European Parliament and of the Council of 12 July 1999 on the European Social Fund, supra n. 253. 279 See European Commission, Communication of 31 January 2001 to the Member States, ‘The regions and the new economy’, Guidelines for innovative actions under the ERDF in 2000–2006, available at: http://ec.europa.eu/comm/regional_policy/sources/docofc/ ofcial/guidelines/pdf/inovac_en.pdf-06, at 3 and 9–10. 280 European Commission, Report on regional innovation strategies under the European Regional Development Fund, Innovative Actions 2000–2002, available at: http://ec.europa. eu/comm/regional_policy/innovation/pdf/guide_ris_nal.pdf. 281 See the ORPHEAS and GEO projects, European Commission, Innovation through the European Social Fund, available at: http://ec.europa.eu/comm/employment_social/esf2000/ article_6_2000_2006_projects/brochure/en.pdf, at 69 and 89 respectively. 282 Council Regulation (EC) No. 1083/2006 of 11 July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No. 1260/1999, OJ L 210, 31/7/2006, p. 25, Regulation (EC) No. 1080/2006 of the European Parliament and of the Council of 5 July 2006 on the European Regional Development Fund and repealing Regulation (EC) No. 1783/1999, OJ L 210, 31/7/2006, p. 1, Regulation (EC) No. 1081/2006 of the European Parliament and of the Council of 5 July 2006 on the European Social Fund and repealing Regulation (EC) No.

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mobilising and reinforcing regional development capacity through economic diversication and job creation, the new instruments anticipate structural interventions and adjustments likely to improve participation in cultural activity. Under the convergence objective, for instance, the ERDF is favourably disposed to ‘investments in culture, including protection, promotion and preservation of cultural heritage; development of cultural infrastructure in support of socio-economic development, sustainable tourism and improved regional attractiveness; and aid to improve the supply of cultural services through new higher added-value services’.283 The foregoing discussion discloses that, in their design and implementation, the Structural Funds have acquired a signicant cultural component. Endowments to culture serve to alleviate some of the main deterrents to participation in cultural life in deprived urban or rural areas, improving their cultural image and attractiveness. By directing resources to projects with a cultural dimension, the Structural Funds do not solely restructure underperforming local economies; they also help develop the endogenous cultural potential of EC regions, transforming them into spaces where culture(s) may be more widely accessed. One may doubt the added value of Community intervention. Why should the Community nance cultural projects under its cohesion policy? Are measures adopted on the basis of Article 151(5) EC an insufcient supplement to Member States’ own efforts to preserve and enhance cultural assets? Is national level support for cultural action to improve economic performance in underdeveloped areas inadequate? Statistical data on Member States’ spending for cultural purposes in less developed regions is lacking. That said, the primary argument advanced for allocation of Community resources to cultural projects is the contribution such funding can make to improving employment prospects in relevant regions. Plainly, objectives pursued under the Structural Funds differ substantially from those to be attained under Article 151 EC. The focus on regional development

1784/1999, OJ L 210, 31/7/2006, p. 12, Council Regulation (EC) No. 1084/2006 of 11 July 2006 establishing a Cohesion Fund and repealing Regulation (EC) No. 1164/94, OJ L 210, 31/7/2006 p. 79, and Regulation (EC) No. 1082/2006 of the European Parliament and of the Council of 5 July 2006 on a European grouping of territorial cooperation (EGTC), OJ L 210, 31/7/2006, p. 19. To increase the added value of EC cohesion policy, aid for rural development and the sheries sector was integrated into the instruments of the common agricultural policy and the common sheries policy (Council Regulation (EC) No. 1698/2005 of 20 September 2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD), OJ L 277, 21/10/2005, p. 1, and Council Regulation (EC) No. 1198/2006 of 27 July 2006 on the European Fisheries Fund, OJ L 223, 15/8/2006, p. 1). 283 Regulation (EC) No. 1080/2006 of the European Parliament and of the Council of 5 July 2006 on the European Regional Development Fund and repealing Regulation (EC) No. 1783/1999, cited above, Art. 4(7).

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entails an instrumental use of culture. Financial assistance for conservation and management of cultural heritage is not intended simply to help preserve regional cultural features, but also to generate major spin-offs and exert a long-term impact on regional economic structures. Not being immediately quantiable, the indirect benets of exploitation of cultural resources for employment are often overlooked at national level, in particular as much cultural activity is dependent on public subsidy, at least during initial stages. Through the Structural Funds, the Community attempts to mobilise Member States by drawing attention to the signicant role culture can play in regenerating declining urban and depopulated rural areas. Culture is not understood as a cost to Member States to the defrayal of which the Community is contributing, but as an economic resource that national and regional authorities must be encouraged henceforth fully to incorporate in their regional development strategies.284 In recognition of the importance of culture for cohesion, the European Parliament invited the Commission to submit, by the end of 2003, a report reviewing the funding of cultural activities as part of subsidies granted for the period 1994–1999.285 Given the decentralised management of most nanced actions, Member States were asked to provide the Commission with relevant information. Difculties were encountered in collecting national data, due to the often transverse, multi-sectoral scope of projects, and the lack of a common denition of culture, which would have eased project identication. Notwithstanding, the report prepared by DG EAC concluded that culture constitutes a precious means for restoring a development balance between the regions of the Community, though ‘without . . . a specic place allotted to it’.286 Indeed, as against the direction of considerable resources to cultural activities, culture and cultural diversity still do not constitute clear-cut objectives of the EC cohesion policy. According to DG Regional Development (REGIO), lifting single sectoral policies, including culture, to the level of an objective of EC cohesion policy would signicantly undermine the basic conceptual approach followed thus far for cohesion. This is based on a fruitful competition

284 Actions taken may help secure public funding at national level; they may also encourage private investment. Opening a new museum, or restoring a cultural site, can easily be associated with policies promoting high-quality tourism, in turn leading to adoption of accompanying measures that target, for example, the improvement of transport facilities or hotel infrastructure. 285 European Parliament, Resolution of 5 September 2001 on cultural cooperation in the European Union, OJ C 72E, 21/3/2002, p. 142, at para. 9. 286 European Commission, Working Document (February 2004), Application of Article 151(4) of the EC Treaty: Use of the Structural Funds in the eld of culture during the period 1994–1999, available at: http://ec.europa.eu/comm/regional_policy/sources/docofc/working/doc/culture_en.pdf, at 10.

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between different policy sectors in Structural Funds programming, allowing the best policy mix to be identied for each region. Including culture amongst the goals of EC regional development policy, it is further argued, would also run counter to the basic characteristics of Structural Funds implementation. Based on partnership, this requires the rm implication of regional and local actors in the planning and implementation of development programmes. While it is widely agreed that cultural action may help raise development levels within the Community, DG REGIO’s view is that cultural issues must continue to be addressed in a exible manner allowing consideration of regional differences, circumstances and needs. 2.2.4.2

Agriculture and culture

The common agricultural policy denes one of the most long-standing elds of Community action. Introduced by the Treaty of Rome, as a response to post-war food shortages, the CAP is closely linked to the operation of the common market. As required under Article 33 EC, the CAP aims to increase productivity and ensure a fair standard of living amongst the agricultural community, at the same time stabilising markets and assuring food supplies that reach consumers at reasonable prices. Initially, the CAP was implemented via production subsidies in the interests of self-sufciency. Now, it emphasises direct payments to farmers as the best means of guaranteeing farm incomes, food safety, food quality and environmentally-friendly production. Since its reform in 1999,287 rural development initiatives accompany and complement the various market and income support activities. Within this second pillar of the CAP, the multifunctional role of farming in the richness and diversity of rural landscapes is certied with the encouragement of agricultural practices safeguarding the countryside’s cultural and natural heritage.288 The dominant land use, agriculture has enabled and nourished the development of civilisation for thousands of years. It has deeply inuenced landscape. The face of modern European countryside reveals its farming heritage in various ways, such as the pattern and size of elds, the extent and type of grasslands, the variety in settlement boundaries, the use of terracing, and the existence of historical landscape features, including archaeological remains. To preserve such characteristics, Community rural development action is not restricted to bolstering competitiveness in agricultural production. It also

287 See Ackrill, ‘CAP Reform 1999: A Crisis in the Making?’, 38 Journal of Common Market Studies (2000) 343. 288 See, in particular, Presidency Conclusions to the Berlin European Council, 24–25 March 1999, at para. 20, available at: http://www.consilium.europa.eu/ueDocs/cms_Data/docs/ pressData/en/ec/ACFB2.html.

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favours incorporation of a cultural dimension in design and implementation of development strategies, through promotion of conservation activities and alternative sources of income, based on viable exploitation of cultural assets. Founded on Articles 36 and 37 EC, Council Regulation (EC) 1257/1999 on support for rural development from the European Agricultural Guidance and Guarantee Fund (EAGGF) traced the way for measures to help rural areas enhance competitiveness in the agricultural sector and promote employment growth.289 The Community nancially assisted agri-environmental schemes, operated by farmers for a ve-year minimum period and specically designed to protect the environment by promoting inter alia ‘the upkeep of the landscape and historical features on agricultural land’.290 To facilitate rural areas’ adaptation to new economic challenges, EC support was also granted to measures relating to ‘the renovation and development of rural villages’, the ‘conservation of the rural heritage’, ‘tourist and craft activities’ and ‘protection of the environment in connection . . . to landscape conservation’.291 New Council Regulation (EC) 1698/2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD)292 strengthens the accommodation of cultural considerations in Community agricultural policy.293 The Regulation sets out a framework for the next generation of rural development strategies, from January 2007, comprising three thematic axes: competitiveness in agriculture and forestry; land-management and environmental protection; and quality of life and economic diversication in rural areas. The land management and environmental protection key priority allows for measures to preserve the natural and cultural resources of European farmed landscapes via appropriate farming systems. The third thematic eld seeks to develop local infrastructure and human capital, improving conditions for job creation in rural areas. To that purpose, it supports programmes encouraging the launch of tourism-related initiatives;294 that promote basic services for the economy and rural population, ‘including

289

See Council Regulation (EC) 1257/1999, supra n. 253. Ibid., Art. 22. 291 Ibid., Art. 33. 292 This new fund was created by Council Regulation (EC) No. 1290/2005 of 21 June 2005 on the nancing of the common agricultural policy (OJ L 209, 11/8/2005, p. 1) for Community expenditure on rural development. 293 See Council Regulation (EC) No. 1698/2005, supra n. 282. 294 According to Article 55 of Council Regulation (EC) No. 1698/2005, the nancial support provided may cover: (a) small-scale infrastructure, such as information centres and the signposting of tourist sites; (b) recreational infrastructure, such as that offering access to natural areas and small-capacity accommodation; and (c) the development and/or marketing of tourism services relating to rural tourism. 290

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cultural and leisure activities, concerning a village or a group of villages, and related small-scale infrastructure’;295 or which facilitate the undertaking of ‘studies and investments associated with the maintenance, restoration and upgrading of the cultural heritage such as the cultural features of villages and the rural landscape’.296 In light of the need revealed by LEADER, the Community initiative for rural development launched under the Structural Funds, to accord due attention to innovative governance models, locally-based, bottom-up development plans were emphasised.297 LEADER+, the successor of LEADER I and II,298 focused on integrated projects, conceived and conducted by partnerships operating at local level. It promoted sustainable rural development, and placed natural and cultural heritage preservation on equal footing with reinforcement of the local economic environment and improvement of the organisational abilities of rural communities.299 Notably, cultural considerations are also taken on board in the control of state aid to the agricultural sector. Neither the 1999 nor the 2005 Council Regulation restricted aid intensity with respect to state support measures for modernisation of agricultural holdings ‘undertaken predominantly in the public interest and related to the conservation of traditional landscapes shaped by agricultural and forestry activities’.300 In line with Council Regulation (EC) 1/2004 on the application of Articles 87 and 88 EC to small and mediumsized enterprises (SMEs) active in the production, processing and marketing of agricultural products,301 ‘aid for conservation of traditional landscapes and buildings’ is compatible with the common market within the meaning of

295

See Art. 56 of Council Regulation (EC) No. 1698/2005, supra n. 282. Ibid., Art. 57(b). 297 See Arts 2(4) and 20(1)(c) of Council Regulation (EC) No. 1260/1999 of 21 June 1999 laying down general provisions on the Structural Funds, supra n. 253. 298 See European Commission, Notice to Member States laying down guidelines for integral global grants for which the Member States are invited to submit proposals in the framework of a Community initiative for rural development (Leader I), OJ C 73, 19/3/1991, p. 33, and Notice to Member States laying down guidelines for global grants or integrated operational programmes for which Member States are invited to submit applications for assistance in the framework of a Community initiative for rural development (Leader II), OJ C 180, 1/7/1994, p. 48. 299 European Commission, Notice to the Member States of 14 April 2000 laying down guidelines for the Community initiative for rural development (Leader+), OJ C 139, 18/5/2000, p. 5, point I, para. 8. 300 See Art. 51(2) of Council Regulation (EC) No. 1257/1999, supra n. 253, and Art. 88(2)(a) of Council Regulation (EC) No. 1698/2005, supra n. 282. 301 Commission Regulation (EC) No. 1/2004 of 23 December 2003 on the application of Articles 87 and 88 of the EC Treaty to State aid to small and medium-sized enterprises active in the production, processing and marketing of agricultural products, OJ L 1, 31/1/2004, p. 1. 296

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Article 87(3)(c) EC, and exempt from the notication requirement of Article 88(3) EC, provided that certain conditions are fullled.302 2.2.4.3

Environment and culture

Articles 174 to 176 EC, introduced by the Treaty of Maastricht and amended by the Treaty of Amsterdam, designate the principal objectives and instruments of EC environmental policy. Striving for a high level of protection, Community environmental action aims to preserve and improve the quality of the environment, protect human health, promote a prudent and rational utilisation of natural resources and encourage measures at the international level which deal with regional or worldwide environmental problems. Expanding over the years, the range of tools devised to implement EC environmental policy consists mainly of harmonising legislation and general action support programmes. Though less readily discernible than in other sectors, Community environmental policy does possess a cultural perspective. The four key thematic strategies of the sixth Community environmental action programme (EAP) (combating climate change, halting the decline of biodiversity, improving the quality of life and ensuring the sustainable management of natural resources and wastes) can make a valuable contribution to sustainable preservation of Member States’ cultural patrimony.303 Preventive or remedial action taken with regard to air pollution, climate disruption, soil erosion or land desertication can exert a positive inuence on the preservation of cultural and archaeological sites endangered by environmental degradation. Pertinently, under the nature and biodiversity priority area for action, the sixth EAP calls for the ‘conservation and appropriate restoration of areas of signicant landscape values’.304 The LIFE programme, introduced in 1992 on the basis of Article 175 (ex-Article 130s) EC (and amended on several times since), sustains the implementation, updating and development of Community environment policy and environmental legislation. Highlighted, in particular, are the promotion

302 Ibid., Art. 5. The aid granted must not entail any increase in production capacity. Aid intensity must be limited to 60% (or 70% in less favoured areas) of the real costs incurred for the conservation of the productive heritage assets of the subsidised farms. State aid may reach up to 100% of the costs incurred for the conservation of non-productive heritage features located on agricultural holdings, such as archaeological or historical remains, up to a limit of €10.000. 303 Decision 1600/2002/EC of the European Parliament and of the Council of 22 July 2002 laying down the Sixth Community Environmental Action Programme, OJ L 242, 10/9/2002, p. 1. 304 Ibid., Art. 6(1).

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of sustainable development and the integration of environmental concerns into other EC policies.305 With three thematic components for the period 2000–2006, LIFE-Nature, LIFE-Environment and LIFE-Third Countries, culture-related projects were supported under its LIFE-Environment strand. Stemming from an understanding of heritage more attentive to natural and biodiversity assets than cultural resources, LIFE-Nature and LIFE-Third Countries rarely incorporated cultural aspects in their implementation.306 Conversely, LIFE-Environment, designed to develop innovative and integrative environmental protection methods, provided an appropriate framework for matching environmental with cultural interests. By focusing, amongst others, on reducing the environmental impact of economic activities and products, as well as on land use and planning,307 LIFE-Environment proved key in identifying appropriate modules for the conservation and adequate management of cultural landscapes, the greening of major socio-cultural events and the encouragement of sustainable tourism. By way of illustration, Community funds were directed to restoration activities in Liguria (Italy) to protect the terraced landscape of the Cinque Terre coastline.308 Local initiatives supported by LIFE were launched to revitalise natural and cultural resources in the heavily urbanised and industrialised

305 See Art. 1 of Council Regulation (EC) No. 1655/2000 of the European Parliament and of the Council of 17 July 2000 concerning the Financial Instrument for the Environment (LIFE), OJ L 192, 28/7/2000, p. 1. See also Council Regulation (EEC) No. 1973/92 of 21 May 1992 establishing a Financial Instrument for the Environment (LIFE), OJ L 206, 22/7/1992, p. 1, and Council Regulation (EC) No. 1404/96 amending Regulation (EEC) No. 1973/92 establishing a nancial instrument for the environment (Life), OJ L 181, 20/7/1996, p. 1. LIFE was extended until 31 December 2006 by Regulation (EC) No. 1682/2004 of the European Parliament and of the Council of 15 September 2004 amending Regulation (EC) No. 1655/2000 concerning the Financial Instrument for the Environment (LIFE), OJ L 308, 5/10/2004, p. 1. 306 The specic objective of LIFE-Nature was to support the implementation of the EU nature conservation policy, namely the ‘Birds’ and ‘Habitats’ Directives (Council Directive 79/409/EEC of 2 April 1979 on the conservation of wild birds, OJ L 103, 25/4/1979, p. 1, and Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and ora, OJ L 206, 22/7/1992, p. 7), nancing, in particular, the establishment of the Natura 2000 European network for the in situ management and conservation of Europe’s most remarkable fauna and ora species. LIFE-Third Countries focused on technical assistance activities for capacity building and sustainable development in third countries, bordering on the Mediterranean and the Baltic Sea. 307 The LIFE Regulation dened ve areas eligible for funding: land-use development and planning; water management; reduction of the environmental impact of economic activities; waste management and reduction of the environmental impact of products through an integrated product policy. See Art. 4(2) of Regulation (EC) No. 1655/2000, supra n. 388. 308 Designated in 1997 as a ‘World Natural and Cultural Heritage’ by UNESCO, the area nonetheless suffered land abandonment and disuse. From total project costs amounting to €701,752, LIFE contributed €271,470. See project description, available at: http://ec.europa. eu/comm/environment/life/project/Projects/index.cfm.

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coastal zone of Taranto, Brindisi and Lecce (Italy).309 In Spain, Community nancial assistance was channelled to restoration and conservation of the Sierra historical mining area, with a view to promoting sustainable tourism.310 Also beneting from EC nance was a scheme to rehabilitate a part of the Aragon Pyrenees by creating a ‘village-museum’ on the socio-cultural features of Pyrenean society, renovating various architectural and cultural buildings, recovering traditional agricultural methods and promoting handcraft activities.311 Further, LIFE-Environment funded the development of integrated environmental management systems for large-scale cultural events held in Austria, Belgium, Germany and Italy.312 Specic attention was afforded to precautionary action to avoid adverse effects that music festivals and cultural exhibitions in archaeological sites may entail for natural and cultural resources. Financial support was provided, for instance, to a partnership project examining, and intended to reduce, the environmental impact of a series of cultural manifestations in Ancient Olympia (Greece) during the 2004 Olympic Games.313 These examples, it is suggested, show that Community environmental policy does possess a cultural component, despite endorsement of a more ecologicalspecic notion of the environment that tends to obscure the cultural features of the action taken. A dividing line between natural and cultural assets is often difcult to establish, obstructing the identication and quantication of the cultural dimension of the projects nanced. Still, interventions in respect of landscape conservation, urban/rural land management and sustainable economic growth often take cultural considerations on board. It is expected that the new LIFE+ programme, adopted with three thematic strands for the period 2007–2013, LIFE+ Nature and Biodiversity, LIFE+ Environment

309 From total project costs amounting to €1,332,828, LIFE contributed €541,170. See project description, available at: http://ec.europa.eu/comm/environment/life/project/ Projects/index.cfm. 310 From total project costs amounting to €1,106,357, LIFE contributed €541,840. See project description, available at: http://ec.europa.eu/comm/environment/life/project/ Projects/index.cfm. 311 From total project costs amounting to €1,752,423, LIFE contributed €499,229. See project description, available at: http://ec.europa.eu/comm/environment/life/project/ Projects/index.cfm. 312 From total project costs amounting to €1,071,896, LIFE contributed €535,499. See project description, available at: http://ec.europa.eu/comm/environment/life/project/ Projects/index.cfm. 313 From total project costs amounting to €810,599, LIFE contributed €404,299. See project description, available at: http://ec.europa.eu/comm/environment/life/project/Projects/index. cfm.

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Policy and Governance and LIFE+ Information and Communication, will maintain incorporation of cultural interests in the projects funded.314 2.2.4.4

Education, vocational training and culture

Pursuant to Article 149 EC, the Community contributes ‘to the development of quality education by encouraging cooperation between the Member States and, if necessary, by supporting and supplementing their action, while fully respecting the responsibility of the Member States for the content of teaching and the organisation of education systems and their cultural and linguistic diversity’. Relevant Community activities promote the development of a European dimension in education, in particular, through teaching and dissemination of the languages of the Member States; students’ and teachers’ mobility; reinforcement of cooperation between educational establishments through exchange of information and experience on issues common to the educational systems of the Member States; and stimulation of distance education.315 In parallel, in accordance with Article 150 EC, the Community conducts a vocational training policy, supportive of Member States’ action and fully respectful of domestic content and organisational structures, to facilitate adaptation to industrial changes, labour market (re-)integration, access to vocational training, mobility and cooperation between educational and training institutions.316 A rst observation in examining the provisions of the EC Treaty on education and vocational training is that, in both policy areas, the Community, entrusted with mere complementary powers, must refrain from interfering with Member States’ decisions on taught content, which is usually conditioned by domestic cultural characteristics. Moreover, in education, European institutions are explicitly required to respect the cultural and linguistic diversity of the Member States. Further substantiation of the link between education and culture is found in the Community’s task of developing a European dimension in education. It must strengthen ‘in young people a sense of European identity’ and prepare them ‘to take part in the economic and social development of the Community’, improving ‘their knowledge of the Community and its Member States in their historical, cultural, economic and social aspects’.317 According to the Council, efforts primarily deployed to give concrete meaning to the 314 Regulation (EC) No. 614/2007 of the European Parliament and of the Council of 23 May 2007 concerning the Financial Instrument for the Environment (LIFE+), OJ L 149, 9/6/2007, p. 1. 315 See Art. 149(2) EC. 316 See, in particular, Art. 150(2) EC. 317 See Resolution of the Council and the Ministers of Education meeting within the Council of 24 May 1988 on the European dimension in education, OJ C 177, 6/7/1988, p. 5.

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European facet of education ‘offer access to the rich diversity of European culture and languages while maintaining common European values’, and meet ‘rapidly changing economic and manpower demands in the European single market’.318 Similarly to EC cultural policy, EC educational policy has been translated into a series of support measures to bolster cooperation in the eld of education. Socrates, the primary Community educational action programme, was adopted in 1995 on the basis of Articles 149 and 150 (ex-Articles 126 and 127) EC.319 Devised to enhance ‘the European dimension in education at all levels so as to strengthen the spirit of European citizenship, drawing on the cultural heritage of each Member State’ and to promote ‘a quantitative and qualitative improvement of the knowledge of the languages of the European Union . . . leading to greater understanding and solidarity between the peoples of the European Union’,320 Socrates was extended in 2000 for a period of 6 years, with resources amounting to €1.850 million.321 Life-long education and training, whose value was openly recognised by the extraordinary Luxembourg European Council on employment,322 formed the cornerstone of the programme. With the aim of creating a ‘Europe of knowledge’,323 through provision of formal and informal education, and promotion of active citizenship and employability,324 Socrates provided extensive support to culture-oriented projects under its thematic actions Comenius, Erasmus, Grundtvig, Lingua and Minerva. Comenius sought to enhance and reinforce the European dimension of school education by strengthening transnational cooperation between schools, improving teaching and language skills, and raising cultural awareness. In terms of culture, in addition to projects targeting learning of ofcial Community languages, together with Irish and Lëtzeburgesch,325 development of training

318 See Conclusions of the Council and of the Ministers of Education meeting within the Council of 27 November 1992 on measures for developing the European dimension in higher education, OJ C 336, 19/12/1992, p. 4. 319 Decision 819/95/EC of the European Parliament and of the Council of 14 March 1995 establishing the Community action programme ‘Socrates’, OJ L 87, 20/4/1995, p. 10. 320 Ibid., Art 3. 321 Decision 253/2000/EC of the European Parliament and of the Council of 24 January 2000 establishing the second phase of the Community action programme in the eld of education ‘Socrates’, OJ L 28, 3/2/2000, p. 1. 322 See Presidency Conclusions, supra n. 228. 323 See, in this respect, European Commission, Communication to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions, Towards a Europe of Knowledge, COM(1997) 653. 324 See Art. 1(3), supra n. 321. 325 See the MEB, DAF-SUEDOST NETWORK, MOBIDIC, TOIL, BABEL UNRAVELLED and LESEI projects, available at: http://www.isoc.siu.no.

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facilities for teachers in art subjects326 and creation of appropriate modules in cultural education,327 with a special focus on the use of new technologies, were funded. In this context, intercultural initiatives designed to eradicate racism and xenophobia were also supported.328 Innovative pedagogical approaches in educating children amongst migrant workers, gypsies, minority and ethnic groups,329 and addressing citizenship and identity were likewise launched.330 Erasmus operated in the eld of higher education. Cooperation between universities was encouraged, with emphasis on mobility and recognition of academic studies and qualications throughout the Community.331 Projects developing methodological tools and course structures in the arts,332 or sustaining foreign language learning333 and intercultural education,334 were facilitated. Grundtvig referred to adult education whether achieved through autonomous learning or within a framework of formal or informal education. Improving linguistic competences,335 raising intercultural awareness336 and promoting acquisition of skills in craft and arts professions337 ranked amongst the activities

326 See, for instance, the 3TS, IN-SERVICE TRAINING OF TEACHERS IN PRIMARY VISUAL ARTS EDUCATION, INTERCULTURAL MUSIC EDUCATION IN EUROPE and HEREDUC projects, available at: http://www.isoc.siu.no. 327 See, in particular, the CREATIVE WRITING, WRITE AN OPERA, STUDIO WORK IN VISUAL ARTS and EXPLORING CROSS-CURRENTS IN EUROPEAN LITERATURE projects, available at: http://www.isoc.siu.no. 328 See the KNOWING US—KNOWING YOU, COMMUNITY-DIVERSITY-COMMUNICATION: BUILDING BRIDGES IN THE MULTICULTURAL EUROPEAN CLASSROOM, BOOKS AND READING FOR INTERCULTURAL EDUCATION, EQUALITY IN EDUCATION, JUSTICE, INTER, NEWTECH, PESCAMI and ALLDIFF projects, available at: http://www.isoc.siu.no. 329 See the EUROPEAN CURRICULUM FOR CHILDREN OF MIGRANT WORKERS, DROM, EDU and TEACHERS FOR MULTILINGUAL—MULTIETHNIC EUROPE projects, available at: http://www.isoc.siu.no. 330 See, for example, the RIAC, THE EUROPEAN PICTURE BOOK COLLECTION, PEACE, ECE and SMILE projects, available at: http://www.isoc.siu.no. 331 Erasmus was complemented by Erasmus Mundus, devised to promote intercultural understanding through cooperation with third countries on the basis of master courses, scholarships and partnerships with foreign higher education institutions. See Decision 2317/2003/EC of the European Parliament and of the Council of 5 December 2003 establishing a programme for the enhancement of quality in higher education and the promotion of intercultural understanding through cooperation with third countries (Erasmus Mundus, 2004 to 2008), OJ L 345, 31/12/2003, p. 1. 332 See the INNOVATION IN HIGHER ARTS EDUCATION, ENHSA and LE NOTRE projects, available at: http://www.isoc.siu.no. 333 See the THEMATIC NETWORK PROJECT IN THE AREA OF LANGUAGES II, available at: http://www.isoc.siu.no. 334 See the UNA FILOSOFIA PER L’EUROPA and CLIOHNET projects, available at: http://www.isoc.siu.no. 335 See the INSTAL, eCOLE and ELTAE projects, available at: http://www.isoc.siu.no. 336 See the NILE, ESMEU and ROMIPEN projects, available at: http://www.isoc.siu.no. 337 See the ACE and CULTURE IN USE projects, available at: http://www.isoc.siu.no.

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most widely supported. Effort was also made to cater for the particular needs of marginalised groups.338 Alongside projects to improve the employability and mobility of performing artists339 and to develop modular courses in cultural subjects,340 projects concerned with social and cultural empowerment of under-privileged groups, via self-learning methods and training courses, were nancially assisted.341 Resources were further channelled to projects developing curricula on European politics and policies, intended to bring adults closer to the European idea.342 With regard to Lingua, the thematic action of Socrates devoted to the teaching and learning of the ofcial languages of the Community (together with Irish and Lëtzeburgesch),343 the objective in view was to raise the quality of language teaching/learning and ensure access to life-long learning, tailored to individual requirements. Community funds were awarded to transnational projects, developing methods for the recognition of linguistic competences and spreading good practice.344 In most instances, the action taken covered both linguistic and cultural themes, combining language-learning methodologies with cultural awareness measures.345 Minerva, nally, underwrote transversal support for open and distance learning through use of information and communication technologies. Projects to help diffuse the use of ICT tools in cultural learning and research or art creation were resourced in this regard.346

338 See, in particular, the TWISFER project, available at: http://www.isoc.siu.no, which sought to improve interpersonal and communication skills through theatre work with the following target groups: elderly people, people with disabilities or special needs and migrants. 339 See the TRANSMISSION project, available at: http://www.isoc.siu.no. 340 See the EUROPEAN ACADEMY FOR CULTURE AND ARTS project, available at: http://www.isoc.siu.no. 341 See the IMED, IMES, TEC, EURO-IDENTITY and DAIM projects, available at: http://www.isoc.siu.no. 342 See the EMPOWERING WOMEN TO AN ACTIVE EUROPEAN CITIZENSHIP and EASY-EU projects, available at: http://www.isoc.siu.no. 343 The Action Plan for language learning and linguistic diversity, adopted in 2004 for a period of 2 years, followed a more inclusive approach, extending to regional, minority and migrant languages, as well as to the languages of the major trading partners of the Union. See European Commission, Communication to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions, Promoting Language Learning and Linguistic Diversity: An Action Plan 2004–2006, COM(2003) 449, at 9. 344 See Annex, Part II, Action 4, supra n. 321. 345 See the CAFALL, eLANCENET and GO EUROPE GO projects, in 11 Lingua Community (March 2005), at 3, 4 and 8, and the BRET and FEEL projects, in 10 Lingua Community (December 2004), at 1 and 3, available at: http://ec.europa.eu/comm/education/programmes/socrates/lingua/community_en.html. 346 See the GIOTTO, SEARCHWEB, REMOTE SCIENTIFIC MUSEUM, E-LEARNING FOR THE TRAINING OF OPERA SINGERS and MULTIMEDIART projects, available at: http://www.isoc.siu.no.

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Leonardo da Vinci, adopted pursuant to Article 150 (ex-Article 127) EC, served the purpose of promoting quality, life-long, vocational training systems through transnational cooperation.347 Operational since 1995,348 it entered its second phase in 2000, with a budget of €1.150 million.349 Projects to increase cross-border mobility of trainers and trainees in cultural-related professions, improve linguistic competences or promote respect for cultural differences were frequently nanced. Thus supported, for example, were schemes to foster occupational mobility in craft-related trade sectors while protecting and disseminating traditional production techniques,350 and to enhance use of new music technologies amongst young people.351 Most projects with a cultural component, though, related to assessment and diffusion of methods and materials for the teaching of linguistic competences, which meet the needs of precise occupational areas and economic sectors. Initiatives to identify and evaluate linguistic facilities available for SMEs in Ireland, Portugal, Poland and the UK,352 and to promote training in basic Greek for science-focused professions, attracted nance.353 Clearly, Community educational and vocational training policies have acquired a signicant cultural aspect. It is notable that themes addressed by the relevant Community activities are not conned to arts education and mobility of cultural practitioners, but extend more widely to areas including the strengthening of intercultural dialogue. Links between education and employment are obvious: the former can ensure that Europeans possess the skills needed to reap benet from the common market. But beyond this, the resourcing of activities targeting marginalised groups, and inquiring into issues raised by multiple identities, provides ample proof that EC educational and vocational training action is not solely market-driven, but eager to delve into European integration’s cultural implications.

347 Council Decision 1999/382/EC of 26 April 1999 establishing the second phase of the Community vocational training action programme ‘Leonardo da Vinci’, OJ L 146, 11/6/1999, p. 33. 348 See Council Decision 94/819/EC of 6 December 1994 establishing an action programme for the implementation of a European Community vocational training policy, OJ L 340, 29/12/1994, p. 8. 349 Supra n. 347, Art. 12. 350 See the SMART project, available at: http://leonardo.cec.eu.int/pdb. 351 See the MUSINET project, available at: http://leonardo.cec.eu.int/pdb. 352 See the REFLECT project, available at: http://leonardo.cec.eu.int/pdb. 353 See the GREEK FOR BASIC SCIENCE project, available at: http://leonardo.cec. eu.int/pdb.

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From 2007 to 2013, a single programme will cover learning opportunities from childhood to old age.354 With a budget of €6.970 billion, Lifelong Learning seeks to ‘foster interchange, cooperation and mobility between education and training systems within the Community so that they become a world quality reference’.355 Built on four pillars, Comenius, Erasmus, Leonardo da Vinci and Grundtvig, the Jean Monnet sub-programme on institutions and activities in the eld of European integration, and a transversal programme pursuing policy cooperation and innovation, language learning, development of ICT-based content and services, Lifelong Learning expressly draws on synergies between education, training and culture. Amongst its objectives feature reinforcement of intercultural dialogue, promotion of creativity, enhancement of linguistic diversity and increased respect and tolerance for other people and their cultures.356 2.2.4.5

Research, technological development and culture

Community research policy arising under Articles 163–173 EC forms part of the assortment of complementary competences ascribed to the Community. EC research action aims at ‘strengthening the scientic and technological bases of the Community industry and encouraging it to become more competitive at the international level, while promoting all the research activities deemed necessary by virtue of other chapters of [the EC] Treaty’.357 Pursuant to Article 166 EC, it is implemented via multi-annual framework support programmes, laying down specic scientic and technological objectives, identifying priority elds for research purposes and determining Community nancial participation. Article 151 EC does not require the undertaking of research activities in the eld of culture. Yet cultural matters have readily found their way onto the European research agenda. After heated debates concerning the creation of a European Research Area (ERA),358 equivalent to the common market for

354 Decision 1720/2006/EC of the European Parliament and of the Council of 15 November 2006 establishing an action programme in the eld of lifelong learning, OJ L 327, 24/11/2006, p. 45. 355 Ibid., Art. 1(2). 356 Ibid., Art. 1(3)(d), (e), (g) and (i). Pursuant to Article 12 (Horizontal Policies), in implementing the programme due regard shall be paid to furthering awareness of the importance of cultural and linguistic diversity within Europe, as well as of the need to combat racism, prejudice and xenophobia. 357 See Art. 163(1) EC. See also Arts 35(a), 152(1) and 157(1) EC. 358 See, in this respect, European Commission, Communication to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions, Towards a European Research Area, COM(2000) 6, and Communication, The European Research Area: Providing new momentum, COM(2002) 565.

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goods and services, and the Lisbon strategy, endorsing the concept of ERA as a platform to regroup and intensify research efforts in order to secure a powerful European competitive knowledge-based economy,359 the drive to foster conditions boosting research in Europe led to an outward expansion of research themes, so as to include culture.360 The fth Framework Programme (FP) for research, technological development and demonstration activities (RTD),361 operational for the period 1998–2002, enjoyed a total budget amounting to €13.700 million, and nancially assisted numerous projects with a cultural dimension. With thematic and horizontal strands, it funded culture-oriented research under the thematic priorities ‘user-friendly information society’ and ‘energy, environment and sustainable development’.362 To deliver technologies, methodologies and indicators sustaining domestic authorities and stakeholders in dening and implementing cultural policies and actions, a specic key action (KA) ‘multimedia content and tools’ was launched. Falling under the information society strand, one of its foci was digital content (DIGICULT).363 Supported, for instance, was the development of digital preservation instruments for audiovisual collections,364 the creation of a Digital Libraries European cultural network based on interoperable platforms and standards365 and the documentation, storage and safeguarding of local cultural resources.366 Cultural research projects were also supported under the KA ‘city of tomorrow and cultural heritage’, within the ‘environment and sustainable

359 See Presidency Conclusions to the Lisbon European Council, 23–24 March 2000, supra n. 233, at paras 23–13. 360 Research initiatives with a cultural dimension had also been launched in the past, though, in a rather piecemeal fashion. See European Commission, First Report on the consideration of cultural aspects in European Community action, supra n. 14, at Part II, pp. 23–30. 361 Decision 182/1999/EC of the European Parliament and of the Council of 22 December 1998 concerning the fth framework programme of the European Community for research, technological development and demonstration activities (1998 to 2002), OJ L 26, 1/2/1999, p. 1. 362 Cultural projects coming under the horizontal facet ‘conrming the international role of Community research’ also received funding. See, for instance, the HERCOMANES project, available at: http://ica.cordis.lu/search/index.cfm?fuseaction=proj.simpledocument&PJ_RC N=4862672&CFID=5711221&CFTOKEN=90628097. 363 In the course of the fth RTD Framework Programme, 8 calls for proposals were launched under the Information Society Technologies Programme. 110 DIGICULT projects were selected and granted funding with a total of €89.7 million. 364 See the BRAVA, COLLATE, DIAMANT, ECHO, G-FORS, IDAP, LIDO, METAVISION and PRESTO projects, available at: http://ica.cordis.lu/search/index.cfm?dbname=proj. 365 See the CLEF, CYCLADES, EULER, ERPANET, OAF and RENARDUS projects, available at: http://ica.cordis.lu/search/index.cfm?dbname=proj. 366 See the CHIMER, COINE and CIPHER projects, available at: http://ica.cordis.lu/ search/index.cfm?dbname=proj.

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development’ theme of the fth FP.367 Targeting the development of techniques for sustainable heritage conservation and management,368 the KA inquired into exposure conditions of cultural objects in museums and galleries,369 and the effects of atmospheric pollution on cultural and historic assets located outdoors.370 The sixth RTD FP, introduced in 2002, with a total budget of €16.270 million for a period of 4 years, substantially strengthened the link between culture and research.371 Pooling dispersed resources and expertise together, in order to materialise the ERA, the programme nanced a range of cultural projects. Under the heading ‘focusing and integrating Community research’, the priority area ‘information society technologies’372 funded production of multi-linguistic and multi-cultural information management systems and the development of ‘interactive and intelligent systems’ for access to and preservation of cultural heritage.373 Amongst activities supported were research to create new technologies delivering ‘cinematic’ entertainment across different platforms;374 to provide personalised information in museums and historic sites;375 to standardise audiovisual content archiving practices;376 and to transform historic and archaeology-related representational material into commercially-viable, tourism-focused, digital media applications.377

367 See supra n. 361, Annex II, Point II, 1, Theme 4, 1. Energy, Environment and Sustainable Development, (a) (iv). 368 The ‘city of tomorrow and cultural heritage’ key action concentrated on four specic areas: city planning and management; cultural heritage; built environment; and urban transport. 369 See, for instance, the AER and LIDO projects, available at: http://ica.cordis.lu/search/ index.cfm?dbname=proj. 370 See the CARAMEL project, available at: http://ica.cordis.lu/search/index. cfm?fuseaction=proj.simpledocument&PJ_RCN=4939087&CFID=5711221&CFTOKEN=9 0628097. 371 Decision 1513/2002/EC of the European Parliament and of the Council of 27 June 2002 concerning the sixth framework programme of the European Community for research, technological development and demonstration activities, contributing to the creation of the European Research Area and to innovation (2002 to 2006), OJ L 232, 29/8/2002, p. 1. 372 Ibid., Annex I. 373 Ibid., Annex I, part I, section 1.1. Thematic Priorities, sub-section 1.1.2. Information Society Technologies, Integrating research into technological areas of priority interest for citizens and businesses, at para. (b) and Components and Microsystems, at para. (b). 374 See the IP_RACINE project, available at: http://cordis.europa.eu/fp6/projects.htm. From total project costs amounting to €14.36 million, the Community contributed €8.6 million. 375 See the EPOCH project, available at: http://cordis.europa.eu/fp6/projects.htm. The Community contributed €7.88 million. 376 See the PRESTOSPACE project, available at: http://cordis.europa.eu/fp6/projects. htm. From total project costs amounting to €15.62 million, the Community contributed €9 million. 377 See the TNT and AGAMEMNON projects, available at: http://cordis.europa.eu/fp6/ projects.htm.

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Projects devised to promote transnational mobility in cultural research beneted from Community resources under the second strand of the sixth FP, ‘Structuring the ERA’, in the frame of Marie-Curie actions.378 The third pillar of the FP ‘Strengthening the foundations of the ERA’ further encouraged the promotion of methodologies to ensure adequate balance between urban needs, heritage conservation and cultural access requirements.379 Under the key theme ‘economic potential and cohesion of a larger and more integrated Europe’380 the Community contributed to examination of meteorological parameters most critical to built cultural heritage,381 and the collection of reliable scientic information for the sustainable maintenance of cultural assets.382 The ‘citizens and governance in a knowledge-based society’ thematic of the sixth FP represented the greater step forward, encouraging research in themes embodying a broader concept of culture. It promoted research in relation to ‘citizenship, democracy and new forms of governance . . . from the perspective of history and cultural heritage’.383 Financed projects studied the cultural dynamics between Eastern and Western Europe,384 and explored the impact of European economic integration on ethnic minority mobilisation.385 With a budget of €50.521 billion over its seven-year lifespan, the seven FP consolidates previously established synergies between research and culture

378 Funding was directed to projects analysing the effects of major cultural events on urban space or introducing multidisciplinary training facilities for heritage conservation and IT presentation of cultural material. See the CIUTAT, CULTURAL HERITAGE and CHIRON projects, available at: http://cordis.europa.eu/fp6/projects.htm. 379 See, in particular, the PICTURE project, available at: http://cordis.europa.eu/fp6/projects.htm. From total project costs amounting to €1.75 million, the Community contributed €1.5 million. 380 Supra n. 371, Annex I, part I, section 1.2. Specic activities covering a wider eld of research, sub-section 1.2.1. Policy support and anticipating scientic and technological needs, point. A. Policy oriented research, at para. 3. 381 See the NOAH’S ARK project, available at: http://cordis.europa.eu/fp6/projects. htm. From total project costs amounting to €1.76 million, the Community contributed €1.18 million. 382 See the CULT-STRAT project, available at: http://cordis.europa.eu/fp6/projects. htm. From total project costs amounting to €1.69 million, the Community contributed €1.03 million. 383 See supra n. 371, Annex I, part I, section 1.1. Thematic Priorities, sub-section 1.1.7. Citizens and governance in a knowledge-based society, at para. (c). Amongst the research topics short-listed featured ‘the emergence of new forms of citizenship and cultural identities’; ‘forms and impact of integration and cultural diversity in Europe’; and ‘social and cultural dialogue involving Europe and the rest of the world’. 384 See the DIOSCURI project, available at: http://cordis.europa.eu/fp6/projects.htm. From total project costs amounting to €971,522, the Community contributed €729,998. 385 See the EUROREG project, available at: http://cordis.europa.eu/fp6/projects.htm. The Community covered total project costs, amounting to €749,100.

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mainly under its ‘cooperation’ strand.386 Activities ‘information and communication technologies’, ‘environment’, ‘socio-economic sciences and humanities’ and ‘security’ place the highest of values on reinforced collaborative research pertaining to culture. Modernisation of ICT cultural services, new forms of cultural expression, increased accessibility to cultural content, improved cultural heritage damage assessment and development of innovative conservation strategies sketch the contours of culture-related activities eligible for EC funding.387 The programme is also open to projects highlighting major trends in society regarding ethnicity, cultural interactions and multiculturalism; investigating methods and tools to build a shared understanding of cultural diversities and commonalities; surveying cultural relations and interdependences between world regions; and exploring ways to reduce security gaps by means of cultural rapprochement.388 2.2.4.6

External relations and culture

EU external action’s legal foundations derive from the various pillars of the European entity, and encompass many different policy areas. This study’s purpose is not to explore the constitutional basis of EU external relations competences, or to examine in detail policy elds possessing a substantial external dimension. Plainly, however, the Union is increasingly taking a role in global economic and political arena. Express powers conferred on the European Community by the EC Treaty to conclude international agreements, and the development of the doctrine of implied powers by the ECJ389 have enabled establishment of close relations with many third countries and international actors in a variety of sectors. The Community has used opportunities presented by bilateral and regional agreements entered into with third parties to encourage cultural cooperation. It has also sought to promote cultural diversity precepts, worldwide, through its inuence on the activities of various international organisations. Cultural cooperation patterns Opportunities for cultural cross-fertilisation and exchange generated by bilateral and multilateral agreements concluded by the Community with third coun-

386 Decision 1982/2006/EC of the European Parliament and of the Council of 18 December 2006 concerning the Seventh Framework Programme of the European Community for research, technological development and demonstration activities (2007–2013), OJ L 412, 30/12/2006, p. 1. 387 Ibid., Annex I, point I ‘Cooperation’, themes 3 and 6. 388 Ibid., themes 8 and 10. 389 See supra n. 31.

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tries have substantially reinforced intercultural dialogue on the international scene. Cooperation channels established display divergence, in view of the different priorities identied for each geographic region. Despite this, culture often gures highly in the process. Entering into development cooperation or association agreements with non-EU states, the Community seeks to raise awareness of Europe and its cultures, promoting a spirit of mutual rapprochement, based on tolerance of, and respect for, cultural differences.390 The constitutional legitimacy of including cultural cooperation amongst areas requiring joint action by the Community and its partners has been a matter of some dispute. For this, the subsidiary nature of the EC cultural competence and the poor drafting of Article 151(3) EC, which does not set out with precision the powers attributed to the European institutions as regards the external facet of their cultural action, are largely responsible. In Portugal v Council,391 Portugal sought the annulment of Decision 94/578/EC, concerning the conclusion of a cooperation agreement on partnership and development between the EC and India.392 The Decision, enacted on the basis of Articles 133 and 181 (ex-Articles 113 and 130y) EC by the Council, acting by qualied majority and after consulting the European Parliament, provided inter alia for action in the cultural domain. Under Article 15, the contracting parties should cooperate in the elds of information and culture in order to promote mutual understanding and strengthen cultural ties. Relevant activities were to be concentrated on cultural information-sharing, heritage preservation, media and audiovisual documentation and the organisation of cultural events. Stressing that EC ‘[cultural] competence is clearly subordinate to an objective of coordinating cultural policies dened by each Member State within the sphere of its own competences’, Portugal argued that Article 151(3) EC did not confer on the Community any powers to conclude agreements touching cultural matters.393 Should the Court recognise in the Community such competence, and with reference to Article 308 (ex-Article 235) EC, ‘measures could be taken only by the Council acting unanimously and following the

390 Of course, progress is not equal across geographical regions. For an overview of the EU’s cultural relations with third countries across the globe, see D. Dodd, M. Lyklema and K. Dittrich-Van Weringh, A Cultural Component as An Integral Part of the EU’s Foreign Policy? (2006), at 34–40. See also supra n. 250, at 25. 391 Case C-268/94, Portugal v Council, [1996] ECR I-6177. 392 Council Decision 94/578/EC of 18 July 1994 concerning the conclusion of the Cooperation Agreement between the European Community and the Republic of India on Partnership and Development, OJ L 223, 27/8/1994, p. 23. 393 Supra n. 391, at para. 51.

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co-decision procedure’.394 In addition, it was urged, all Member States should participate in conclusion of the agreement.395 The Court declined to comment on the impact of Article 151(3) EC on the Community’s external cultural action. Nevertheless, it asserted the complementary competence enjoyed by the European institutions to conclude development cooperation agreements with non-member countries,396 noting that, to qualify as a development cooperation agreement, an agreement should pursue the objectives of Article 177 (ex-Article 130u) EC. Article 177(1) (exArticle 130u(1)) EC, in particular, signalled that these were broad objectives,397 in the sense that measures required for their pursuit might concern a variety of specic matters,398 including culture. Consequently, requiring a development cooperation agreement ‘to be based on another provision as well as on Article 130y [now Article 181 EC] and, possibly, also to be concluded by the Member States whenever it touche[d] on a specic matter would in practice amount to rendering devoid of substance the competence and procedure prescribed in Article 130y [now Article 181 EC]’.399 The fact that the EC-India agreement contained cultural provisions, the Court claried, could not alter its characterisation as a development cooperation agreement.400 The agreement needed to be evaluated in the light of its essential object, and not in terms of its individual cultural clauses, provided these did not impose extensive obligations distinct from those of development cooperation contained in the EC Treaty.401 Article 15 of the agreement, the Court held, only identied culture as one area of cooperation.402 It did not establish, in concrete terms, the manner in which the cooperation envisaged

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Ibid. Ibid. 396 Supra n. 391, at para. 36. 397 According to Article 177(1) EC, Community policy in the sphere of development cooperation, which is complementary to the policies pursued by the Member States, fosters: the sustainable economic and social development of the developing countries, and more particularly the most disadvantaged among them; the smooth and gradual integration of the developing countries into the world economy; and the campaign against poverty in the developing countries. 398 Supra n. 391, at para. 37. 399 Ibid., at para. 38. Article 181 EC stipulates that ‘[w]ithin their respective spheres of competence, the Community and the Member States shall cooperate with third countries and with the competent international organisations. The arrangements for Community cooperation may be the subject of agreements between the Community and the third parties concerned, which shall be negotiated and concluded in accordance with Article 300. The previous paragraph shall be without prejudice to Member States’ competence to negotiate in international bodies and to conclude international agreements.’ 400 Ibid., at para. 39. 401 Ibid. 402 Ibid., at para. 45. 395

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should be implemented, albeit some indications on the activities to which special importance should be attached were given.403 The Court therefore concluded that Article 15 did not imply a general power to undertake any sort of action in the cultural eld.404 Nor did it predetermine the allocation of cultural competences between the Community and the Member States, so conditioning the legal basis for adoption of Community acts implementing cultural cooperation.405 For the Court, Article 15 sought development cooperation objectives, namely the promotion and enhancement of cooperation between contracting parties in an area of common interest, with due respect for the special needs of India as a developing country, in line with Article 177(1) EC.406 In ascertaining cultural cooperation as one means to attain the objectives of the EC development cooperation policy, the Court conrmed that the European institutions may consider cultural matters when taking action in the external sphere. Though no specic mention was made of Article 151(4) EC, the cultural provisions of the EC-India agreement illustrate well the place culture occupies in the attainment of other EC policy goals. The formula used, now sanctioned by the Court, has been replicated, almost verbatim, in many development cooperation agreements concluded between the Community and third countries.407 A cultural dimension in the external action of the Community is likewise discernible in measures adopted on the basis of Article 187 EC. This provides that the Community may be associated with overseas countries and territories (OCTs) having special relations with Denmark, France, the Netherlands and the United Kingdom. Council Decision 2001/822/EC, promoting economic 403

Ibid. Ibid., at para. 47. 405 Ibid. 406 Ibid., at para. 54. 407 See, for instance, Article 28 of the Framework Agreement on Cooperation between the European Economic Community and the Cartagena Agreement and its member countries, namely the Republic of Bolivia, the Republic of Colombia, the Republic of Ecuador, the Republic of Peru and the Republic of Venezuela, signed on 23 April 1993 in Copenhagen, OJ L 127, 29/4/1998, p. 11, and Council Decision 98/278/EC of 7 April 1998 concerning the conclusion of a framework agreement on cooperation between the European Economic Community and the Cartagena Agreement and its member countries, namely the Republic of Bolivia, the Republic of Colombia, the Republic of Ecuador, the Republic of Peru and the Republic of Venezuela, OJ L 127, 29/4/1998, p. 10. See also Article 30 of the Framework Agreement on Cooperation between the European Economic Community and the Republics of Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama, signed on 22 February 1993 in San Salvador, OJ L 63, 12/3/1999, p. 39, and Council Decision 1999/194/EC of 22 February 1999 concerning the conclusion of a Framework Cooperation Agreement between the European Economic Community and the Republics of Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama, OJ L 63, 12/3/1999, p. 38. 404

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and social development of OCTs, and establishing close economic relations between them and the Community, pays particular attention to cultural considerations.408 Article 17, entitled ‘cultural and social cooperation’, stipulates that ‘[c]ooperation shall contribute to the self-reliant development of the OCTs, this being a process centred on people themselves and rooted in each people’s culture’. It afrms that ‘the human and cultural dimension shall embrace all areas and be reected in all development projects and programmes’, so as to help relevant countries and territories to ‘enhance their human resources, increase their own creative capacities and promote their cultural identities’. Emphasis is placed on promoting intercultural dialogue, preserving cultural heritage, producing and disseminating cultural products, and encouraging cultural events.409 Also recognised is the role of sustainable tourism, appropriately to exploit cultural resources, advancing trade in services and stimulating private nancial ows.410 Trilateral partnerships, comprising the Commission, the Member State to which the OCT is linked, and the OCT itself are charged with implementation.411 Financial assistance is primarily provided by the European Development Fund (EDF),412 the main instrument for Community aid for development cooperation.413 Efforts are also being made to strengthen cultural bonds with the African, Caribbean and Pacic (ACP) developing countries on the basis of Article 310 EC, which enables the Community to conclude with other states ‘agreements establishing an association involving reciprocal rights and obligations, common action and special procedure’.414 The IV Lomé Convention (1995–2000) took

408

Council Decision 2001/822/EC of 27 November 2001 on the association of the overseas countries and territories with the European Community (‘Overseas Association Decision’), OJ L 314, 30/11/2001, p. 1. 409 Ibid., Art. 17. 410 Ibid., Art. 13(10). 411 Ibid., Art. 4. 412 Ibid., Annex II A. The OCTs also benet from refundable aid from the OCT Investment Facility, loans from the European Investment Bank’s own resources, aid under EU horizontal budget lines and grants under EC support programmes in the cultural and audiovisual elds. 413 See Internal Agreement between Representatives of the Governments of the Member States meeting within the Council on the Financing and Administration of Community Aid under the Financial Protocol to the Partnership Agreement between the African, Caribbean and Pacic States and the European Community and its Member States signed in Cotonou (Benin) on 23 June 2000 and the allocation of nancial assistance for the Overseas Countries and Territories to which Part Four of the EC Treaty applies, OJ L 317, 15/12/2000, p. 355, and Council Financial Regulation of 27 March 2003 applicable to the 9th European Development Fund, OJ L 83, 1/4/2003, p. 1. 414 See, in this respect, Council Decision 2003/159/EC of 19 December 2002 concerning the conclusion of the Partnership Agreement between the African, Caribbean and Pacic

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rst steps towards increasing the creative capacity of the ACP countries.415 The Cotonou agreement, signed on 23 June 2000 for a period of 20 years, has the ambition of reinforcing cultural cooperation between parties.416 Identifying various action pillars,417 it highlights joint cultural activities under the heading ‘social and human development’, within the ‘development strategies and priority for poverty reduction’ strand. In accordance with Article 27, cultural cooperation must aim at integrating a cultural dimension at all levels of development cooperation; facilitating intercultural dialogue; helping preserve heritage assets; and sustaining the development of cultural industries, via the enhancement of market access opportunities for ACP cultural goods and services. Actions are eligible for funding under the EDF, with resources distributed on the basis of national, regional and intra-ACP programmes. During the revision of the Cotonou agreement,418 a process running from May 2004 to February 2005, consensus was reached on bolstering the use of local content for information and communication technologies (ICTs) and promoting traditional knowledge as part of sectoral economic development.419 Equally importantly, the Community has introduced wide-ranging cultural cooperation platforms, bi- and multilaterally,420 on the basis of the multidimensional Euro-Mediterranean Partnership (EMP).421 EMP was launched

Group of States, of the one part, and the European Community and its Member States, of the other part, signed in Cotonou on 23 June 2000, OJ L 65, 8/3/2003, p. 27. 415 See Art. 139 of the Fourth ACP-EEC Convention, signed at Lomé on 15 December 1989, OJ L 229, 17/8/1991, p. 3. According to Articles 145–149, the main elds of cultural activity should focus on recognition and promotion of the cultural identities of the ACP peoples, preservation of their cultural patrimony, stimulation of the production and distribution of cultural goods and organisation of cultural events in and outside ACP countries. 416 Partnership Agreement between the members of the African, Caribbean and Pacic Group States (ACP) of the one part, and the European Community and its Member States, of the other part, signed in Cotonou on 23 June 2000, OJ L 317, 15/12/2000, p. 3. 417 The ve interdependent pillars of the Cotonou agreement consist of a comprehensive political dimension, participatory approaches to ensure the involvement of civil society and economic and social players, development strategies with a strengthened focus on poverty reduction, a new economic and trade cooperation framework and nancial cooperation. 418 See Article 95(3) of the Cotonou agreement, supra n. 416. 419 See Part B, paras 6 (with respect to Article 23) and 12 (with respect to Article 43(4)) of the Agreement amending the Partnership Agreement between the members of the African, Caribbean and Pacic Group of States, of the one part, and the European Community and its Member States, of the other part, signed in Cotonou on 23 June 2000—Final Act—Declarations, OJ L 287, 28/10/2005, p. 4. 420 See, generally, Psychogiopoulou, ‘Euro-Mediterranean Cultural Cooperation in the Field of Heritage Conservation and Management’, 10 European Foreign Affairs Review (2005) 237, and Peresso, ‘Euro-Mediterranean Cultural Cooperation’, 3 European Foreign Affairs Review (1998) 135. 421 On the multi-dimensional nature of the Euro-Mediterranean Partnership, see Philippart, ‘The Euro-Mediterranean Partnership: A Critical Evaluation of an Ambitious Scheme’, 8 European Foreign Affairs Review (2003) 201.

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in 1995, with the Barcelona declaration,422 and seeks to transform the Mediterranean basin into an area of peace, stability and prosperity.423 Calling for an intensied, pro-active approach in various culture-related sectors, the third ‘basket’ of the Barcelona process on social, cultural and human affairs aspires to bring the peoples of Europe and the Mediterranean closer together, furthering understanding between them.424 In the bilateral context, a main feature of the EMP has been the negotiation of new mixed association agreements between the EC, Member States and the Mediterranean countries on the basis of Article 310 EC.425 All of these endorse cultural heritage protection as a priority area for action. Both cultural and economic arguments have provided a rationale for selecting cultural heritage as a target sector. On the one hand, cultural cooperation to protect and enhance items and values that historically shaped diverse cultural identities is viewed as key to cultural enrichment, encouraging mutual knowledge and solidarity amongst partners. On the other, protection of cultural heritage is recognised as apt to generate major economic benets for Mediterranean countries, mainly through promotion of cultural tourism. Often featured in association agreements are activities to increase exchanges of artists and works of art, the organisation of cultural events, provision of training opportunities for people working in the cultural eld, promotion of literary translations and the ght against organised crime, including, in particular, trafcking of cultural goods.426 Of course, most of the resources endowed to the Mediterranean countries are channelled to structural adjustment and

422 The Barcelona Declaration was adopted at the Barcelona Euro-Mediterranean Conference (27–28 November 1995) by the then 15 EU Member States and Algeria, Cyprus, Egypt, Israel, Jordan, Lebanon, Malta, Morocco, the Palestinian Authority, Syria, Tunisia and Turkey. It is available at: http://ec.europa.eu/comm/external_ relations/euromed/bd.htm. 423 See Rhein, ‘Europe and the Mediterranean: A Newly Emerging Geopolitical Area?’, 9 European Foreign Affairs Review (1996) 80. 424 On the three chapters of the Barcelona process, see D.K. Xenakis and D.N. Chryssochoou, Europe in Change: The Emerging Euro-Mediterranean System (2001), at 74–94. 425 New association agreements were signed with Algeria (December 2001), Egypt ( June 2001), Israel (November 1995), Jordan (November 1997), Lebanon ( June 2002), Morocco (February 1996), the Palestinian Authority (Interim agreement, February 1997) and Tunisia ( July 1995). Negotiations with Syria were concluded on 19 October 2004. EU-Turkey relations are still governed by the association agreement signed in September 1963 that envisages EU membership. Since May 2004, Cyprus and Malta have been members of the EU. 426 See, for example, Arts 77 and 86 of the Euro-Mediterranean Agreement establishing an Association between the European Community and its Member States, of the one part, and the People’s Democratic Republic of Algeria, of the other part, signed in Valencia on 22 April 2002, OJ L 265, 10/10/2005, p. 2. Reference is often made to the possibility of extending cultural programmes implemented by the European Community or by its Member States to the Mediterranean partners. See, for instance, Art. 74(3) of the Euro-Mediterranean Agreement establishing an Association between the European Communities and its Member States, of the one part, and the Republic of Tunisia, of the other part, signed in Brussels on 17 July 1995, OJ L 97, 30/3/1998, p. 2.

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economic transition measures.427 Culture-oriented projects can nonetheless still be found. In Syria, €10 million were directed to the Cultural Heritage Development Programme, improving institutional support for management of archaeological and historic sites on the basis of internationally recognised protection standards. The programme Protection and Promotion of Cultural Heritage, launched by Jordan’s national Ministry of Tourism with the objective of boosting heritage-based tourism as an engine of economic growth, was also supported.428 Under the multilateral cooperation platform established by the EMP, a special programme focuses on heritage conservation and management techniques, exploring how best to record and care for tangible and intangible Mediterranean patrimony.429 Euromed Heritage, operational since 1997 with total funds amounting to €57.2 million until 2008,430 seeks to raise awareness and disseminate cultural knowledge among decision-makers, and the general public, through creation of inventories, promotion of networking and training opportunities for cultural operators, encouragement of high-quality tourism, and the exchange of experiences in institutional management practices, legislation trends and technical assistance.431 With a total budget of €20 million over four years, Euromed Audiovisual was inaugurated in 2000 with a view to establishing a platform for EU and Mediterranean-based operators to collaborate in producing and distributing audiovisual products, while preserving audiovisual archive material across the region.432 Entering its second phase in 2005, with resources amounting

427

See gures available at: http://ec.europa.eu/comm/external_relations/euromed. A dual approach has been followed, consisting of measures that help preserve relatively unknown archaeological sites and upgrade site-management facilities, so as to strike an adequate balance between conservation constraints and site accessibility. 429 Cultural actions are also nanced by the various EC delegations, Euromed civil forums and the Anna Lindh Euro-Mediterranean Foundation for the Dialogue between Cultures. 430 Twenty-one projects were supported by Euromed Heritage I with MEDA funds amounting to €17.2 million for 1997–2003. Euromed Heritage II, launched in December 2000 with a total budget of €30 million for 2001–2008, covers 11 projects, selected from 106 applications received. Euromed Heritage III is the follow-up to Euromed Heritage II and supports 4 projects with MEDA resources reaching €10 million for the period 2003–2008. 431 See Declaration of the Euro-Mediterranean Meeting of Ministers for Culture, Bologna, 22 and 23 April 1996, available at: http://ec.europa.eu/comm/external_relations/euromed/ conf/sect/culture.htm. 432 Call for proposals, Euromed audiovisual cooperation programme, OJ C 247, 7/8/1998, p. 15, and Conclusions of the Second Conference of Ministers of Culture, Rhodes, 25–26 September 1998, available at: http://ec.europa.eu/comm/external_relations/euromed/conf/ sect/culture2.htm. The six projects selected under the rst phase of Euromed Audiovisual were: CINEMA MED, which organised an Arab-Mediterranean lm festival (grant amount: €1 million), MEDEA, which nanced the pre-production phase of audiovisual works through the launch of various calls for proposals (grant amount: €4 million), EUROPA CINEMAS, which supported the distribution and circulation of lms in both the Mediterranean partners and the EU (grant amount: €4 million), EUROMEDIATOON, which funded the production 428

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to €15 million to 2007, the programme directs Community funding to four thematic priorities: development, promotion, distribution and exhibition of Mediterranean audiovisual projects; preservation and storing of audiovisual archives; vocational training; and update of the legislative and regulatory audiovisual framework, attending particularly to ght against piracy.433 Based on the premise that the EU has a vital interest in seeing greater economic development and better governance in its immediate neighbours by land or sea, the European Neighbourhood Policy was launched in the aftermath of the 2004 enlargement.434 Aimed at developing a ‘ring of friends’ with whom the EU enjoys close, privileged relations,435 the ENP builds on existing cooperation and association agreements signed by the Community and third countries, and is implemented through bilateral action plans, mutually agreed by the EC and each partner.436 Cultural issues are uppermost in the minds of policy-makers. To illustrate, the EU/Egypt action plan lists amongst the priority areas for action: deepening intercultural dialogue; enhancing Egypt’s participation in EC cultural cooperation programmes; and advancing expertise regarding cultural heritage protection, translations, and communication skills.437 The EU/Armenia action plan envisages the promotion of Armenian cultural heritage in Europe and an exchange of views on the ratication and implementation of the 2005 UNESCO Convention on the protection and promotion of the diversity of cultural expressions.438

of cartoons (grant amount: €3,998,000) and CAPMED, which focused on development of tools and mechanisms for the preservation of audiovisual assets (grant amount: €3,825,000). 433 See European Commission, Euromed Audiovisual II, Guidelines for grant applicants responding to the restricted call for proposals 2005, W3 Europaid/121416, 25/4/2005. 434 See European Commission, Communication to the Council and the European Parliament, Wider Europe-Neighbourhood: A New Framework for Relations with our Eastern and Southern Neighbours, COM(2003) 104, and European Neighbourhood Policy, Strategy paper, COM(2004) 373. 435 The European Neighbourhood Policy covers Algeria, Armenia, Azerbaijan, Belarus, Egypt, Georgia, Israel, Jordan, Lebanon, Libya, Moldova, Morocco, the Palestinian Authority, Syria, Tunisia and Ukraine. EU-Russia relations are developed through a Strategic Partnership. A framework of cooperation with Russia is also provided by the Northern Dimension. 436 Funding is provided by the European Neighbourhood and Partnership Instrument, adopted on the basis of Articles 179 (development cooperation) and 181a (economic, nancial and technical cooperation with third countries) EC. See Regulation (EC) No. 1638/2006 of the European Parliament and of the Council of 24 October 2006 laying down general provisions establishing a European Neighbourhood and Partnership Instrument, OJ L 310, 9/11/2006, p. 1. 437 See EU/Egypt Action Plan, available at: http://ec.europa.eu/world/enp/pdf/action_ plans/egypt_enp_ap_nal_ en.pdf, at point 2.6.a. 438 See EU/Armenia Action Plan, available at: http://ec.europa.eu/world/enp/pdf/action_ plans/armenia_enp_ap_ nal_en.pdf, at point 4.7.3.

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The convergence of the external and internal facets of the Community’s cultural activities is remarkable.439 Incorporating cultural cooperation instruments in agreements concluded with third countries, whether mixed or of a ‘pure’ Community type, EC external action is enriched with a cultural dimension similar to that of internal EC cooperation structures. The themes usually highlighted, i.e. heritage protection, dissemination of cultural information, exchange of experience and training of individuals active in the cultural sector, largely correspond to measures implementing the mandate of Article 151(2) EC. Interestingly, symmetry in the shortcomings of action taken can also be observed. The cultural provisions of EC cooperation agreements rarely attract signicant nancial resources, a criticism frequently raised with respect to EC level funding opportunities for cultural cooperation between Member States. Promotion of cultural diversity precepts Because preservation and promotion of cultural distinctiveness ranks among the founding principles of the European integration model, the Community has been particularly active in debating relevant matters within various international organisations. Cultural cooperation forms a long-standing component of relations with the Council of Europe. More recently, the Community has developed ambitious cultural agenda with respect to UNESCO and the World Trade Organisation (WTO). Under the auspices of the rst, it has contributed to the emergence of a global cultural diversity paradigm, as a principal engine in the drafting of an international standard-setting instrument on protection and promotion of cultural diversity. Within the WTO, one of whose aims is to remove inter-state barriers to trade in cultural expressions, the Community has sought to develop a liberalisation formula that respects Member States’ freedom to dene and implement cultural policies, as they see t. Though a variety of international and regional instruments with a cultural component already exists, appreciation of the potential value of a legally binding Convention addressing cultural diversity concerns in the context of globalisation, has steadily grown. UNESCO’s Universal Declaration on Cultural Diversity and supporting Action Plan adopted on 2 November 2001 invited members to consider the advisability of an international legal instrument on cultural diversity.440 In its wake, negotiations on the nature and scope of such an instrument entered full swing. 439 See also, in this respect, McMahon, ‘Preserving and Promoting Differences? The External Dimension of Cultural Cooperation’, in R. Craufurd Smith (ed.), supra n. 3, 327, at 342–343. 440 See UNESCO Universal Declaration on Cultural Diversity, adopted by the 31st Session of the General Conference of UNESCO, Paris, 2 November 2001, available at: http://unesdoc. unesco.org/images/0012/001271/127160m.pdf.

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From the very beginning, the Community and Member States were actively involved in the process. Prior to the UNESCO General Conference, which requested the organisation’s Director General to submit at its October 2005 session a preliminary Convention draft, the Commission produced a communication, entitled Towards an international instrument on cultural diversity.441 Published in August 2003, this expressed full support for the idea of an international normative instrument establishing a ‘cultural pillar’ in international governance. In the Commission’s view, efforts ought primarily to focus on producing a legally binding text, to consolidate certain cultural rights, commit parties to international cultural cooperation by establishing a global monitoring mechanism on the state of cultural diversity, and create a discussion forum on cultural policies and actions. In line with Article 151(3) EC, by which ‘[t]he Community and the Member States shall foster cooperation . . . with competent international organisations in the sphere of culture’, initial comments on a preliminary draft Convention from both the Community and the Member States were forwarded to UNESCO by the Dutch Presidency in November 2004.442 The position taken reiterated the need for due attention to the specic dual nature (cultural and economic) of cultural goods and services, and recognition of the role of public policies and international cooperation in protecting and promoting cultural distinctiveness.443 Articulation of the Convention with other international instruments and bodies was also advocated, to allow for its effective implementation in parallel with the maintenance of legal certainty as regards obligations arising from other international instruments.444 To reinforce the voice of the Community and its constituent units, on 16 November 2004, the Cultural Affairs Council gave the Commission a mandate to conduct negotiations. Under this mandate, the Commission was to guarantee that any view expressed during negotiations in matters of shared competence was subject to prior common accord amongst Member States, and that the nal text of the Convention would be consistent with the acquis communautaire. To coordinate interventions by the Commission and the Member States, a specic code of conduct was issued in January 2005.445 This claried the specic tasks of the Presidency and the Commission. The Presidency was 441 European Commission, Communication to the Council and the European Parliament, Towards an international instrument on cultural diversity, COM(2003) 520. 442 Communication of the European Community and its Member States of 15 November 2004 to UNESCO on the preliminary draft UNESCO Convention on the protection of the diversity of cultural contents and artistic expressions, available at: http://trade.ec.europa. eu/doclib/docs/2004/december/tradoc_120449.pdf. 443 Ibid., at 1. 444 Ibid. 445 Note from the Presidency to Delegations, Code of conduct between the Council, the Member States and the Commission on the UNESCO negotiations on the draft Convention

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required to negotiate and express, on behalf of Member States, common positions reached in the coordination process, on aspects of domestic cultural policies, human rights, education, international cultural cooperation and any other matter falling exclusively or primarily within the competence of the Member States.446 The Commission, for its part, was required to negotiate on behalf of the Community and express Community positions in relation to free movement of goods, the common rules of competition with a special focus on state aids, the internal market, EC measures introduced in the sphere of intellectual property and common commercial policy.447 Where these competences proved inextricably linked, the Presidency and the Commission were to agree which would deliver any statement on behalf of the Community and Member States.448 To enable national delegations to prepare for negotiations and approve common positions for submission, expert coordination meetings were convened, eliciting Member States’ remarks on the preliminary draft. Negotiations concluded in Paris on 3 June 2005, and the Convention on the protection and promotion of the diversity of cultural expressions was adopted by UNESCO’s General Conference on 25 October 2005.449 The nal text espouses the purpose to ‘create the conditions for cultures to ourish and to freely interact in a mutually benecial manner’,450 with due respect for human rights and fundamental freedoms. It acknowledges the distinctive nature of cultural activities, goods and services as vehicles of cultural values, and reafrms the states’ sovereign right to adopt, maintain and implement policies and measures to protect and promote diversity of cultural expressions within their territory. The Convention encourages intercultural dialogue and international cultural cooperation in a spirit of partnership, especially vis-à-vis developing countries. Abiding by the principle of equal dignity of all cultures, including minority and indigenous cultures, it advocates equitable access to a rich and diverse range of cultural content. Concerned to ensure a broader

on the protection of the diversity of cultural contents and artistic expressions, Doc. 5768/05, CULT 4. 446 Ibid., at para. 1. 447 Ibid., at para. 2. 448 Ibid., at para. 3. The Commission was required to present the common position when the preponderance of the matter concerned fell within the competence of the Community, the Presidency, when the preponderance of the matter concerned fell within the competence of the Member States. Common statements were to be circulated among Member States beforehand. Exceptionally, after due coordination, a Member State other than that holding the Presidency could take the oor, in so far as its contribution was limited to supporting the agreed common position. Were a common position not reached on a given issue, the Member States could in areas falling exclusively or primarily under their competence express their point of view. 449 See supra n. 34. 148 members of UNESCO supported the nal draft, with only Israel and the United States voting against. Four countries (Australia, Honduras, Nicaragua and Liberia) abstained. 450 Ibid., Art. 1.

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consideration of cultural diversity in the development of state policies, in effect it replicates the cultural mainstreaming exercise of Article 151(4) EC at the international level. Speaking with single voice during negotiations (for which it was congratulated by Member States at their nal coordination meeting in Paris), the Community succeeded in having most of its suggestions included in the adopted text. Accordingly, the Convention contains a clause enabling the Community, which has observer status within UNESCO, to ratify and become party to the Convention. Clarications on the complex question of the position of the Convention in the international legal order largely build upon EC proposals. The Community stressed, from the outset, that a mechanism giving priority to rights and obligations under the Convention or other international agreements should be avoided, and sought to convince UNESCO members of the importance of complementarity with other instruments, in particular those implemented by the WTO. Article 20 stipulates that ‘without subordinating this Convention to any other treaty’, parties shall ‘foster mutual supportiveness between this Convention and the other treaties to which they are parties’ and shall take account of its provisions, ‘when interpreting and applying the other treaties to which they are parties or when entering into other international obligations’. This echoes the EC’s suggested delineation of the Convention’s relationship with both existing and future agreements.451 Stating that ‘the UNESCO Convention constitutes a relevant and effective pillar for promoting cultural diversity and cultural exchanges, to which both the Community, as reected by Article 151(4) of the [EC] Treaty, and its Member States, attach the greatest importance’, the Council adopted unanimously on 18 May 2006 a Decision authorising the Community to become party to it.452 The Decision claims the procedural legal basis of Article 300(2) and (3) EC, and the sectoral legal bases of Articles 89 (state aids), 133 (common commercial policy), 151 (culture), 181 (development cooperation) and 181a (economic, nancial and technical cooperation with third countries) EC. Reference to Article 151 EC reects European institutions’ position that Article 151 EC empowers the Community to enter binding international instruments of cultural subject matter. On the other hand, recourse to Articles 89, 133, 181 and 181a EC for the adoption of a measure primarily intended to preserve and enhance cultural diversity is a clear instance of cultural mainstreaming.

451

In addition, pursuant to Article 21, parties are specically required to promote the objectives and principles of the Convention in other international fora on the basis of appropriate consultation and coordination procedures. 452 See supra n. 36, 3rd indent.

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Arguably, Community involvement in the negotiations and subsequent conclusion of the UNESCO Convention stemmed from a desire to appear, on the world stage, as a bearer of cultural diversity precepts, inspired by its own multi-cultural integration model. The same may be accurately said of the position adopted by the Community within the WTO system, where it has used its global trade negotiating power, under Article 133 EC, to limit the impact of trade liberalisation on the cultural sector.453 More conspicuously, within the international trade arena, the Community has been called on to address cultural content regulation, which may entail some form of restriction on the circulation of cultural goods and services. Cultural goods and services fall within the scope of rules introduced to regulate the international trade order; this is also the case with regard to EC level norms aiming to establish and guarantee proper functioning of the common market. Intra-EC experience in acknowledging, on certain occasions, the special characteristics of trade in cultural products, has provided a platform for design of the Community’s external trade conduct. The cultural specicity contour observable in the development of EC external trade activities is not Community-specic. The special characteristics of trade in cultural expressions were recognised, to some extent, by the 1947 GATT rules, later replicated in the 1994 GATT regime. Besides Article XX(f ), which allows for trade restrictions ‘imposed for the protection of national treasures of artistic, historic or archaeological value’, and the GATT provisions on subsidies, which preserve states’ discretion to direct domestic resources to the production and dissemination of cultural content,454 arrangements made for cinema screen quotas are, in this respect, illuminating.455 Elimination of quantitative restrictions on imports is prescribed by Article XI of the GATT. Despite this, regulations that reserve a certain share of total screen time in cinemas to domestic works are not prohibited pursuant

453 See De Witte, ‘Trade in Culture: International Legal Regimes and EU Constitutional Values’, in G. De Búrca and J. Scott (eds), The EU and the WTO: Legal and Constitutional Issues (2001) 237, at 237. 454 Pursuant to Article III(8)(b) of the GATT, the national treatment obligation does not prevent the exclusive payment of subsidies to domestic producers. In accordance with Article XVI, in the case of serious prejudice to the interests of any other contracting party, caused or threatened by the provision of subsidies, the granting party must, upon request, discuss the possibility of limiting subsidisation. The 1994 Agreement on Subsidies and Countervailing measures prohibits subsidies, contingent, in law or in fact, upon export performance or the use of domestic over imported goods (see Art. 3). Actionable and non-actionable subsidies (Arts 5 and 8) may only be challenged when they entail a prejudice for the economies of other contracting parties. Countries with a strong presence in exports of cultural goods will nd it extremely difcult to provide sufcient proof for such adverse effects. 455 See, generally, Herold, ‘European Public Film Support within the WTO Framework’, Iris Plus (2003), No. 6, 2, at 3–5.

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to Article IV, so long as specic conditions are met. Screen content requirements were introduced by various countries post-World War II as a response to the worldwide dominance of Hollywood movies. Now, they constitute an exception to the GATT obligation of national treatment, according to which foreign goods must be treated in the same manner as domestic goods. Relevant provisions reect an awareness of the need to permit states a margin of manoeuvre in promoting domestic cultural values through cinematographic means.456 In the same spirit, Article IV contains a derogation from the most favoured nation (MFN) principle enshrined in Article I of the GATT (i.e. the extension of all trade advantages that any third nation is granted to all contracting parties to the agreement) for measures adopted to preserve cultural links amongst states. More precisely, restrictions, ‘which reserve a minimum proportion of screen time for lms of a specied origin other than that of the contracting party imposing such screen quotas’ are permitted. Thus, states may accord preferential treatment, for exhibition purposes, to motion pictures originating in countries with which they share common cultural bonds or have linguistic ties. Article IV refers exclusively to cinematographic lms without mentioning any other audiovisual products. The early 1960s witnessed a failure to reach consensus on whether television programmes were covered by the provision. In 1991, the US, alerted by restrictions on the showing of non-European works contained in the Television without Frontiers Directive,457 submitted a request for consultations with the then European Economic Community.458 The US argued that Article IV should be strictly interpreted, so as to apply only to screen exhibition requirements for motion pictures. The EEC’s position was that television programmes were included within the notion of services, and therefore could not be covered by the GATT. This question, unresolved then, later assumed a role in the wider context of the 1968–1994 Uruguay Round negotiations, and remains unsettled even now.

456 According to Article IV(d) of the GATT, screen quotas remain subject to negotiations for their limitation, liberalisation or elimination, as they may constitute an obstacle to the development of trade relations at both the multilateral and bilateral levels. To give an example, in the late 1990s, the South Korean government had to gradually phase out local screen quota regulations in order to conclude a bilateral agreement with the US, which required their elimination as a condition for signature. See Graber, ‘Audio-Visual Policy: The Stumbling Block of a Trade Liberalisation?’, in D. Geradin and D. Luff (eds), The WTO and Global Convergence in Telecommunications and Audio-Visual Services (2004) 165, at 198–199. 457 Council Directive 89/552/EEC of 3 October 1989 on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities, OJ L 298, 17/10/1989, p. 23. 458 GATT, Analytical Index: Guide to GATT Law and Practice, 6th Edition (1994), at 191–193.

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The interpretation of Article IV of the GATT is not the only issue left unresolved by the Marrakesh agreement, signed in April 1994. Two radically conicting views, as to whether audiovisual industries possess a cultural or purely commercial character were articulated in the Uruguay Round. Whereas the rst would entail the sector’s total exclusion from the disciplines of the multilateral trading system, the second would prompt unconditional submission to the regime introduced. The prevalence of an ‘all-or-nothing’ attitude eventually culminated in stalemate: audiovisuals became a bone of contention and the negotiations ended with a provisional compromise, commonly referred to as the ‘agreement to disagree’.459 At the time, the Community defended the non-applicability of trade rules to audiovisual services.460 Yet it failed to exclude the audiovisual industry from the liberalisation process, revisited by adoption of the GATS agreement. Given intense US opposition, no cultural exception or audiovisual derogation was included in the text of the GATS. Respectful of the cultural needs of its constituent parties, the Community still sought to transform the exible GATS liberalisation method into an instrument supportive, at least temporarily, of Member States’ freedom to dene and pursue their domestic cultural policies. Under the system established, each state party to the WTO must accord, to services and service suppliers of any other party, treatment no less favourable than that accorded to like services and suppliers of any other country.461 According to paragraph 2 of Article II, parties may exempt certain measures from the MFN obligation, provided that such measures appear in the members’ list of exemptions at the time of the entry into force of the WTO agreement and do not, in principle, exceed more than 10 years’ duration.462 The EC has lodged exemptions relating to both production and distribution of audiovisual goods. Consequently, measures are permitted that dene works of European origin in such a way as to extend national treatment regarding access to broadcasting, or similar forms of transmission, to audiovisual products originating from states parties to the European Convention on Transfrontier Television. Also allowed are measures based on bilateral or multilateral co-production agreements

459 Footer and Graber, ‘Trade Liberalization and Cultural Policy’, 3 Journal of International Economic Law (2000) 115, at 119–122. 460 For a broad overview of the EC position in this regard, see Pauwels and Loisen, ‘The WTO and the Audiovisual Sector: Economic Free Trade vs Cultural Horse Trading?’, 18 European Journal of Communication (2003) 291, at 293–296. 461 See Art. II of the GATS. 462 See Annex on Art. II exemptions. If granted for a period of more than 5 years, exemptions must be reviewed by the Council for Trade in Services.

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between EU Member States and third countries which confer national treatment for distribution purposes and access to funding, as well as measures granting benets under various support programmes, such as MEDIA and EURIMAGES,463 to audiovisual works and suppliers of such works meeting certain European origin criteria.464 For the EC, the mechanisms described preserve cultural and linguistic links between the states concerned. In addition, two rather defensive MFN exemptions may be found in the EC schedule. The rst provides for adoption of duties countering unfair pricing practices in trade in audiovisual services by third countries. Under the second, the Community may take discriminatory action to prevent, correct or counterbalance adverse, unfair or unreasonable conditions affecting EC audiovisual services and service providers, created by unilateral actions from other WTO members. With regard to market access and national treatment, members’ obligations, as agreed in the negotiations, are determined in schedules of specic commitments, which lay down terms and conditions on market access and national treatment for specic trade sectors and sub-sectors.465 Notwithstanding that audiovisual services are subject to the principle of progressive liberalisation,466 the Community has in this context abstained from commitments for all modes of services supply in the audiovisual eld,467 excluding de facto its 463 See Council Decision 2000/821/EC of 20 December 2000 on the implementation of a programme to encourage the development, distribution and promotion of European audiovisual works (MEDIA Plus—Development, Distribution and Promotion, 2001–2005), OJ L 336, 30/12/2000, p. 82, Decision 163/2001/EC of the European Parliament and of the Council of 19 January 2001 on the implementation of a training programme for professionals in the European audiovisual programme industry (MEDIA-Training, 2001–2005), OJ L 26, 27/1/2001, p. 1, Decision 1718/2006/EC of the European Parliament and of the Council of 15 November 2006 concerning the implementation of a programme of support for the European audiovisual sector (MEDIA 2007), OJ L 327, 24/11/2006, p. 12, and Council of Europe, Committee of Ministers, Resolution (88) 15 of 26 October 1988 setting up a European support fund for the co-production and distribution of creative cinematographic and audiovisual works: ‘Eurimages’, adopted at the 420th meeting of the Ministers’ Deputies and amended by Resolutions (89)6, (90)34, (92)3, (93)10, (95)4, (97)65 and (98)10 and Decisions taken by the Ministers’ Deputies on 15 December 1999 at the 692nd meeting and on 19 July 2000 at the 718th meeting. 464 Amongst the EC exemptions to the MFN treatment obligation also features the grant of a waiver for the requirement in Spain to obtain licences for the distribution of dubbed lms of non-Community origin with respect to lms meeting certain European origin criteria, recommended for children’s audiences. Measures taken in Denmark, aimed at enhancing the production and distribution of audiovisual works in the Nordic countries, are also included. 465 For a comprehensive overview, see P.V. Den Bossche, The Law and Policy of the World Trade Organisation: Text, Cases and Materials (2005), at 487. 466 See Art. XIX of the GATS. 467 The GATS agreement distinguishes between four modes of supply of services: crossborder trade; consumption abroad; commercial presence; and presence of natural persons. Cross-border supply covers services ows from the territory of one member into the territory of another member. Consumption abroad refers to situations where a service consumer moves

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audiovisual market from the GATS regime.468 Moreover, to prevent American audiovisual operators from gaining national treatment and access to the European audiovisual market by advocating a broad interpretation of the telecommunications services, for which EC commitments are made, the EC schedule contains an explicit reservation to the effect that telecommunications, which cover ‘all services consisting of the transmission and reception of signals by any electromagnetic means’, but not ‘the economic activity consisting of the provision of content services which require telecommunications services for their transport’, do not extend to broadcasting, dened as ‘the uninterrupted chain of transmission required for the distribution of TV and radio programme signals to the general public’. As for subsidies regarding the production and distribution of audiovisual content at the national or regional levels, the GATS regime is limited to the general MFN obligation treatment and the specic commitments, total or partial, listed by the WTO members in their respective lists. This being so, the EC MFN exemptions, and the absence of commitments for audiovisual services, safeguard Member States’ freedom to provide supportive action.469 In other areas of cultural activity, the Community proved more willing to open its market. Caution was exercised, however, to avoid jeopardising Member States’ cultural policy choices. In some trade sectors and sub-sectors for which commitments are made, limitations are listed in order to protect areas of particular historic or artistic interest.470 For ‘news and press agency services’, which come within the theme of ‘recreational, cultural and sporting services’ and have a signicant role to play in preserving and promoting domestic cultural features, foreign ownership restrictions are maintained.471 into the territory of another member to obtain a service. Commercial presence implies that a service supplier of one member establishes a territorial presence, including through ownership or lease of premises, in the territory of another member in order to provide a service. Presence of natural persons consists of persons of one member entering the territory of another member to supply a service. 468 The same strategy was followed by Canada and Switzerland. 469 Note that the GATS agreement provides in Article XV for future negotiations to develop rules on subsidies that distort trade in services but, as the US has itself noted, there is no presupposition as to the content of such potential provisions. See Doc. S/CSS/W21, Council for Trade in Services, Special Session, Communication from the United States, Audiovisual and Related Services, 18/12/2000. 470 See, for instance, the limitations to the commitments entered into with regard to commercial presence for retailing services (Italy) and for the sub-sector of hotels, restaurants and catering services, which come under the category of tourism and travel related services (Spain, Greece and Portugal). 471 For commercial presence, in France, foreign participation in companies publishing in French may not exceed 20% of the capital or voting rights. In Italy, specic limits are xed to multimedia ownership, and foreign companies cannot control publishing or broadcasting rms. In Portugal, foreign participation in the capital of publishing companies, including newspapers, is limited to 10%, without voting rights.

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No commitments are made in relation to cross-border provision of ‘entertainment services’, which encompass theatre, live bands and circus services. The sector remains equally unbound as regards the fourth mode of supply of services, namely the entry and temporary stay in EC territory of foreign individuals providing such services (though with the exception of Austria and France which have prescribed specic limitations).472 The same applies to ‘printing and publishing services’ under the category of ‘other business services’, despite concessions made for their liberalisation under other modes of supply (again subject to limitations).473 In the new round of negotiations, launched in January 2000 and revitalised by the 2001 Doha Development Agenda on an offer-request basis, the EC intends to follow a policy consistent with its current position. In accordance with the mandate given to the Commission by the Council to ensure that ‘the Community and its Member States maintain the possibility to preserve and develop their capacity to dene and implement their cultural and audiovisual policies for the purpose of preserving their cultural diversity’,474 the current market access and national treatment regime for cultural industries remains practically unaltered, and no requests are made for the liberalisation of audiovisual services in other countries. The EC offer, tabled in April 2003,475 maintains the audiovisual sector as uncommitted. The MFN exemptions are also kept with only minor changes.476 As for ‘printing and publishing’ and ‘recreational, cultural and sporting services,’ no major changes are registered; here, only removal of some foreign ownership limitations for ‘news and press agency services’ is sought.

472 In Austria, access is limited to persons whose main professional activity is in the eld of ne arts. In France, artists must have obtained an employment contract from an authorised entertainment enterprise, which must pay a tax to the International Migration Ofce. The work permit delivered must not exceed a period of nine months. It can be renewed for three additional months. Access to management functions is subject to authorisation by the competent authorities. Nationality conditions apply if authorisation is given for more than two years. 473 For example, in Italy, foreign participation in publishing companies is limited to 49% of capital or voting rights. 474 See Press Release 12121/99, 2209th Council Meeting of 26 October 1999 (Luxembourg). 475 See Communication from the European Communities and its Member States of 29 April 2003, Trade in Services, Conditional offer, available at: http://trade.ec.europa.eu/doclib/ docs/2004/march/tradoc_113003.pdf. The offer was revised in June 2005. See Communication from the European Communities and the Member States of 2 June 2005, Conditional revised offer, available at: http://trade.ec.europa.eu/doclib/docs/2005/june/tradoc_123488. reduced%20cells%20v2.pdf. 476 For instance, the MFN exemption regarding measures adopted in Denmark, which favour the production and distribution of cinematographic works and television programmes in the Nordic countries, is now extended to Sweden and Finland.

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Negotiating commitments in areas of cultural activity other than the audiovisual are unlikely to be problematic for the Community. But recent developments in negotiations for audiovisual services point in a different direction.477 The classication issue,478 raised by the US, reacting to new characteristics of the online environment,479 has already yielded conicting interpretations and much controversy amongst WTO members. It is not certain whether consensus will be reached on a comprehensive list of the various facets of the audiovisual industry, compatibly with the Community’s understanding of the sector. More importantly, various members heeded the importance of promoting broader market access for audiovisual services in this round, discouraging any a priori exclusion of the sector from the negotiations.480 Not surprisingly, the US seeks to ‘avoid creating a systematic problem within the WTO’;481 similar sentiments have been expressed by other states with powerful media production and distribution industries. On 30 June 2005, delegations of the US, Hong Kong China, Japan, Mexico, the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu issued a joint communication, arguing that audiovisual services, like all services under the GATS, should form an integral part of the round.482 Noting that ‘trade in audiovisual services results in cultural exchange, the best way to promote cultural diversity’, they highlighted the exibility of the GATS regime which, in their view, allows governments, when scheduling commitments, to accommodate national cultural policy objectives.483 In general, members with active interests in the audiovisual eld demand elimination of relevant MFN exemptions, coupled with more commitments

477 See Bernier, ‘Content Regulation in the Audio-visual Sector and the WTO’, in supra n. 456, 215, at 233–241. 478 In the Services Sectoral Classication List (Doc. MTN.GNS/W/120, 10/7/1991), prepared during the Uruguay Round and largely based on the United Nations Central Product Classication, the denition of the audiovisual sector comprises six sub-categories as follows: Audiovisual services a. Motion picture and video tape production and distribution services (CPC 9611) b. Motion picture projection services (CPC 9612) c. Radio and television services (CPC 9613) d. Radio and television transmission services (CPC 7524) e. Sound recording n.a. f. Other. 479 Supra n. 469. 480 See Doc. TN/S/M/14, Council for Trade in Services, Special Session, Report of the meeting held on 21, 22 and 25 February 2005, Note by the Secretariat, 26/4/2004. 481 Ibid., at para. 245. 482 See Doc. TN/S/W/49, Council for Trade in Services, Special Session, Communication from Hong Kong China, Japan, Mexico, The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu and United States, Joint Statement on the Negotiations on Audiovisual Services, 30/6/2005. 483 Ibid., at para. 5.

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for production and distribution of audiovisual content.484 WTO members who have exercised their right to le MFN exemptions for audiovisual services, face considerable pressure to review their position and verify whether the conditions giving rise to them still prevail.485 Needless to say, the EC defensive MFN exemptions on redressive duties and discriminatory actions are strongly criticised in this context. Against this gloomy background, there are states which, though accepting the goal of achieving a signicant level of liberalisation of audiovisual markets, assert that governments should preserve a margin of exibility to achieve cultural policy goals alongside free trade objectives. Brazil, for instance, has submitted a proposal calling for progressive liberalisation of the audiovisual sector, but recognising that states’ autonomy to promote cultural identity and diversity should be retained.486 Switzerland has suggested introducing a cultural diversity safeguard, either implicitly, on the basis of existing instruments, or explicitly, via introduction of a general enabling clause to that effect.487 The Community has so far refrained from commenting on these views. Undoubtedly, though, it will soon need to take a stronger stance. The dialogue initiated on subsidies in the area of lm production and distribution is salient. Considerable Community efforts will be required to ensure that adoption of a possible standard-setting instrument does not countervail Member States’ cultural prerogatives. In its current form, the GATS does not prevent governments from channelling resources to the audiovisual sector. By contrast, Brazil’s proposal to consider such mechanisms in the context of the ongoing negotiations on subsidies under Article XV of the GATS,488 either within a framework of possible multilateral disciplines or by scheduling national treatment limitations in members’ specic commitments, might prove particularly unsettling for the Community’s long-operating MEDIA programme and for Member States’ schemes supporting cultural production and distribution. As the WTO is drawn more deeply into political controversy, the EC position clearly becomes more delicate. Entrusted with the burden of speaking with a

484

See Doc. WT/TPR/G/154/Rev.1, Trade Policy Review Body, Trade Policy Review, Report by Bolivia, Revision, 9/12/2005. Japan’s view, for example, is that regulations, devised to protect domestic cultural features, should be clearly specied in the schedule of specic commitments. See Doc. WT/TPR/M/136/Add.1, Trade Policy Review Body, Trade Policy Review, European Communities, Minutes of meeting, Addendum, 18/1/2005. 485 See Doc. S/C/M/76, Council for Trade in Services, Report of the meeting held on 30 November 2004, Note by the Secretariat, 4/2/2005. 486 See Doc. WT/TPR/S/140, Trade Policy Review Body, Trade Policy Review, Brazil, Report by the Secretariat, 1/11/2004. 487 See Doc. S/CSS/W/74, Council for Trade in Services, Special Session, Communication from Switzerland, GATS 2000—Audiovisual services, 4/5/2001. 488 Supra n. 486.

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common voice on behalf of Member States to promote both their trade and cultural interests, the path ahead is not straightforward. Admittedly, no major disagreement exists amongst parties as to the importance of either free trade or cultural diversity. Nonetheless, accommodating such values in specic policy instruments remains a highly complicated exercise. Whereas the Community deserves credit for protection granted to Member States’ cultural spheres thus far, in coming years, it may be increasingly difcult to carve out a protected cultural domain. Whether the recently adopted UNESCO Convention on the protection and promotion of the diversity of cultural expressions will prove of help in this respect, inducing parties to increase consideration for cultural diversity precepts when applying and interpreting trade obligations within the WTO is for the moment unclear.489 2.2.5

CONCLUDING REMARKS

The Community’s implicit cultural powers, embodied in Article 151(4) EC and founded on the transversal nature of culture, allow for development of Community cultural action well exceeding the procedural requirements of Article 151(5) EC. Cultural policy objectives linked to protecting and further promoting the cultural wealth of Member States may be pursued on the basis of other Treaty provisions, either as the primary aim to achieve or as a secondary or incidental goal alongside other legitimate EC policy objectives. The fact that the cultural cross-sectional clause enables adoption of culturerelated measures, on the basis of Treaty provisions other than Article 151(5) EC, does not entail that the European institutions are actually bound to integrate a cultural rationale in Community action overall. Given the soft language used, Article 151(4) EC is primarily intended to alert the European legislator to cultural implications that a measure’s enactment might entail, not to create a substantive obligation for policy integration. The protection afforded to cultural considerations varies considerably, depending on the factual and political circumstances surrounding each case. Absent a strong institutional commitment to cultural policy mainstreaming, Article 151(4) EC has not to date exerted considerable inuence on EC policy-making. Despite rhetorical formulas, widely employed, about preserving

489 For a critical assessment of the 2005 UNESCO Convention, see Graber, ‘The New UNESCO Convention on Cultural Diversity: A Counterbalance to the WTO?’, 9 Journal of International Economic Law (2006) 553, Hahn, ‘A Clash of Cultures? The UNESCO Diversity Convention and International Trade Law’, 9 Journal of International Economic Law (2006) 515, and Germann, ‘Towards a Global Cultural Contract to Counter Trade Related Cultural Discrimination’, in N. Obuljen and J. Smiers (eds), UNESCO’s Convention on the Protection and Promotion of the Diversity of Cultural Expressions: Making it Work (2006) 277.

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and enhancing cultural diversity, procedural reforms implementing the cultural cross-sectional clause are not in place. Policy design remains strictly characterised by sectoral interests, and lack of horizontal coordination blocks appropriate weight being given to cultural considerations. This is notwithstanding the EC’s current focus on participatory policy formulation, to enable the Community to attain its various objectives in a balanced way. Culture stands outside the process, with synergies largely unexploited. The limited attention paid to Article 151(4) EC is particularly surprising, considering the cultural dimension that many EC policies have gradually acquired. Recent developments in the elds of cohesion, agriculture, environmental protection, education, research and external relations signal a resolve to create interconnections between culture and other EC policies. Analysis of the role that Article 151(4) EC should play, in this respect, is wanting. Thorough examination of possibilities for integrated action or reconciliation of potentially conicting interests may substantially reinforce policy-linking efforts. All the same, and bearing in mind that Article 151(4) EC has still to realise its full potential, concrete attempts to embed a cultural diversity paradigm in Community action that builds on Treaty articles other than Article 151 EC can be seen. The following chapters disclose insights into European institutions’ cultural mainstreaming practice. Examined, in detail, are the circumstances under which the European institutions have sought to accommodate cultural considerations in their action, sometimes successfully, on other occasions, in a partial or negligible manner.

Part B

Internal Market and Culture

Introduction The lack of an explicit Community cultural competence at the outset of the European project did not obstruct the development of Community action with cultural relevance. Until the entry into force of the Treaty of Maastricht, there was no precise legal basis for Community involvement in the cultural domain. Despite this, the cultural impact of Community rules and measures has been a consequence of the drive to attain one fundamental goal of the European integration process, namely the creation of an internal market where goods, services, persons and capital can circulate unhindered. Community institutions, rather than dening an autonomous, distinct cultural policy, approached the cultural sector via sector-specic application of the economic provisions of the Treaty establishing the European Economic Community (EEC). Elaboration of free movement principles provided a platform for judicial statements and legislative measures bearing an undeniable cultural dimension, a practice continuing today. The purpose of this chapter is to explore the inuence exerted by Community law on domestic cultural schemes and strategies, through efforts to introduce and guarantee the proper functioning of the internal market, both before and after insertion of Article 151(4) in the Treaty establishing the European Community (EC). Analysis will address both judicial and legislative inroads into the cultural eld, verifying whether Community institutions have acknowledged, in exercising their competences, the cultural implications of their action. Can it be argued that cultural considerations were afforded due weight by Community institutions prior to introduction of Article 151(4) EC? Has Article 151(4) EC instilled new dynamics in the process? Before engaging substantively with the issues, it is apposite briey to recall the EC ‘internal market provisions’.1 The principle of free movement of goods is enshrined in Title I of Part III of the EC Treaty. Articles 23–27 EC lay the foundations for a customs union, providing for the removal of customs duties on imports and exports and all charges having equivalent effect, and establishing a Common Customs Tariff. Articles 28–29 EC prohibit quantitative restrictions and measures having equivalent effect on imports and exports. Articles 90–92 EC preclude discriminatory tax provisions. Pursuant to Article 30 EC, discriminatory barriers to trade may be justied on grounds of public morality, public policy or public security, the protection of health and life of

1

For the sake of consistency, the method of citation follows the Treaty of Amsterdam’s renumbering of the articles of the EC Treaty, which took effect on 1 May 1999. When pre-Amsterdam texts referring to an article of the EC Treaty are cited, quoted passages will be followed with a reference in brackets to the corresponding provision as from 1 May 1999.

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humans, animals or plants, the protection of national treasures possessing artistic, historic or archaeological value and the protection of industrial and commercial property, provided they do not constitute a means of arbitrary discrimination or a disguised restriction of trade. Protection accorded to national treasures (despite the term’s divergent expression in different language versions of the EC Treaty)2 reects an initial formal recognition of the special place that cultural goods, or at least those of a remarkable cultural value, occupy in the Community system.3 Free movement of workers and freedom of establishment for self-employed persons are inscribed in Articles 39 and 43 EC, which emphasise the principle of non-discrimination on grounds of nationality, embodied in Article 12 EC of the EC Treaty as a general principle of EC law. Article 49 EC covers free movement of services and Articles 56 et seq. EC, the free movement of capital. Under Article 46 EC, Member States may provide for special treatment of Community nationals established in a Member State other than the state of origin on grounds of public policy, public security and public health. Articles 55 and 39(3) EC allow exemptions on the same grounds with regard to services and with respect to the right of a worker to accept offers of employment, move freely within the territory of a Member State for the same purpose and stay in a Member State as employed or following employment. A specic exception to the principle of free movement of workers is contained in Article 39(4) EC, in relation to employment in public service. The principal legal bases for the adoption of internal market legislation are found in Articles 40, 47(2), 57(2), 93, 94 and 95 EC.

2 The English, French, Danish and Greek versions of the EC Treaty refer to ‘national treasures’. The Italian, Spanish, Portuguese and Dutch versions use the term ‘national patrimony’. The German version mentions ‘national cultural goods’. According to the European Court of Justice, ‘[t]he different language versions of a Community text must be given a uniform interpretation and hence in the case of divergence between the versions the provision in question must be interpreted by reference to the purpose and general scheme of the rules of which it forms part’. See Case 30/77, Régina v Pierre Bouchereau, [1977] ECR 1999, at para. 14. 3 See, generally, Pescatore, ‘Le commerce de l’art et le marché commun’, 21 Revue Trimestrielle de Droit Européen (1985) 451, and Mattera, ‘La libre circulation des oeuvres d’art à l’intérieur de la Communauté et la protection des trésors nationaux ayant une valeur artistique, historique ou archéologique’, 1 Revue du Marché Unique Européen (1993), No. 2, 9.

Chapter Three

Culture, Free Movement and European Courts

With a view to creating a common market space without frontiers, market integration requires national measures breaching the free movement principles to be abolished or modied, to achieve compatibility with the Treaty rules. During the transitional period for establishment of the internal market, Member States were required to withdraw existing and refrain from introducing new restrictive measures. Since this process did not result in removal of all obstacles to trade and mobility, the European Court of Justice (ECJ) was from an early stage called on to determine the legality of domestic restrictive legislative and administrative schemes in the eld of culture. In adjudicating the compatibility of domestic laws and regulations with the EEC and EC Treaties, the ECJ has dealt with various types of ‘culture and internal market’ cases. Proceedings regarding the impact of the free movement principles on national cultural policies stricto sensu, that is, policies mainly relating to measures fostering production and distribution of cultural and audiovisual content, facilitating access to cultural activities or supporting heritage preservation, form the core of the present analysis. In tandem, disputes with regard to domestic linguistic regulation will also be discussed, since they raise fundamental questions about protection and promotion of linguistic diversity—another facet of the cultural plurality amongst Member States.1 The ECJ has also examined the inuence of the internal market on national cultural values and practices, seen from a broader perspective. This part of the case-law is rather disparate in subject matter, ranging from the famous Sunday rogan and Bosman rulings to judgments on lotteries, the importation Tr of obscene articles from abroad and the expulsion from national territory of other Member States’ nationals.2 Focused on domestic regulations, adopted

1

Linguistic diversity is expressly mentioned (together with cultural diversity) in Article 149 of the EC Treaty (education) and in Article 22 of the EU Charter on Fundamental Rights. 2 See, in particular, Cases C-145/88, Torfaen Borough Council v B & Q plc., [1989] ECR 3851, C-169/91, Council of the City of Stoke-on-Trent and Norwich City Council v B & Q plc., [1992] ECR

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in accordance with national or regional socio-cultural characteristics, it is prominent in the literature on European integration.3 As its connection with Article 151 EC is rather tenuous, it is not discussed further here. Proceedings pertaining to food quality and traditional production modules are for similar reasons excluded.4 Although manufacturing rules for traditional foodstuffs and arrangements on indications and designations of origin against false limitations appear to come within the scope of a wider cultural policy pursued by the Member States, such cases are not on all fours with the cultural title of the EC Treaty. The fact that such rulings are not truly connected with culture is supported by the line of defence Member States chose in relevant proceedings, based on grounds of consumer protection rather than cultural claims. Prior to entry into force of the Maastricht Treaty, impediments to the free ow of cultural goods, services and operators, were challenged either as discriminatory national practices or indistinctly applied, domestic measures, which, in certain circumstances, were found to justify barriers to free movement. There is no evidence, post-Maastricht, to suggest that Article 151(4)’s introduction into the EC Treaty has exercised any signicant inuence on the Court’s approach with regard to the impact of Community rules on domestic cultural strategies. The rare cases where express reference is made to Article 151 EC do not seem to fundamentally alter pre-Maastricht judicial positions.

6635, C-388/88, Rochdale Borough Council v Stewart John Anders, [1992] ECR 6457, C-159/90, The Society for the Protection of Unborn Children Ireland Ltd v Stephen Grogan and others, [1991] ECR 4685, C-415/93, Union Royale Belge des Sociétés de Football Association ASBL v Jean-Marc Bosman, [1995] ECR I-4921, C-275/92, Her Majesty’s Customs and Excise v Gerhart Schindler and Jörg Schindler, [1994] ECR 1039, C-124/97, Läärä and others, [1999] ECR I-6067, C-67/98, Questore di Verona v Diego Zenatti, [1999] ECR I-7289, C-6/01, Anomar and others, [2003] ECR I-8621, C-243/01, Criminal proceedings against Piergiorgio Gambelli and others, [2003] ECR I-13031, 34/79, Regina v Maurice Donald Henn and John Frederick Ernest Darby, [1979] ECR 3795, and Joined Cases 115/81 and 116/81, Rezguia Adoui v Belgian State and the City of Liège; Dominique Cornuaille v Belgian State, [1982] ECR 1665. 3 See, generally, P. Kurzer, Markets and Moral Regulation (2001). 4 See Cases 178/84, Commission v Germany, [1987] ECR 1227, 407/85, 3 Glocken GmbH and Gertraud Kritzinger v USL Centro-Sud and Provincia autonoma di Bolzano, [1988] ECR 4233, 237/82, Jongeneel Kaas BV and others v State of the Netherlands and Stichting Centraal Orgaan Zuivelcontrole, [1984] ECR 483, 12/74, Commission v Germany, [1975] ECR 181, C-47/90, Establissements Delhaize frères et Compagnie Le Lion SA v Promalvin SA and AGE Bodegas Unidas SA, [1992] ECR 3669, C-108/01, Consorzio del Prosciutto di Parma and Salumicio S. Rita SpA v Asda Stores Ltd and Hygrade Foods Ltd, [2003] ECR I-5121, C-469/00, Ravil SARL v Bellon Import SARL and Biraghi SpA, [2003] ECR I-5053, and Joined Cases C-465/2002 and C-466/2002, Germany v Commission, [2005] ECR I-9115.

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The Pre-Maastricht Context

The free movement principles of the EEC Treaty, pertinent to all elds of economic activity, were bound to affect the cultural sector. Member States’ diverse schemes, intended to regulate domestic cultural markets and, typically, to protect them from foreign competition, as a potential hindrance to market liberalisation required to be removed. Attempts to deter application of the free movement provisions to trade in cultural goods were quickly rebuffed. In the Italian Treasures case, relating to the imposition of an export tax on cultural goods, Italy alleged that works of art could not be assimilated to ‘consumer goods or articles of general use’.5 But the Court rejected the possibility of a general cultural exemption. Works of art, in so far as they can be valued in money and form the object of a commercial transaction, were held as within the scope of the common market rules.6 Pursuant to Article 30 EC, protection of national treasures possessing artistic, historic or archaeological value may justify derogations from the principle of free movement of goods. Such justication has never been raised in litigation before the ECJ, yet discloses that national treasures constitute a special domain, protected from the Community’s market imperatives. Crucially, recourse to Article 30 EC to justify discriminatory measures with respect to imports, exports and transit in goods on general cultural policy grounds is not permitted. According to the Court, Article 30 EC, derogating from a fundamental rule of the Treaty, must be interpreted strictly and cannot be extended to cover objectives not expressly enumerated therein. Indeed, in Leclerc, the Court held that national legislation on book-price-xing, adopted to protect creativity and cultural diversity at national level, could not escape the prohibition of Article 28 EC: protecting cultural creation and diversity was not mentioned in Article 30 EC.7 While unwilling to recognise justications not expressly contained in Article 30 EC, the Court did not oppose broad interpretation of derogations that are explicitly listed. Protection of literary and artistic property by copyright was found to be covered by the protection of industrial and commercial property, which under Article 30 EC may justify restrictions to free movement of goods.8 According to Advocate General Darmon, a different scenario could

5

Case 7/68, Commission v Italy, [1968] ECR 423, at 428. Ibid., at 429. 7 Case 229/83, Leclerc v Au blé vert, [1985] ECR 1. 8 See Joined Cases 55/80 and 57/80, Musik-Vertrieb membrane GmbH et K-tel International v GEMA—Gesellschaft für musikalische Aufführungs—und mechanische Vervielfältigungsrechte, [1981] ECR 147, and Case 341/87, EMI Electrola GmbH v Patricia Im—und Export and others, [1989] ECR 6

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‘give rise . . . to major risks for artistic creativity in the Community, an essential aspect of this Europe of culture which everyone desires’.9 Concerning free circulation of workers, on the one hand, the Court held that cultural professionals are within the scope of the Treaty as any other operators exercising an economic activity in a Member State other than the state of origin.10 On the other, it ruled that the exception of Article 39(4) EC with regard to employment in the public sector has to be narrowly interpreted and may not justify restrictions to the admission of non-nationals to certain functions in the public cultural sector. The Court claried in Commission v Belgium that the notion of ‘employment within the meaning of Article 48(4) [now Article 39(4)] of the Treaty must be connected with the specic activities of the public service in so far as it is entrusted with the exercise of powers conferred by public law and with responsibility for safeguarding the general interests of the State’.11 Subsequently, it found that Greece, by imposing a Greek nationality condition rst, as regards access to musicians’ posts at the Athens opera and in municipal and local orchestras, and secondly, with respect to employment posts in public bodies providing radio and television services, failed to full its obligations under Article 39 EC.12 In the eld of services and freedom of establishment, the ECJ similarly asserted that the principle of free movement applies with regard to both operators providing cross-border cultural services and self-employed cultural actors.13 As to derogations, the Court excluded the possibility of bringing cultural justications within any of the permitted grounds for exemption under Article 46 EC, which relates to the right of establishment but also applies to services by means of Article 55 EC.14 The point was made clear in Commission v Belgium, concerning a ban, imposed by the Belgian government, that prohibited cable television companies in the Flemish community relaying on their networks programmes of other Member States’ radio or

79. It is generally agreed that copyright legislation lies within the scope of national cultural policies, as a means to encourage the creation and dissemination of cultural works. See, in this respect, Litman, ‘Sharing and Stealing’, Social Science Research Network (SSRN, 23 November 2003), available at: http://ssrn.com/abstract=472141. 9 See Opinion of Advocate General Darmon delivered on 29 November 1988, Case 341/87, supra n. 8, 86, at para. 25. 10 See Case C-290/94, Commission v Greece, [1996] ECR I-3285. 11 Case 149/79, Commission v Belgium, [1982] ECR 1845. 12 Supra n. 10. 13 See, in particular, Cases 155/73, Sacchi, [1974] ECR 409, and 197/84, P. Steinhauser v City of Biarritz, [1985] ECR 1819. 14 On whether there is scope for the Member States to bring cultural policy justications on grounds of public policy under Article 46 EC, see Karydis, ‘Le juge communautaire et la préservation de l’identité culturelle nationalle’, 30 Revue Trimestrielle de Droit Européen (1994) 551, at 557–558.

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television broadcasting stations, where programming was not transmitted in the language or one of the languages of the Member State in which the broadcasting operators were established.15 The domestic legislation under review was found to be discriminatory against foreign operators because it prevented stations established in a Member State other than the Netherlands from offering programmes in Dutch to the Flemish audience, when that possibility naturally existed for national broadcasting operators. The justications adduced by the Belgian authorities—the need to maintain media pluralism, ensure the viability of national broadcasting stations and preserve artistic heritage—the Court found to be unfounded. Regarding the rst and second of these grounds, the Court stressed that the primary aim of the legislation adopted (to preclude foreign commercial channels from jeopardising the competitive position of domestic operators) was economic in nature. Accordingly, it could not justify restrictions on free provision of services. As to the third objective claimed, of preserving and further developing artistic heritage, the Court stated that the national legislation was ‘in reality, likely to reduce demand for television productions in Dutch’.16 Whether media regulation prohibiting use of a national language by foreign broadcasters, in order to secure from foreign competition domestic operators, is within the scope of national ‘cultural policy’ is open to question. Arguably, the line of defence chosen by the Belgian authorities was not culture-based, so that the Court was right to point to the economic considerations driving the choice of regulatory approach at national level. However, even had the linguistic restrictions pursued purely cultural objectives, they would not have survived: the Court ascertained that no exemption from freedom to provide services could be sought on the basis of cultural policy because cultural considerations do not ground any exemption permitted under Article 46, read in conjunction with Article 55 EC. Along similar lines, in Fedicine, national rules reserving the grant of dubbing licences for third country lms to operators undertaking, at the same time, to distribute national productions, were found to fall foul of Article 49 EC.17 The Spanish government alleged that domestic legislation aimed to protect the national lm industry and thus was driven by cultural concerns. The legislative act, by linking the grant of dubbing licences for foreign lms to distribution of Spanish lms, accorded preferential treatment to national 15 Case C-211/91, Commission v Belgium, [1992] ECR 6757. See also Case 352/85, Bond van Adverteerders v Netherlands State, [1988] ECR 2085. 16 Case C-211/91, cited above, at para. 9. 17 Case C-17/92, Federación de Distribuidores Cinematográcos v Estado Español et Union de Productores de Cine y Televisión, [1993] ECR 2239.

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producers, to the detriment of producers established in other Member States who sought to distribute their lms in Spain. For the Court, the discrimination suffered by the latter could not be justied by cultural policy considerations, as cultural concerns were not included within any of the justications allowed by the Treaty in the eld of services. The restrictive effect of primary Community law on state regulation in the eld of culture was tempered, to an extent, by gradual development of the so-called ‘rule of reason’. Following the Dassonville judgment18 and the seminal Cassis de Dijon ruling,19 it became clear that impediments to cross-border mobility and trade, arising from generally applicable national rules (namely rules which do not distinguish on grounds of origin), could be justied by imperative reasons relating to the public interest, a notion dened widely, to incorporate national cultural policy goals. In this respect, protecting national historical and artistic heritage,20 promoting the widest possible dissemination of knowledge of a country’s patrimony,21 safeguarding freedom of expression of the various (in particular, social, cultural, religious and philosophical) components of a Member State22 or encouraging provision of quality television services23 were accepted as grounds on which indistinctly applicable restrictions to free movement could be justied. Of course, the balance between market integration and the protective function of national legislative or administrative practice was carefully circumscribed. For a Member State successfully to plead a mandatory requirement in its defence, the schemes under scrutiny were required not only to apply without distinction on the basis of origin, but also to be necessary, appropriate and proportionate to the cultural goals pursued. Unsurprisingly, the balancing exercise evolved into an extremely complex undertaking. On numerous occasions the technical tries of the proportionality test applied by the Court diluted national efforts to preserve non-discriminatory (and therefore less-easily captured) measures, introduced on the basis of alleged cultural policy considerations. In Commission v Netherlands, for instance, it was held that the obligation, imposed by Dutch legislation on national broadcasting bodies, to have all or some of their programming produced via recourse to the services of a specic public limited company, the NOPB, 18

Case 8/74, Dassonville, [1974] ECR 837. Case 120/78, Rewe-Zentral AG v Bundesmonopolverwaltung für Branntwein (Cassis de Dijon), [1979] ECR 649. 20 Case C-180/89, Commission v Italy, [1991] ECR 709. 21 Case C-154/89, Commission v France, [1991] ECR I-659. See also Case C-198/89, Commission v Greece, [1991] ECR 727. 22 Cases C-353/89, Commission v Netherlands, [1991] ECR 4069, and C-288/89, Stichting Collectieve Antennevoorziening Gouda and others v Commissariaat voor de Media, [1991] ECR 4007. 23 Case C-353/89, cited above. 19

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was not proportionate to the cultural aim of maintaining a pluralist media landscape.24 The Court noted that ‘a cultural policy understood in that sense may indeed constitute an overriding requirement relating to the general interest which justies a restriction of the freedom to provide services’.25 But, it concluded, the legislation examined was disproportionate to the objective pursued. Pluralism in the audio-visual sector of a Member State could ‘not be affected in any way by allowing the various national broadcasting bodies to make use of providers of services established in other Member States’.26 In the same vein, domestic rules, compelling broadcasting bodies established in other Member States to conform to certain Dutch standards, should they seek to broadcast programmes containing advertisements intended for the Dutch public, were found to breach Article 49 EC.27 The Dutch government argued that the national legislation, by requiring the production of advertisements by an independent legal person and the use of all advertising revenue for the creation of audiovisual content, prevented advertisers from exerting ‘an excessive inuence over the preparation of programmes, which might jeopardise cultural policy’.28 The Court retorted that conditions affecting the structure of foreign organisations were not objectively necessary to safeguard the general interest of maintaining domestic, plural audiovisual patterns. The Dutch government could ‘very well conne itself to formulating the statutes of its own bodies in an appropriate manner’.29 The Court’s attitude stemmed from a desire to ensure that protectionist goals, under the guise of cultural concerns, do not undermine establishment of the internal market. A similar tone was set in a series of cases on foodstuffs labelling.30 Article 14 (now amended) of Directive 79/112/EEC stipulated that labelling particulars should appear in ‘a language easily understood’ by purchasers, unless other measures were taken to ensure that the consumer was informed.31 In examining the compatibility with Community rules of

24

Ibid. Ibid., at para. 30. 26 Ibid., at para. 31. 27 Note, however, that Article 49 EC, and the provisions of the Treaty on free movement of capital, do not preclude domestic legislation designed to prevent national broadcasting organisations from improperly evading their content obligations, imposed to guarantee the pluralistic and non-commercial nature of programming. See Case C-148/91, Vereniging Veronica Omroep Organisatie v Commissariaat voor de Media, [1993] ECR 487. See also Case C-23/93, TV10 SA v Commissariaat voor de Media, [1994] ECR I-4795. 28 Case C-353/89, supra n. 22, at para. 41. 29 Ibid., at para. 42. 30 See Shuibhne, ‘Labels, Locals, and the Free Movement of Goods’, in R. Craufurd Smith (ed.), Culture and European Union Law (2004) 81. 31 See Council Directive 79/112/EEC of 18 December 1978 on the approximation of the laws of the Member States relating to the labelling, presentation and advertising of foodstuffs 25

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stringent national measures going beyond the obligation to use a language easily understood, the Court favoured compliance with the free movement principles. Linguistic requirements demanding the use of a precise language were frequently found to indirectly discriminate against foreign producers, who were disadvantaged vis-à-vis national operators, whose products already complied with national rules. In Piageme I, for example, the Court held that Article 28 EC precluded a national law from requiring the exclusive use of Dutch for the sale of mineral water in the Flemish community of Belgium without allowing for the possibility of using another language easily understood by purchasers or of informing the purchaser by other means.32 Notwithstanding the tendency of Member States to prescribe labelling requirements matching their linguistic characteristics, a language easily understood need not coincide with the language of the region in which the products entered the market. Conversely, in Groener, the Court upheld national rules making appointment to a full-time teaching post conditional upon adequate knowledge of Irish, for the EEC Treaty did not prohibit ‘the adoption of a policy for the protection and promotion of a language of a Member State which is both the national language and the rst ofcial language’, in so far as implementation did not ‘encroach upon a fundamental freedom such as that of the free movement of workers’.33 The Court recognised the ‘special linguistic situation in Ireland’, where one ofcial language necessitated protection from another ofcial language.34 It is highly likely this factor shaped the Court’s approach, and it is not certain whether the same conclusion would have been reached for countries with different linguistic dynamics, or in relation to regional languages and languages, which, though national, are not ofcial.35 At any rate, the fact that the Court took into account Ireland’s specic linguistic features, even with certain limits,36 demonstrates a degree of judicial sensitiveness with regard to national cultural autonomy. Interestingly, in other cases, the Court, by ensuring respect for the free movement principles, indirectly encouraged preservation and promotion of

for sale to the ultimate consumer, OJ L 33, 8/2/1979, p. 1. Directive 2000/13/EC of 20 March 2000 repealed Directive 79/112/EEC (OJ L 109, 6/5/2000, p. 29). 32 Case C-369/89, Piageme and others v BVBA Peeters, [1991] ECR I-2971. 33 Case C-379/87, Anita Groener v Minister for Education and the City of Dublin Vocational Educational Committee, [1989] ECR 3967, at para. 19. 34 Ibid., at para. 17. 35 See R.L. Creech, Law and Language in the European Union: The Paradox of a Babel ‘United in Diversity’ (2005), at 107. 36 Taking note of the low standards required by the Irish measure (competence and not uency of Irish), the Groener judgment was also viewed as signalling that unwarranted linguistic requirements are not allowed. See McMahon, ‘Case 379/87, Anita Groener v Minister for Education and the City of Dublin Vocational Educational Committee’, 27 Common Market Law Review (1990) 129, at 137.

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the cultural identity of Member States’ nationals exercising free movement rights. Mutsch is revealing.37 The Court ruled that a Luxembourg national, residing and pursuing an activity as an employed person in Belgium, was entitled to request that court proceedings against him take place in German under the same conditions applying to Belgian citizens. The right to use one’s own language in proceedings under the same conditions as national workers played ‘an important role in the integration of a migrant worker and his family into the host country, and thus in achieving the objective of free movement of workers’.38 Yet, by granting such a right, the Court simultaneously supported the protection of language, one of the most sensitive aspects of one’s cultural identity. Konstantinidis eshed out similar standards. The case related to the entry of the name of a Greek national, settled in Germany as a self-employed person, in civil status registers, and using a form of spelling to which he objected.39 The Court ruled that adoption of legislative or administrative rules for transcription of names in Roman characters was incompatible with freedom of establishment, in so far as their application caused Member States’ nationals a degree of inconvenience amounting to interference with the exercise of establishment rights.40 Not surprisingly, the issue was framed so as to connect only with the problems that a market operator, when establishing in a Member State other than the state of origin, would encounter in the pursuit of a professional activity. Nonetheless, the statement made by Advocate General Jacobs that ‘Community law does not regard the migrant worker (or the self-employed worker) purely as an economic agent and a factor of production . . . [but also] as a human being who is entitled to live in that State in “freedom and dignity”’, and that, in any case, ‘it is our name that gives us a sense of identity, dignity and self-esteem’ supports the view that cultural considerations—the cultural origins that one’s name reects—were decisive in the case.41 In fact, in Garcia Avello, a case further discussed below, the Court itself accepted this point, to the extent that respect for the cultural identity of EU citizens requires adoption of special measures, exceeding strict respect for equal treatment.42

37

Case 137/84, Criminal proceedings against Rober Heinrich Maria Mutsch, [1985] ECR 2681. Ibid., at para. 16. 39 Case C-168/91, Christos Konstantinidis v Stadt Altensteig—Standesamt and Landratsamt Calw—Ordnungsamt, [1993] ECR 1191. 40 The Court expressly referred to the risk of potential clients confusing Konstantinidis with other operators due to the spelling of his name. 41 See Opinion of Advocate General Jacobs delivered on 9 December 1992, Case C-168/91, supra n. 39, 1198, at paras 24 and 40. 42 Case C-148/02, Garcia Avello, [2003] ECR I-11613. 38

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At other times, the Court’s rigorous defence of the EEC Treaty rules increased prospects of cultural interaction. Telling are Steinhauser and Commission v Spain.43 The former arose from the refusal of the City of Biarritz to allow a German professional artist to participate in a tendering procedure for allocation of public property used for the exhibition and sale of craft products on grounds of nationality. The Court held that the discrimination suffered by the cultural operator fell within the scope of Article 43 EC. The decision was intended to provide guidance to Member States with regard to removal of provisions or practices that excluded, limited or imposed extra burdens on the exercise of establishment rights. Nevertheless, by compelling France to comply with the EEC Treaty, the Court indirectly sustained participation of Community nationals in the cultural life of the host country, promoting a more diversied cultural offering in the domestic market. In Commission v Spain, discriminatory rules on admission to state museums based on nationality were found to breach Article 49 EC. The Court sought to safeguard mobility within the Community but also guaranteed equal access to culture for all Community nationals, regardless of nationality considerations, so encouraging the emergence of a favourable environment for unimpeded cultural appreciation. A multi-cultural reading of the Court’s judgments is available not just with respect to cases concerning direct discriminatory national measures. Equally, it is viable in cases relating to indistinctly applicable domestic rules which passed the mandatory requirements test. To illustrate, in Cinéthèque, the Court ruled that French legislation which accorded priority to the distribution of cinematographic works in cinema theatres, irrespective of origin, did not have as its purpose or effect the favouring of national lm production. Rather, it stimulated cinematographic creation in general, and preserved a plural audiovisual offering.44 Drawing on the foregoing discussion, it may be observed that, while it is difcult to identify a set of parameters that systematically guided the Court in its action, domestic cultural concerns were afforded consideration in preMaastricht judicial reasoning. Though efforts to justify domestic practices that shielded a national market from foreign competition on alleged cultural policy grounds proved untenable, on various occasions the Court sought to balance the cultural prerogatives of the Member States with the Community’s market integration rules. This corrects the mistaken impression that, in the forward push towards a single market, only economic values deserve recognition.

43

See Cases Case 197/84, supra n. 13, and 45/93, Commission v Spain, [1994] ECR I-911. Joined Cases 60/84 and 61/84, Cinéthèque SA and others v Fédération nationale des cinémas français, [1985] ECR 2605. 44

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Certainly, there is no shortage of cases impinging upon national cultural policies. An alternative reading of relevant decisions could induce one to argue that the Court, by demanding compliance with the free movement provisions, simultaneously promoted a multi-cultural paradigm for the new single market created, widening the range of cultural choices available to Member States’ nationals. The establishment of a borderless cultural market of goods, services and operators essentially implied two complementary tasks: Member States were not simply compelled to do away with protectionist measures; they were also required to endorse a spirit of cultural openness, dismantling their cultural frontiers.

3.2 EC Case-Law Subsequent to the Introduction of Article 151(4) EC The cultural cross-sectional clause of Article 151(4) EC has so far received little judicial attention. In its post-Maastricht case-law, the Court has examined the compatibility of national cultural measures with EC Treaty rules, without re-appraising its approach in the light of Article 151(4) EC. As in the pre-Maastricht context, various lines of reasoning have been adopted, revealing that Article 151(4) EC has failed signicantly to guide the Court’s evaluations. Domestic language policies with respect to the labelling of foodstuffs have continued to be curtailed, the judiciary declining to consider whether, following introduction of Article 151(4) EC, cultural concerns should be given greater weight in its assessment.45 In other instances, domestic linguistic rules have garnered the Court’s support. In Angonese, it was ruled that requiring a job applicant to have a certain level of knowledge of a Member State’s regional language was legitimate.46 However, making admission to a recruitment competition conditional on possession of one particular diploma providing evidence of linguistic knowledge was found to contravene Article 39 EC as discriminatory and disproportionate. Despite the lack of a systematic judicial approach in relation to national linguistic requirements, it is possible in a post- as in a pre-Maastricht context to point to decisions where the Court supported the preservation of cultural features of Member States’ nationals exercising their movement rights. In this second phase, though, greater emphasis has been placed on Article 12 EC’s

45 See Case C-366/98, Criminal proceedings against Yannick Geffroy and Casino France SNC, [2000] ECR I-6579. 46 Case C-281/98, Roman Angonese v Cassa di Risparmio di Bolzano SpA, [2000] ECR I-4139.

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principle of non-discrimination on grounds of nationality. In Bickel and Franz,47 the Court accepted that preservation of ‘the ethnic and cultural identity of persons belonging to [a] protected minority’ may constitute a legitimate aim of national legislation.48 Legislation granting a right to Italian nationals, residents of the Province of Bolzano, to have criminal proceedings conducted in German was found to possess such an objective. But extending this right to German-speaking nationals of other Member States, occasionally or temporarily present in the region, would not undermine its attainment.49 Garcia Avello related to the request of a Spanish national, Carlos Garcia Avello, and his Belgian spouse, Isabelle Weber, residing in Belgium, to change the surname of their children, who possessed dual Spanish and Belgian nationality—from ‘Garcia Avello’, their name according to Belgian law, to ‘Garcia Weber’, in line with Spanish custom.50 The Court took the position that Article 12 EC (and Article 17 EC on citizenship of the Union) precluded the Belgian administrative authority from refusing the application. The principle of non-discrimination had to be read from the perspective of substantive equality,51 entailing that ‘comparable situations must not be treated differently and that different situations must not be treated in the same way’.52 In contrast to persons possessing only Belgian nationality, Belgian nationals also holding Spanish nationality had different surnames under the Belgian and Spanish legal systems. This discrepancy was likely to cause serious inconvenience, professionally and privately. Garcia Avello’s children thus occupied a specic, distinguishable situation, justifying different treatment. Acknowledgment that strict respect for the principle of non-discrimination should not run counter to the right to one’s name sent a clear message to the Member States that protection of the cultural identity of EU citizens could require specic measures on their part. Rejection of the argument, advanced by the Danish government, that a common regime on attribution of names would facilitate integration of Spanish nationals into Belgium elucidates that

47

Case C-274/96, Criminal proceedings against Horst Otto Bickel and Ulrich Franz, [1998] ECR I-7637. 48 Ibid., at para. 21. 49 The Court accepted the argument that Italian courts were in a position to conduct proceedings in German for non-Italian nationals without additional complications or costs, since the necessary arrangements were already in place with respect to Italians, residents of the Province of Bolzano (ibid., at para. 30). 50 See supra n. 42. 51 See Toggenburg, ‘Who is Managing Ethnic and Cultural Diversity in the European Condominium? The Moments of Entry, Integration and Preservation’, 43 Journal of Common Market Studies (2005) 717, at 727. 52 Supra n. 42, at para. 31.

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for the Court, free movement (and EU citizenship) must not lead to cultural assimilation. The multi-cultural paradigm promoted by the Court is also detectable in the following series of judgments—though none makes specic reference to Article 151(4) EC. De Coster stemmed from a dispute, referred for a preliminary ruling, concerning the imposition of a tax on satellite dishes by the municipality of Watermael-Boitsfort in Belgium, allegedly on grounds of environmental protection.53 The Court held that the local measure was a restriction to the free provision of services and was not proportionate to the environmental aims pursued. Since the local tax applied only to reception of television programmes transmitted via satellite, and not via cable (the primary mode of programme delivery in Belgium), it was more likely to dissuade access to foreign programmes than domestic ones, and hence primarily affect the activities of broadcasters established in Member States other than Belgium.54 This is because whereas all domestic channels were distributed by cable, only some foreign channels were; most foreign stations could only be received by satellite.55 Though the Court’s reasoning was of an essentially economic nature, its ultimate effect was to improve prospects for foreign programme delivery, encouraging the availability of diversied cultural content in the domestic market. Commission v France leads one to the same conclusion.56 Here, national legislation was found to be incompatible with Article 49 EC. The domestic scheme under examination made the grant of licences to agents based in France and engaging artists established in another Member State subject to the ‘needs of the market’, and especially the ‘need for engagement of performers’. It also considered all artists pursuing their activities on a temporary basis in France as ‘employed persons’, bound to pay contributions as afliates of the national social security system. The Court ruled that the conditions imposed for engaging foreign artists constituted an unlawful restriction on freedom to provide services, ‘in that [they] tend[ed] to limit the number of suppliers of services’ in the national market.57 Additionally, the presumption of artists’ salaried status deterred provision of cultural services by performers established in another Member State.58 In order to avoid a qualication of their contract as an employment contract giving rise to extra social security costs, operators needed to prove that they pursue their activities in a self-employed capacity.

53 54 55 56 57 58

Case C-17/00, De Coster, [2001] ECR I-9445. Ibid., at paras 31, 33 and 35. Ibid., at para. 32. Case C-255/04, Commission v France, [2006] ECR I-5251. Ibid., at para. 29. Ibid., at para. 38.

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More prominently, in Gerritse the Court sought to reform Member States’ tax withholding income systems, likely to disadvantage foreign cultural practitioners as compared with resident cultural players and therefore liable to discourage provision of cultural services in a Member State other than the state of residence.59 The proceedings originated in a dispute between a Dutch musician who performed as a drummer at a radio station in Berlin, and the German tax authorities, who taxed him at source for his performance at a at rate of 25%, without deduction of business expenses. Direct taxation does not as such fall within the purview of the Community. Notwithstanding, it is settled case-law that the powers retained by the Member States must be exercised consistently with Community law and, in particular, that they must not infringe fundamental freedoms guaranteed by the EC Treaty.60 According to the Court, the business expenses in question were directly linked to the activity that generated the taxable income in Germany, so that residents and non-residents were in a comparable situation. The German legislation required that non-residents be taxed on their gross income without deduction of business expenses, whilst residents were taxed on their net income after deduction of expenses. This was detrimental to other Member States’ nationals, thus constituting indirect discrimination on grounds of nationality, in breach of Article 49 EC. On the issue of denitive taxation of the performer’s income, the Court noted that, at rst sight, Germany was not required to tax Gerritse according to the scheme applicable for residents in Germany, which provided for certain tax benets.61 The Court asserted that ‘the situations of residents and of non-residents are generally not comparable’, because ‘the income received in the territory of a Member State by a non-resident is in most cases only a part of his total income, which is concentrated at his place of residence’.62 But taking into consideration that advantages comparable to those available in Germany were granted to Netherlands residents, the Court concluded that Gerritse occupied a situation comparable to residents in Germany. Should the at rate applicable to him be found higher than the rate of income tax applicable to residents in Germany (which was an issue for the national court), Gerritse would have suffered indirect discrimination.

59

Case C-234/01, Arnoud Gerritse v Finanzamt Neukölln-Nord, [2003] ECR I-5933. See Cases C-204/90, Bachmann, [1992] ECR I-249, C-300/90, Commission v Belgium, [1992] ECR I-305, C-279/93, Schumacker, [1995] ECR I-225, C-80/94, Wielockx, [1995] ECR I-2493, C-107/94, Asscher, [1996] ECR I-3089, C-391/97, Gschwind, [1999] ECR I-5451, and C-55/00, Gottardo, [2002] ECR I-413. 61 The income of residents was taxed in Germany according to a progressive table, including a tax-free allowance introduced for social purposes. 62 Supra n. 59, at paras 43–44. 60

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The Gerritse judgment has major ramications for the cultural domain. It is generally accepted that the taxation of artists lies with the country of performance,63 since mobile operators are often difcult to locate. Non-deductibility of business expenses or the application of high withholding tax rates may limit artists’ mobility by strongly inuencing the choice of a place of performance. By restraining operators’ performing plans, such schemes are likely to impede access to the cultural market of Member States other than the state of residence, reducing the range of cultural services provided at national level.64 The Court’s readiness to align domestic withholding income systems with the principle of equal treatment is geared to creating conditions to stimulate increased participation in the cultural life of Member States other than the Member State of residence. The question of whether measures are justied as facilitating access to cultural activities might require more cautious assessment when the residence criterion is used to determine eligibility for certain cultural benets at local level. Commission v Italy concerned discriminatory, advantageous rates for admission to decentralised state museums in favour of Italian nationals (Venice and Treviso), and also in favour of residents aged over 60 or 65 years (Florence and Padova).65 In allowing these regimes, the Court ruled, Italy had failed to full its obligations under Articles 12 and 49 EC. The Court had previously consistently held that the rules regarding equality of treatment forbade not only overt discrimination based on nationality, but also its covert forms. Maintaining this position, the Court rejected the Italian government’s argument that the schemes, introduced in the light of the high costs inherent in the management of cultural institutions, promoted scal cohesion by granting favourable treatment to Italian nationals and residents who had contributed, via the payment of taxes, to their running. Further, the Court reafrmed, economic aims neither constitute public policy grounds, within the meaning of Article 46 EC, nor an overriding reason in the general interest. The Court’s decision, though directed at ensuring equality of treatment for cultural enjoyment, irrespective of both nationality and residence considerations, is supercial, leaving contentious issues unaddressed. The removal of nationality discrimination, long-debated as an issue central to European integration, does not raise any fundamental questions; precluding local

63 See, in particular, Article 17 of the OECD Model Convention with respect to taxes on income and on capital, applicable to both self-employed and employed artists, available at: http://www.oecd.org. 64 In Germany, following the 1996 tax increase for foreign artists, the number of performances is reported to have fallen by 33%. See Molenaar, ‘International Obstacles for International Performing Artists’, 42 European Taxation (2002) 149, at 149. 65 Case C-388/01, Commission v Italy, [2003] ECR I-721.

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authorities from providing certain cultural services on terms favourable to residents is, however, a different matter. A requirement to allow free entrance to local museums to residents and non-residents alike challenges the nances of local authorities, and by substantially reducing funds available for preservation purposes carries the risk of a negative impact on heritage conservation. Moreover, and though the Italian government did not raise the point in its defence, it is debatable whether market integration goals should take priority over solidarity objectives pursued via establishment of advantageous conditions for appreciation of cultural patrimony by locals. The Court’s judgment, treating direct and indirect discrimination as identical, is not persuasive.66 All in all, it seems that new Article 151(4) EC has had little bearing on judicial practice. The Court has avoided grappling with the implications of the cultural cross-sectional clause, unwilling to disrupt pre-established patterns of cultural discourse. Should this be viewed as an illustration of a judicial belief that Article 151(4) EC serves little useful purpose, precisely because cultural factors were given weight already by the pre-Maastricht case-law? Or does it rather demonstrate the Court’s reluctance to become enmeshed in a controversial debate over Article 151(4) EC’s effects? The Court has tended to avoid open reference to cultural issues, building its reasoning around principles with which it feels more comfortable, such as free movement and equal treatment. This is not to deny that, beneath the surface of judgments, attempts sometimes lurk to guarantee multi-cultural standards for the frontier-less market space created. Even so, this intention is never expressly spelled out and cultural considerations anyhow do not appear to attract more weight now than in the pre-Maastricht context. On this basis, it is reasonable to conclude that the Court has not systematically considered the impact of Community rules on national cultural policies and that it has not seriously reected on the role that Article 151(4) EC can play in relevant assessments.

66 On this point, see Davies, ‘ “Any Place I Hang my Hat?” or: Residence is the New Nationality’, 11 European Law Journal (2005) 43.

Chapter Four

Internal Market Legislation and Cultural Mainstreaming

It is common ground that market integration does not constitute the sole method applied to attain the objective of the creation of the Community’s internal market. A double-edged approach is rather followed with policy integration complementing the results obtained via market integration. EC-level legislation is adopted in order to replace or align national rules to the extent necessary for the proper functioning of the internal market. Harmonisation, initially extremely detailed and subsequently more focused on the mechanism of mutual recognition,1 seeks to prevent market fragmentation by approximating or coordinating domestic rules that form a barrier to trade. In enacting harmonising legislation on the basis of Articles 40, 47(2), 57(2), 93, 94 and 95 EC—the main internal market legal bases of the Treaty—the question of the balance to strike between public policy considerations, including cultural policy concerns, and the Community goal of ensuring free circulation of goods, persons, services and capital arose on a number of occasions. The constitutional legitimacy of pursuing cultural policy objectives through internal market legislation was discussed extensively in chapter 2. Accordingly, this topic will not be considered further here. The aim of this chapter is to investigate whether, following the entry into force of the EC Treaty, Article 151(4) EC has served to intensify pre-Maastricht efforts deployed to integrate a cultural reasoning in the rules enacted. The best known instruments with clearly cultural subject matter, adopted prior to the entry into force of the Maastricht Treaty, are Council Regulation (EEC) 3911/92 on the export of cultural goods and Council Directive 93/7/ EEC on the return of cultural objects unlawfully removed from the territory

1 For an overview, see Mattera, ‘L’Union Européenne assure le respect des identités nationales, régionales et locales, en particulier par l’application et la mise en œuvre du principe de la reconnaissance mutuelle’, Revue du Droit de l’Union Européenne (2002) 17.

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of a Member State.2 Enacted to promote completion of the internal market,3 these seek to reconcile the fundamental principle of free circulation of goods with domestic cultural policy concerns linked to heritage protection. The adoption of both Regulation and Directive may be explained by considering the implications of removal of custom controls between the Member States for domestic protective cultural heritage regimes. Under the terms and within the limits of Article 30 EC, Member States would retain, after 1992, the right to dene their cultural treasures and take the necessary measures for their protection. However, the opening of internal Community customs frontiers risked increasing the illegal trafcking of works of art.4 With a view to counteracting such trends, while guaranteeing that divergences in domestic heritage laws do not impede full realisation of the common market, it was decided to impose uniform controls at external borders, and make arrangements allowing Member States to secure the return of cultural goods unlawfully removed from their territory. In accordance with Council Regulation (EEC) No. 3911/92, export of cultural goods outside the customs territory of the Community is subject to an export licence,5 issued by the competent authority of the Member State

2 Council Regulation (EEC) No. 3911/92 of 9 December 1992 on the export of cultural goods, OJ L 395, 31/12/1992, p. 1, and Council Directive 93/7/EEC of 15 March 1993 on the return of cultural objects unlawfully removed from the territory of a Member State, OJ L 74, 27/3/1993, p. 74. See, in this respect, Margue, ‘La protection des trésors nationaux dans le cadre du grand marché: problèmes et perspectives’, Revue du Marché Commun et de l’Union Européenne (1992), No. 363, 905, De Ceuster, ‘Les règles communautaires en matière de restitution de biens culturels ayant quitté illicitement le territoire d’un Etat membre’, 1 Revue du Marché Unique Européen (1993), No. 2, 33, Voudouri, ‘Circulation et protection des biens culturels dans l’Europe sans frontières’, 110 Revue du Droit Public et de la Science Politique en France et à l’étranger (1994) 479, Von Plehwe, ‘European Union and the Free Movement of Cultural Goods’, 20 European Law Review (1995) 431, Biondi, ‘The Merchant, the Thief & the Citizen: The Circulation of Works of Art within the European Union’, 34 Common Market Law Review (1997) 1173, and Poli, ‘Droit communautaire, compétences culturelles des états membres en matière de protection du patrimoine national, et Convention d’ UNIDROIT sur les biens culturels volés ou illicitement exportés’, Revue du Marché Commun et de l’Union Européenne (1998) 89. 3 The Directive was adopted on the basis of Article 95 EC. The legal foundation of Regulation (EEC) 3911/92 was Article 133 EC, which concerns the Community’s common commercial policy. According to the rst indent of the Regulation, ‘in view of the completion of the internal market, rules on trade with third countries [were] needed for the protection of cultural goods’. 4 It was feared that cultural goods, moved from the territory of a Member State and presented to the customs ofces of Member States with more relaxed export controls, could be easily exported to third countries. 5 The Commission in Regulation (EEC) No. 752/93 of 30 March 1993 laying down provisions for the implementation of Council Regulation (EEC) No. 3911/92 on the export of cultural goods (OJ L 77, 31/3/1993, p. 24), as subsequently amended by Regulation (EC) No. 1526/98 (OJ L 201, 17/7/1998, p. 47) and Regulation (EC) No. 656/2004 (OJ L 104, 8/4/2004, p. 50), laid down different types of export licences: ‘standard’; ‘specic open’; and

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in whose territory the cultural object in question was lawfully and denitely located on 1 January 1993.6 The licence must be presented to the customs ofces empowered by the Member States to carry out export formalities.7 It may be granted for the common categories of cultural goods listed in an Annex to the Regulation and dened on the basis of age and economic criteria.8 Administrative assistance forms the core of the rules enacted. Information exchange between customs ofces guarantees object identication, and sheds light on the circulation status of cultural goods. Directive 93/7/EEC complements this by providing for return of goods having unlawfully exited the territory of a Member State (on or) after 1 January 19939 in violation of domestic protective laws or Regulation (EEC) No. 3911/92.10 Its scope includes only those cultural objects which are both listed in an annex to the Directive (identical to that of the Regulation) and classied, before or after unlawful removal, as national treasures by the country of origin.11 National treasures, which are not ‘cultural objects’ within the meaning of the Directive, are excluded from its application and so governed solely by national legislation.12 The obligation for return is subject to judicial proceedings within clearly dened time limits,13 to be initiated by the requesting Member State before the competent court of the Member State where the object is located, against ‘general open’. Open licences are used to cover repeated temporary exports of cultural goods for a given person or organisation, and temporary exports of cultural goods which form part of the permanent collection of a museum or other institution. 6 The licence can be issued thereafter by the competent authority of the Member States in whose territory the object is located, following lawful and denitive dispatch from another Member State, importation from a third country or re-importation from a third country after lawful dispatch from a Member State to that country. According to Article 2(2) of the Regulation, the export licence may be refused, where the cultural goods in question are covered by legislation protecting national treasures of artistic, historical or archaeological value in the Member State concerned. It may be waived for certain archaeological objects over 100 years old, and of limited scientic or archaeological interest, provided that these are not the direct product of excavations. 7 Supra n. 2, Regulation (EEC) No. 3911/92, Art. 4. 8 Council Regulation (EC) No. 2469/96 of 16 December 1996 amending the Annex to Regulation (EEC) No. 3911/92 on the export of cultural goods (OJ L 335, 24/12/1996, p. 9) added watercolours, gouaches and pastels. 9 Supra n. 2, Directive 93/7/EEC, Art. 13. Each Member State may apply the arrangements provided to requests for the return of cultural objects unlawfully removed from the territory of other Member States prior to 1 January 1993 (Art. 14(2)). 10 Directive 93/7/EEC also covers instances of works of art not returned at the end of a period of lawful temporary removal (Art. 1(2)). 11 Supra n. 2, Directive 93/7/EEC, Art. 1(1). Objects that do not feature in the list, but form an integral part of public collections enlisted in the inventories of museums, archives, libraries and ecclesiastical institutions are also covered by the Directive. 12 Under Article 14(1) of the Directive, each Member State may extend the protection granted to items other than those enumerated in the Directive. 13 Supra n. 2, Directive 93/7/EEC, Art. 7.

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the possessor or, failing that, the holder of the cultural object (who, if bona de, is entitled to fair compensation).14 Although the remedies, for theft or unlawful transfers carried out with the owner’s consent, are available only to Member States, not private individuals, the framework introduced is without prejudice to civil or criminal proceedings brought by individuals. The Directive is concerned only with the issue of return. Questions of ownership are governed by the law of the requesting state.15 Self-evidently, the scheme’s success turns on cooperation amongst national authorities.16 Domestic cultural policy considerations played a major role in enactment of both instruments. By introducing uniform controls at the Community’s external borders and a procedure for restoring unlawfully removed national treasures, the European institutions have sought to enact a measure of market integration, yet one which is not detrimental to Member States’ cultural richness. By supporting Member States’ efforts to preserve their cultural assets, in particular, via extra-territorial application of their cultural protection policies as framed by national legislative and administrative practice, the legislation seeks to discourage illicit trade in works of art. To this end, precise cultural policy decisions have been made. Despite the absence of explicit reference to so-called ‘Community heritage’,17 the categories of cultural goods, within the scope of the Regulation and the Directive, evince a clear cultural policy choice by the Community that Member States must respect.18 More conspicuously, national authorities are compelled to take other Member States’ cultural interests into account on the basis of the cooperation channels established.19 In all likelihood, Member States will continue to accord priority to preservation of their own cultural assets. Nonetheless, they are expected to carry out appropriate checks, and demonstrate a high level of diligence with regard to trade transactions which may affect the cultural patrimony of their partners.

14

Ibid., Art. 9. The burden of proof is governed by the legislation of the requested state. Ibid., Arts 12 and 15. 16 Ibid., Art. 4. Consultation matters pertaining to the search and identication of goods which are reported as missing, the notication of the discovery of cultural objects when there are reasonable grounds to believe that they have been unlawfully removed, the safeguarding of an object’s integrity, the adoption of interim measures to prevent evasion of the return procedure, and mediation between the possessor/holder and the requesting state are expressly addressed by the Directive. 17 See, in this respect, European Commission, Communication to the Council and Parliament, Stronger Community action in the cultural sector, Bull. EC (1982), Supplement 6/82, at 8. 18 De Witte, ‘The Cultural Dimension of Community Law’, in Collected Courses of the Academy of European Law (1993), Vol. IV–1 229, at 243. 19 This is despite the fact that the framework adopted is primarily intended to harmonise procedural aspects. 15

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Against evidence of a gradual change in attitude, lack of appropriate administrative coordination between Member States has proved the main drawback of the system in practice.20 The absence of detailed controls as to the provenance and legality of cultural goods, hindrances to information exchange, and delays in adopting transposition measures for the Directive, have undermined efcient implementation. Recently, the Commission has launched a series of initiatives restructuring relevant administrative assistance, so that free circulation of works of art does not translate into a cultural loss for Member States.21 Regulation (EEC) No. 3911/92 and Directive 93/7/EEC are not the only measures, adopted prior to the Treaty of Maastricht, bearing a signicant cultural dimension. The former instruments essentially reinforced the cultural prerogatives of the Member States. But mention should also be made of a number of legislative acts principally implementing free movement principles, while incidentally impinging on national cultural policies. The provisions on language use for product labelling, inserted in various binding documents for purposes of consumer protection, affected domestic cultural policies, by limiting Member States’ margin of discretion with respect to language regulation.22 More importantly, on the basis of Article 40 EC, on 25 July 1977, the Council adopted Directive 77/486/EEC on the education of the children of migrant workers.23 This Directive imposed a duty on Member States to ensure that free tuition is offered in their territory, including ‘the teaching—adapted to the specic needs of such children—of the ofcial language or one of the ofcial languages of the host State’.24 It also

20 See, in particular, European Commission, Report to the Council, the European Parliament and the Economic and Social Committee on the implementation of Council Regulation (EEC) No. 3911/92 on the export of cultural goods and Council Directive 93/7/EEC on the return of cultural objects unlawfully removed from the territory of a Member State, COM(2000) 325, and Biondi, ‘The Gardener and Other Stories: The Peregrinations of Cultural Artefacts within the European Union’, in R. Craufurd Smith (ed.), Culture and European Union Law (2004) 153, at 157–161. 21 For an overview of the Commission’s initiatives, see Council Resolution of 21 January 2002 on the Commission report on the implementation of Regulation (EEC) No. 3911/92 on the export of cultural goods and Directive 93/7/EEC on the return of cultural objects unlawfully removed from the territory of a Member State, OJ C 32, 5/2/2002, p. 3. 22 See, for example, Council Directive 79/112/EEC of 18 December 1978 on the approximation of the laws of the Member States relating to the labelling, presentation and advertising of foodstuffs for sale to the ultimate consumer, OJ L 33, 8/2/1979, p. 1, Council Directive 76/768/EEC of 27 July 1976 on the approximation of the laws of the Member States relating to cosmetic products, OJ L 262, 27/9/1976, p. 169, and Council Directive 92/27/EEC of 31 March 1992 on the labelling of medicinal products for human use and on package leaets, OJ L 113, 30/4/1992, p. 8. 23 Council Directive 77/496/EEC of 25 July 1977 on the education of the children of migrant workers, OJ L 199, 6/8/1977, p. 32. 24 Ibid., Art. 2.

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instructed host Member States to take appropriate measures to promote, in coordination with normal education, the teaching of children’s mother tongue and culture,25 ‘with a view principally to facilitating their possible integration into the Member State of origin’.26 Improving children’s linguistic skills was meant to facilitate intra-Community mobility. Teaching of the language of the host state should permit children’s integration into the new educational environment. Acquaintance with mother tongue and culture should support the possibility of re-entry into the Member State of origin. Saliently, the creation of such positive obligations for Member States, directly affecting education and linguistic policies, can also be interpreted as an attempt by the European legislator to ensure that mobility neither undermines linguistic diversity, nor jeopardises the preservation and further development of cultural identity. Community legislation adopted prior to introduction of Article 151 in the EC Treaty thus occasionally affected domestic cultural patterns and practices. On certain occasions, the European institutions sought to support Member States’ cultural policy strategies, where these were endangered by market integration. There are also instances where Community legislation assigned to the Member States new cultural tasks in response to regulatory needs created by establishment of a frontier-less market. In all cases, precise cultural policy choices were made at Community level, altering domestic cultural policy preferences. The parameters of the Community’s cultural mainstreaming action, in the pre-Maastricht context, and subsequently via the mandate codied in Article 151(4) EC, may be more precisely identied by rst mapping the legislative sectors in which the internal market v culture conict has arisen over the years. For that purpose, the following sections focus on three distinct areas of Community legislation, as cultural policy-linking case-studies: indirect taxation of cultural goods and services; copyright protection in relation to the advent of the information society and the recognition of a resale right for artists; and audiovisual regulation.

4.1

Culture and Taxation

From the very beginning of the European project, taxation, a core element of national sovereignty, was identied amongst the policy areas which could hinder establishment and proper functioning of the internal market. National

25 26

Ibid., Art. 3. Ibid., Preamble to the Directive.

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differences in tax regimes could result in the creation or multiplication of scal barriers, leading to market fragmentation. Such differences, therefore, needed to be removed. Community action to adjust national tax systems is based on a variety of Treaty provisions. The general principle of non-discrimination on grounds of nationality, prescribed by Article 12 EC and embodied in the free movement principles, precludes unequal tax treatment favouring national goods, services, operators and capital. Unjustied scal restrictions, impeding intra-Community trade by sheltering the domestic market against foreign competition, must be abolished. Customs duties of a scal nature are explicitly prohibited by Article 25 EC. Articles 90 to 92 EC, relating to indirect taxation,27 provide for equal scal treatment of domestic and foreign products. Article 93 EC confers on the Community the competence to harmonise national indirect taxation schemes ‘to the extent that such harmonisation is necessary to ensure the establishment and the functioning of the internal market’. The unanimity requirement imposed enables the exercise of veto powers within the Council. As for direct taxation,28 in the absence of a specic legal basis for harmonisation, and given the inapplicability of Article 95 EC to scal matters,29 recourse can only be made to Article 94 EC, which postulates unanimity for the approximation of national legislations directly affecting the establishment or functioning of the internal market. Taking note of Member States’ unease about Community interference with their scal autonomy, EC taxation policy does not aspire to accomplish full harmonisation. Instead it seeks to align national systems as far as necessary for proper operation of the common market.30 To date, the impact of Community legislative intervention on national tax systems has been mainly felt in the area of indirect taxation, which is likely to have a more immediate effect on the free ow of products within the Community. To determine whether cultural concerns have been duly considered in the legislative process, this part of the study focuses on EC legislative instruments pertaining to a common system of value added tax (VAT).31 Section 4.1.1 briey surveys the historical development of Community VAT legislation, presenting the basic characteristics

27

Indirect taxation refers to taxes levied on goods and services. Direct taxation concerns taxes imposed directly to taxpayers. 29 In accordance with para. 2 of Article 95 EC, ‘[p]aragraph 1 shall not apply to scal provisions, to those relating to the free movement of persons nor to those relating to the rights and interests of employed persons’. 30 B.J.M. Terra and P.J. Wattel, European Tax Law (2001), at 3–4. 31 For a broad overview of the characteristics of VAT as an indirect tax on consumption, see L. Ebrill et al., The Modern VAT (2001), at 15–22. 28

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of the framework introduced, and illuminating the cultural issues involved. Section 4.1.2 addresses cultural mainstreaming in the context of VAT rates approximation, investigating preferential treatment granted to certain cultural goods and services. This provides a natural bridge to the topic dealt with in section 4.1.3, namely the incorporation of cultural policy objectives in harmonising legislation establishing a special scheme for supplies of works of art, collectors’ items and antiques. Section 4.1.4 concludes highlighting the principal features of EC cultural mainstreaming efforts in the eld. 4.1.1 VAT Legislation and the Cultural Sector: Exploring the Interface The rst elements of harmonisation in the area of indirect taxation can be traced to 1967, when the rst32 and second33 VAT Directives were adopted upon the recommendation of the Fiscal and Financial Committee. This had been established in 1960, to examine how national indirect tax regimes could be approximated in the interest of the common market. The Committee suggested abolition of cascade taxes and the adoption of a common VAT system, which would afford intra-Community sales and purchases the same treatment accorded to transactions operated within a single Member State. It convinced the Council to do away with all cumulative multi-stage taxes, to be replaced by a common VAT regime. For the sake of simplicity and neutrality, the new VAT scheme was to be based on the principle that a general tax on consumption applies, in as general a manner as possible, to all goods and services, proportionately with their price, and covering all stages of production and distribution without breaks in the supply-chain. An extensive discretion was left to Member States with regard to the VAT rates applicable and the exemptions permitted. This undermined efforts to introduce a common VAT system, resulting in disparate national legislations, which in turn gave rise to several scenarios of double taxation, alternatively, the absence of taxation as such. The 1970s brought new impetus to the process, with adoption of the famous Council Decision regarding replacement of nancial contributions from the Member States by the Communities’ own resources.34 The Decision provided that, from 1975 onwards, the Community’s

32 First Council Directive 67/227/EEC of 11 April 1967 on the harmonisation of legislation of Member States concerning turnover taxes, OJ 71, 14/4/1967, p. 1301. 33 Second Council Directive 67/228/EEC of 11 April 1967 on the harmonisation of legislation of Member States concerning turnover taxes—Structure and procedures for application of the common system of value added tax, OJ 71, 14/4/1967, p. 1303. 34 Council Decision 70/243/ECSC, EEC, Euratom of 21 April 1970 on the replacement of nancial contributions from Member States by the Communities’ own resources, OJ L 94, 28/4/1970, p. 19.

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budget would comprise inter alia a percentage of the Member States’ revenue accruing from VAT, via the application of a rate, not exceeding 1%, to an assessment basis determined in a uniform manner for all Member States according to Community rules. In 1977 the sixth VAT Directive was enacted.35 Aiming to secure equality between Member States and European tax payers, while preventing the erosion of Community resources, it claried many aspects of the common VAT regime and uniform basis of assessment. The sixth VAT Directive is the cornerstone of VAT taxation policy at Community level.36 Inherent in its scheme is the principle of scal neutrality, which precludes treating similar products, in competition with each other, differently for VAT purposes.37 Given Member States’ reluctance to full the conditions necessary for an origin-based VAT system, that is, taxation occurring in the exporting state, as originally envisaged by the Commission, the Directive, as modied in 1991,38 establishes a transitional regime: business-to-business transactions must be taxed in accordance with the principle of destination and business-to-consumers supplies, on the basis of the principle of origin. Article 2 stipulates that ‘the supply of goods and services effected for consideration within the territory of the country by a taxable person acting as such’ and ‘the importation of goods’ are subject to VAT.39 Cultural goods and services do not escape VAT. For tax purposes, supplies of cultural goods and services are to be treated exactly in the same manner as supplies of other common merchandise bearing the VAT burden. An accurate reading of the Directive reveals, nevertheless, that steps were taken, at the time of its adoption, to enable Member States to maintain a certain level of preferential cultural tax treatment in line with national cultural policy choices and historical considerations.

35 Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes—Common system of value added tax: uniform basis of assessment, OJ L 145, 13/6/1977, p. 1 (hereinafter the sixth VAT Directive). 36 The Directive includes most of the precise denitions prerequisite to establishment of a common VAT regime. It denes the notions of ‘taxable person’ and ‘taxable transaction’, sets out the rules concerning the place of supply, the taxable amount, the applicable rates and deductions, introduces certain exemptions, and establishes a special scheme for small undertakings and travel agents. Amended on various occasions, it was repealed and replaced by Directive 2006/112/EC (OJ L 347, 11/12/2006, p. 1). 37 On the principle of scal neutrality, see, in particular, Case C-481/98, Commission v France, [2001] ECR I-3369, and Case C-216/97, Gregg, [1999] ECR I-4947. 38 Council Directive 91/680/EEC of 16 December 1991 supplementing the common system of value added tax and amending Directive 77/388/EEC with a view to the abolition of scal frontiers, OJ L 376, 31/12/1991, p. 1. 39 For the purposes of the Directive, ‘supply of goods’ means ‘the transfer of the right to dispose of tangible property as owner’ (Art. 5(1)). ‘Supply of services’ refers to ‘any transaction which does not constitute a supply of goods within the meaning of article 5’ (Art. 6(1)). Article 7 stipulates that imports cover ‘the entry of goods into the territory of the country as dened in article 3’, which relates to the territorial application of the Directive.

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It would be misleading to argue that a process of cultural mainstreaming consciously took place during the negotiations of the sixth VAT Directive. Still, the nal text heeds domestic cultural policy objectives, principally linked to broad dissemination of cultural content. According to Article 13(A)(1)(n), ‘without prejudice to other Community provisions’, certain activities in the public interest, including ‘certain cultural services and goods closely linked thereto supplied by bodies governed by public law or by other cultural bodies recognised by the Member State concerned’ are VAT-exempt.40 The Member States are free to remove VAT liability for entry fees to national and regional museums, galleries and art exhibitions, for admission charges to theatrical, musical and choreographic performances or for services rendered by public libraries and documentation centres, if these respect specic conditions laid down ‘for the purpose of ensuring the correct and straightforward application of such exemptions and of preventing any possible evasion, avoidance or abuse’.41 In 1984, the Commission proposed replacing the imprecise wording ‘certain cultural services and goods closely linked thereto’ with a specic list of cultural services and goods exempt from VAT.42 This proposal it based on the argument that Member States usually provide for the same or similar VAT exemptions in the cultural sector. Following intense negotiations within the Council, a decision was made to retain the provision unaltered, so as to permit Member States the exibility to dene at will those cultural services and goods exempt from VAT liability in accordance with domestic cultural policy priorities. Cultural goods and services escape VAT if provided by bodies governed by public law, or other specied bodies.43 Under Article 13(A)(2)(a), Member States may make the exemption available to non-prot organisations, managed and administered on a voluntary basis, so long as no distortions of competition are generated, and the prices charged are approved by public authorities. In addition, a specic VAT exemption is granted for the supply of cultural

40

According to Article 13(A)(2)(b), the supply of services or goods shall not be granted exemption as provided for in (n), if it is not essential to the transactions exempted, and its basic purpose is to obtain additional income for the organisation by carrying out transactions which are in direct competition with those of commercial enterprises liable for value added tax. 41 See Art. 13(A)(1), supra n. 35. 42 See European Commission, Proposal for a nineteenth Council Directive on the harmonisation of the laws of the Member States relating to turnover taxes, amending Directive 77/388/EC—Common system of value added tax, COM(1984) 648, Art. 1(3)(c). 43 Note that the Court ruled in Matthias Hoffman that single performers, such as solo singers, supplying services individually, may be regarded as bodies similar to public-law bodies performing certain cultural functions, in so far as the services supplied are recognised as cultural. See Case C-144/00, Matthias Hoffman, [2003] ECR I-2921.

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services and goods by organisations ‘in connection with fund-raising events organised exclusively for their own benet provided that exemption is not likely to cause distortion of competition’44 and for ‘activities of public radio and television bodies other than those of a commercial nature’.45 Article 28(3)(b) makes provisional arrangements for VAT purposes, pending the transformation to an origin-based regime, and allows domestic authorities to continue, during the transitional period (starting 1 January 1978) to exempt the activities set out in Annex F to the sixth VAT Directive. The latter, at point 2, includes ‘services supplied by authors, artists and performers’. Its provisions constitute a temporary exception to the principle that VAT is to be levied upon all services supplied for consideration by a taxable person, and must be interpreted strictly. In Commission v Finland, the Court held that national legislation, which exempted from VAT the sale of a work of art by artists or their agents, and the importation of works of art bought directly from their creators, lay outside the scope of the Annex, which only covers services supplied by authors, artists and performers.46 The Court also determined that Annex F excludes the grant of new exemptions or the reintroduction of old exemptions.47 In Commission v Spain, it ruled that Spain could no longer claim the right to exempt from VAT professional services provided by gurative artists, writers, music composers, photographers and creators of audiovisual works, as it had previously subjected these services to the general VAT scheme.48 Finally, until the introduction of a Community taxation system for works of art, which, given repeated transactions, are usually prone to double taxation, Article 32 of Directive 77/388/EEC allowed the Member States to maintain special tax regimes for such goods. The relevant directive, to be enacted before 31 December 1977, was adopted unanimously by the Council, but not until 1994, due to difculties encountered in the negotiation process.49 It seeks to address the special features of the art trade, and is discussed in further detail below.

44 See Art. 13(A)(1)(o), supra n. 35. The Member States may introduce any necessary restrictions as regards the number of events or the amount of receipts which give entitlement to exemption. 45 Ibid., Art. 13(A)(1)(q). 46 Case C-169/00, Commission v Finland, [2002] ECR I-2433. 47 Only the maintenance of already existing domestic derogatory provisions is permitted. 48 See Case C-35/90, Commission v Spain, [1991] ECR I-5073. 49 See Council Directive 94/5/EC of 14 February 1994 supplementing the common system of value added tax and amending Directive 77/388/EEC—Special arrangements applicable to second-hand goods, works of art, collectors’ items and antiques, OJ L 60, 3/3/1994, p. 16.

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chapter four VAT Rates Approximation

European institutions dealt with the issue of VAT rates approximation in the course of the legislative programme for completion of the internal market in light of the argument that abolition of intra-EC border controls, without some approximation of VAT rates, would lead to distortions of competition and market dysfunctions. With the opening of the market to operators performing cross-border supplies, and to consumers wanting to make cross-frontier purchases, the role played by different VAT rates in conditioning consumers’ and businesses’ behaviour could not be ignored. Tax rate differentials, a considerable price factor, could signicantly determine the competitive position of operators and inuence purchasing patterns. The principle of destination, applicable to business-to-business transactions, makes VAT rate disparities less exploitable, and is unlikely to generate substantial competition distortions and deections of trade. By contrast, the approximation of VAT rates was perceived as an absolute precondition of the irreversibility of the abolition of internal border controls for businessto-consumer transactions, which are subject to taxation on the basis of the principle of origin. In the Commission’s view, VAT rate harmonisation could also generally prepare the ground for passage to a denitive VAT regime solely based on the principle of origin, in the longer run.50 In exercising harmonisation competences it enjoys in the eld of indirect taxation, the European legislator sought to accommodate cultural policy considerations in the framework established: preferential VAT treatment of certain cultural goods and services is allowed. Recent developments in the production and distribution methods of cultural content, however, call for an update of the system, and present new cultural mainstreaming challenges for the Community. 4.1.2.1

Directive 92/77/EEC

The work programme for completion of the internal market by January 1993 was set out in the White Paper of 29 June 1985.51 Here the Commission advanced a series of proposals to abolish scal controls at internal Community frontiers and make intra-Community transactions subject to VAT levied

50 Although the denitive VAT regime should become operational on 1 January 1997, lack of progress within the Council resulted in extension of the transitional arrangements until today. 51 European Commission, White Paper to the European Council, Completing the Internal Market, COM(1985) 310.

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in the country of origin.52 VAT rates approximation was seen as an essential counterpart to this project. If distortions were to be avoided, harmonisation could not be conned to introducing a uniform tax base, but had also to address the issue of applicable rates. Under the sixth VAT Directive, as originally drafted, this was a matter of absolute national discretion: Member States might x the level of their standard rate and apply increased or reduced rates at will.53 Noting that all Member States, except Denmark and the UK, applied at least two different VAT rates, in its proposal of 21 August 1987, the Commission suggested a dual VAT rate system, consisting of a standard and a reduced rate.54 So as to limit administrative difculties and allow a margin of scal manoeuvrability, two rate bands were xed, varying between 14% and 20% for the standard rate, and 4% and 9% for the reduced rate.55 Since books, newspapers and periodicals enjoyed a privileged tax status in the majority of Member States for cultural policy reasons, the Commission proposed including such items amongst the goods and services, the supply of which should be subject to the reduced rate.56 Negotiations within the Council for an origin-based VAT regime progressed slowly. Eventually, a decision was made to establish a transitional regime, leading the Commission to withdraw its proposal. In a meeting of the ECOFIN Council on 18 December 1989, consensus was reached on the application of reduced rates to supplies of goods and services meeting essential needs or various social and cultural policy objectives.57 Matters were formalised with the adoption of Directive 92/77/EEC amending Directive 77/388/EEC on the

52 See, in particular, European Commission, Communication on the completion of the internal market: Approximation of indirect tax rates and harmonisation of indirect tax structure, COM (1987) 320 nal/2, Proposal for a Council Directive supplementing the common system of value added tax and amending Directive 77/388/EEC—Approximation of VAT rates, COM (1987) 321 nal/2, Proposal for a Council Directive completing and amending Directive 77/388/EEC, Removal of scal frontiers, COM(1987) 322 nal/2, Working Document, Completing the internal market—The introduction of a VAT clearing mechanism for intraCommunity sales, COM(1987) 323, and Proposal for a Council Directive instituting a process of convergence of rates of value-added tax and excise duties, COM(1987) 324 nal/3. 53 See Art. 12 of the sixth VAT Directive, supra n. 35. 54 European Commission, Proposal for a Council Directive supplementing the common system of value added tax and amending Directive 77/388/EEC—Approximation of VAT rates, supra n. 52. 55 Ibid., Art. 12(3). 56 Ibid., Art. 12(4). 57 See European Commission, Report to the Council in accordance with Article 12(4) and 28(2)(g) of the Sixth Council Directive of 17 May 1977 on the harmonisation of the laws of the Member States relating to turn-over taxes—Common system of value added tax: uniform basis of assessment, COM(1994) 584, at 13.

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basis of Article 93 EC.58 According to the system introduced, from 1 January 1993 onwards Member States have been obliged to apply a standard rate for VAT purposes (not be less than 15%) but may also apply one or two reduced rates (not be less than 5%) for the supply of goods and services specied in Annex H to the sixth VAT Directive.59 The content of the Annex aroused some controversy. It became clear, during the discussions, that Member States held substantially different views as regards the goods and services which should be allowed to benet from preferential tax treatment. Under the pressure of the unanimity requirement, a proposal emerged which relied on broadly dened categories, from which the Member States could select those goods and services best suiting their national policies. Additionally, certain temporary derogations were permitted, until introduction of the denitive VAT regime, in the form of tax-preferential measures, based on so-called super-reduced VAT rates and zero-rating.60 The cultural sector did not benet from a tax privileged status as a whole; tax relief mechanisms were established, though, for several cultural goods and services. No guidance was offered in the preparatory documents of Directive 92/77/EEC as to the tax treatment of cultural transactions,61 but the idea of a reduced rate, used as an instrument to limit the tax burden borne by cultural goods and services, and so increasing demand and facilitating access to cultural content, quickly gained ground within the Council.62

58 Council Directive 92/77/EEC of 19 October 1992 supplementing the common system of value added tax and amending Directive 77/388/EEC (approximation of VAT rates), OJ L 316, 31/10/1992, p. 1. 59 See Art. 12(3)(a) of the amended sixth VAT Directive. Directive 2001/4/EC of 19 January 2001 extended the application of the standard rate as xed until 31 December 2005 (OJ L 22, 24/1/2001, p. 17) and Directive 2005/92/EC of 12 December 2005, until 31 December 2010 (OJ L 345, 28/12/2005, p. 19). 60 See Art. 28(2) of the amended sixth VAT Directive and, in particular, point (a), which enables the Member States to maintain, under certain conditions, the application of superreduced rates, in force on 1 January 1991, and exemptions with refund of the tax paid at the preceding stage. See also point (c), according to which Spain and Luxembourg (which had to increase their standard rate by more than 2% in order to meet the 15% minimum) may apply a super-reduced rate to the supplies specied in Annex H. 61 See European Commission, Proposal for an amendment to the proposal for a Council Directive supplementing the common system of value added tax and amending Directive 77/388/EEC, COM(1990) 182 nal—SYN 274, Opinion of the European Parliament on the Commission proposal and amended proposal for a Council Directive supplementing the common system of value added tax and amending Directive 77/388/EEC, OJ C 324, 24/12/1990, p. 97, and Opinion of the Economic and Social Committee on the amended proposal for a Council Regulation (EEC) on the statistics relating to the trading of goods between Member States, OJ C 332, 31/12/1990, p. 1. 62 VAT rates constitute signicant price-factors, especially if trade professionals pass the difference to the nal customer and do not contend themselves in raising prot margins.

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As a result, featured amongst the areas enumerated in the Annex, under categories 6, 7 and 8, are the ‘supply, including on loan by libraries, of books (including brochures, leaets and similar printed matter, children’s picture, drawing or colouring books, music printed or in manuscript, maps and hydrographic or similar charts), newspapers and periodicals, other than material wholly or substantially devoted to advertising matter’, ‘admissions to shows, theatres, circuses, fairs, amusement parks, concerts, museums, zoos, cinemas, exhibitions and similar cultural events and facilities—reception of broadcasting services’ and ‘services supplied by or royalties due to writers, composers and performing artists’. In the Commission’s view, all three of these categories ‘fall into the scope of what one might call cultural policy’.63 The permissive character of Annex H allows Member States substantial exibility to support domestic cultural policies by VAT induced incentives. National governments who wish to use a scal instrument to enhance cultural policy strategies may apply the reduced VAT rate to the categories of cultural goods and services of the Annex. Member States preferring, rather, to maximise tax revenues, may opt for the standard rate. Furthermore, as the Commission has repeatedly stated,64 Member States may apply the reduced rate to specic items expressly mentioned in the Annex, in addition to all the categories it enumerates. In all cases, Member States remain free to dene cultural policies according to their own interests, and may opt to prioritise cultural goals or economic objectives.65 It is notable that most Member States have taken advantage of the possibility of taxing cultural goods and services at the lower rate.66 Many have also used the Directive’s transitional provisions, which permit application of super-reduced rates under the minimum level of 5% or zero-rating. Regarding books, newspapers and periodicals, all Member States have applied reduced

63 European Commission, Report to the Council and to the European Parliament in accordance with Article 12(4) of the Sixth Council Directive of 17 May 1977 on the harmonisation of the laws of the Member States relating to turn-over taxes—Common system of value added tax: uniform basis of assessment, COM(1997) 559, at 25. 64 Ibid., at 9, and supra n. 57, at 14. 65 In exercising the powers conferred by the Directive, the Member States must respect the principle of scal neutrality, precluding treating similar goods and supplies of services, which are in competition with each other, differently for VAT purposes. The Court ruled, for instance, that Germany, by applying a reduced VAT rate to services provided by music ensembles directly to the public or for a concert organiser, and to services provided directly to the public by soloists, whereas services provided by soloists to a concert organiser were subject to the standard VAT rate, failed its obligations under the Directive. See Case C-109/02, Commission v Germany, [2003] ECR I-12691. 66 See European Commission, Report on reduced VAT rates drawn up in accordance with Article 12(4) of the Sixth Council Directive of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes—Common system of value added tax: uniform basis of assessment, COM(2001) 599.

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or zero-rates. As for admission fees to cultural events, only Denmark and the UK have decided to apply the standard rate; the overwhelming majority of the Member States implementing reduced or super-reduced rates, and exploiting the exemption in the public interest, granted by Article 13 of the sixth VAT Directive. Preference for reduced rates, zero rates and the public interest exemption of Article 13 is also demonstrated with respect to services supplied by writers, composers and performing artists or in relation to royalties their due, with the exception of the UK. 4.1.2.2

Shortcomings of the scheme

A high level of uptake of reduced VAT rates for the supply of certain cultural goods and services by Member States does not entail that the system is immune to criticism. As it stands, the lack of common denitions of categories listed in Annex H gives rise to ‘borderline’ cases, so that the tax treatment of particular transactions is uncertain. According to new marketing techniques, products allocated to different VAT rates may be sold together as one item, raising difculties as to tax treatment. There are no clear criteria to identify, for instance, the rate applicable to a biography of a painter, in book form, sold together with a CD containing examples of his work. Moreover, rates distinction based on the nature of the cultural content disseminated can be disputable. Whereas books are generally eligible for a reduced VAT rate, music is liable to taxation at the standard rate, despite arguments made by music industry interests that CDs, records, cassettes and music videos are means of cultural expression comparable to cultural goods and services that do benet from tax reductions. More anomalously still, cultural goods and services of identical content but embodied in different formats may be subject to different VAT rates. A book may be charged at the reduced rate in a given Member State where the same content with CD support will bear VAT at the standard rate. Admission to cinema theatres to watch a lm may be eligible for a VAT rate reduction, but purchasing the same lm on DVD or VHS will not. There may be sound cultural policy reasons for privileging certain cultural goods and services over others. Taking into consideration efforts deployed at Community level to boost the European cinema industry,67 tax-based incen67 See, for instance, Council Decision 90/685/EEC of 21 December 1990 concerning the implementation of an action programme to promote the development of the European audiovisual industry (Media, 1991 to 1995), OJ L 380, 1/12/1990, p. 37. See also Council Decision 2000/821/EC of 20 December 2000 on the implementation of a programme to encourage the development, distribution and promotion of European audiovisual works (MEDIA Plus—Development, Distribution and Promotion, 2001–2005), OJ L 336, 30/12/2000, p. 82, Decision 163/2001/EC of the European Parliament and of the Council of 19 January 2001

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tives favouring cinema- over home-viewing might be understandable, to an extent. Naturally, particular cultural policy choices made by the European institutions, when drafting Annex H, are debatable. A reduced VAT rate for music CDs and DVDs, for example, could also help mitigate the considerable pressure exerted by pirated products on the music industry, increasing its consumer appeal via lower prices. The balancing exercise performed by the European institutions between cultural policy objectives and taxation goals may be particularly unsettling for Member States wishing to make use of scal instruments to support cultural content dissemination. While a reduced rate for the cultural sector as a whole would entail considerable revenue implications, there is a strong case for arguing that the choice of a reduced VAT rate should have been left to Member States. The advent of the information society is likely further to exacerbate such problems, as cultural goods and services supplied electronically enter into direct competition with those supplied by traditional means.68 Though a reduced rate may be applied to supply in a non-electronic environment, cultural goods and services ordered and delivered online must be taxed at the standard rate.69 Indeed, in a communication E-commerce and indirect taxation, the Commission took the robust line that electronic transactions, of whatever kind, should be taxed as services,70 an approach endorsed by the ECOFIN Council at its meeting on 6 June 1998. In its proposal for a Council Directive amending Directive 77/388/EEC as regards the value added tax arrangements applicable to certain services supplied by electronic means, the Commission further suggested that the standard rate should apply.71 A reduced rate, it advocated, on the implementation of a training programme for professionals in the European audiovisual programme industry (MEDIA-Training, 2001–2005), OJ L 26, 27/1/2001, p. 1, and Decision 1718/2006/EC of the European Parliament and of the Council of 15 November 2006 concerning the implementation of a programme of support for the European audiovisual sector (MEDIA 2007), OJ L 327, 24/11/2006, p. 12. 68 In fact, revenue considerations aside, it was decided to apply VAT to trade over online networks in order to avoid distortions of competition with similar conventionally traded products. See European Commission, Interim Report of 3 April 1998 on the implications of electronic commerce for VAT and Customs: Document XXI/98/0359, available at: http:// ec.europa.eu/comm/taxation_customs/resources/documents/interim_report_on_ electric_commerce_en.pdf, at 3. 69 See Council Directive 2002/38/EC of 7 May 2002 amending and amending temporarily Directive 77/388/EEC as regards the value added tax arrangements applicable to radio and television broadcasting services and certain electronically supplied services, OJ L 28, 15/5/2002, p. 41. 70 European Commission, Communication, E-commerce and indirect taxation, COM(1998) 374. 71 See European Commission, Proposal for a Council Directive amending Directive 77/388/ EEC as regards the value added tax arrangements applicable to certain services supplied by electronic mean, COM(2000) 349.

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should implicate only the cultural goods and services featured in Annex H and not extended to their digital, online versions which differ from their physical counterparts in their ability to offer a variety of additional functions. The European Parliament hinted at the discriminatory effects such an approach would entail.72 Despite this, Directive 2002/38/EC, adopted on 7 May 2002, excludes the possibility of a VAT reduction for online services.73 It thus runs counter to the ‘equal tax treatment for similar goods and services’ paradigm by subjecting the category of electronic cultural supplies to the standard VAT rate. Certainly, scope should exist to allow the supply of a cultural good and the provision of a cultural service to be taxed differently. It may be queried, however, whether the same argument applies when goods and services have precisely the same content and full exactly the same functions. 4.1.2.3

Annex H and cultural mainstreaming: the way forward

Under Article 12(4) of the sixth VAT Directive, every two years the Council must assess whether any changes to the list of goods and services of Annex H are desirable, on the basis of a report produced by the Commission. In reviewing national implementation of reduced rates since 1994,74 the Commission has ostensibly refused to propose any modications, either via deletion of any of the existing cultural categories or addition of new cultural categories and items to the Annex. In the Commission’s view, any evaluation of the merits of possible alterations to the content of Annex H must reect their overall effect on the proper functioning of the internal market pursuant to Article 93 EC. Specic changes can be proposed only if required to overcome problems of distortion of competition which hamper cross-frontier purchases or inuence retailers’ supply patterns. Under the current structure of VAT rates, two factors may in general

72 See European Parliament, Report of 28 November 2000 on 1. the proposal for a European Parliament and Council Regulation amending Regulation (EEC) No. 218/92 on administrative co-operation in the eld of indirect taxation (VAT) and 2. the proposal for a Council Directive amending Directive 77/388/EEC as regards the value added tax arrangements applicable to certain services supplied by electronic mean, Committee on Economic and Monetary Affairs, Rapporteur: José Manuel García-Margallo y Marl, A5–0362/2000, and Report of 25 June 1998 on the Report from the Commission to the Council and the European Parliament in accordance with Article 12(4) of the Sixth Council Directive of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes—Common system of value added tax: uniform basis of assessment, Committee on Economic and Monetary Affairs and Industrial Policy, Rapporteur: Bernand Castagnède, A4–0252/1998. 73 For an illustrative list of the electronically supplied services under the scope of the Directive, see Annex L to the Directive and, in particular, categories 3 and 4, which cover the supply of images and text, and the supply of music, lms, cultural, artistic and entertainment broadcasts and events. 74 See supra ns 57, 63 and 66.

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obstruct the smooth functioning of the internal market and require narrowing the scope of Annex H: the discretionary, optional nature of the application of reduced rates, and the lack of common denitions for the categories of goods and services which may benet from a reduced rate. The Commission considers that the short-listed categories are not the kinds of economic activity, which, by their nature, lend themselves easily to large-scale, cross-border transactions. Consequently, no signicant distortions of competition and deections of trade can be detected, so as to justify amendments. As to extension of the scope of Annex H, the Commission asserts a standard rate as the only guarantee of scal neutrality. It believes that widening discrepancies between VAT rates by adding new categories or new items eligible for a rate reduction may trigger structural imbalances and distortions of competition. Too many reduced rates, it is said, run counter to the basic goal of simplifying the VAT system. Should requests to enlarge the scope of the goods and services subject to taxation at reduced rate be accepted, this would entail substantial budgetary repercussions difcult for Member States to cope with.75 Not explicitly formulated with reference to the cultural sector, the Commission’s arguments assume that extending the range of cultural goods and services potentially beneting from reduced VAT rates undermines proper functioning of the internal market. Broadly, the Commission treats VAT as an improper means to attain cultural policy objectives. Cultural policy goals can be best achieved via other, more appropriate mechanisms, such as subsidies or reductions in direct taxation.76 Individual Parliamentarians have lodged several proposals for an extension of the option, granted to the Member States under category 10 of Annex H, to apply the reduced rate to services covering the ‘supply, construction, renovation and alteration of housing provided as part of a social policy’, to similar services relating to historical buildings and monuments as part of the Community’s cultural policy.77 To these, the Commission has declined

75

Supra n. 63, at 14. Ibid., at 17. 77 See Question No. 69 (H-0087/95) by Stefano De Luca, Reduced VAT rate for the restoration, protection and conservation of cultural goods in general and in particular buildings, parks and gardens of historic and artistic interest, Debates of the European Parliament, No. 4–457, 14/2/1995, p. 94, Question No. 36 (H-0404/95) by Stefano De Luca, Reduced VAT rate for the restoration, protection and conservation of cultural goods, including objects of artistic and cultural interest, Debates of the European Parliament, No. 4–464, 14/6/1995, p. 138, Written Question No. 2789/94 by Werner Langen to the Commission, VAT on measures to protect historic monuments, OJ C 175, 10/7/1995, p. 13, and Written Question No. 916/94 by Glyn Ford to the Commission, VAT on buildings with heritage status, OJ C 367, 22/12/1994, p. 45. 76

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to respond. Bearing in mind that the Commission views the categories of Annex H as relatively insignicant in terms of trans-frontier trade, widening the scope of category 10 to include such restoration and renovation services would have made sense, as there is no signicant cross-border dimension in this market segment. The European Parliament, stressing that legitimate public revenue concerns should not dictate an excessively rigid attitude as to the scope of reduced rates, urged the Commission to consider the feasibility of a VAT reduction in line with changes in societal and cultural needs.78 The policy debate ared up with the Commission’s Strategy to improve the operation of the VAT system within the context of the internal market.79 This document, published in 2000, adopted a positive attitude towards rationalisation of the rules and derogations applying to the reduced rates, but called for an examination of the role of reduced rates as a means of pursuing objectives inherent in other Community or national policies. Based on the resulting analysis, in its 2003 proposal for a Council Directive amending Directive 77/388/EEC as regards reduced VAT rates, the Commission argued that reduced rates are inadequate for encouraging consumers to buy or make use of certain goods and services, given that price comparisons do not suggest that a VAT reduction necessarily guarantees lower prices and an increase in demand.80 It afrmed that reduced VAT rates are not the proper mechanism to subsidise particular sectors, and refrained from suggesting their extension.81 For the Commission, accommodation of cultural aspects, in accordance with Article 151(4) EC, should not run counter to the concrete objectives of Article 93 EC. Introducing reduced rates for cultural goods and services to which the standard rate already applied (thus guaranteeing a certain degree of harmonisation) would be regressive in terms of harmonisation.

78

See supra n. 72, European Parliament Report (1998), at 11. See European Commission, Communication to the Council and the European Parliament, A strategy to improve the operation of the VAT system within the context of the internal market, COM(2000) 348. 80 See European Commission, Proposal for a Council Directive amending Directive 77/388/ EEC as regards rates of value added tax, COM(2003) 397, at point 65. The Commission based its conclusion on Member States’ reports examining the impact of reduced rates for labourintensive services on job creation (see Directive 99/85/EC, OJ L 277, 28/10/1999, p. 34). According to the Commission, no country had been able to robustly demonstrate that reduced rates made a contribution to employment growth or lower prices affecting demand. 81 The Commission proposed, instead, retaining the current Annex H list as the only reference for derogations from the standard rate, and limiting the scope of zero or super-reduced rates to the categories of goods and services enumerated therein. Ibid., at point 72, recital 14 and Art. 2(a) and (b). 79

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It is doubtful whether the degree of harmonisation defended by the Commission actually exists. There are wide discrepancies between the standard VAT rates applied by the Member States, which range from 15% to 25%. These are inconsistent with the objective of harmonisation and a persistent source of potential distortions of competition. If a uniform standard rate was in place for all Member States, the Commission’s approach might be acceptable—but realistically this scenario is unlikely to eventuate, given Member States’ strong interest in keeping standard rates unchanged. No wonder that cultural stakeholders reacted negatively to the Commission’s proposal, and invited the European Parliament to challenge its approach which was suggested to penalise access to cultural content.82 In its report of 25 November 2003,83 the Parliament impugned the Commission’s orientation towards further standard-rate harmonisation, and criticised its assessment that VAT is an imprecise tool for policy-making in other policy elds due to information decits. Regarding the possibility of a link between culture and indirect taxation, in particular, the Parliament insisted that Member States should retain discretion to use VAT as an instrument of cultural policy. It proposed that buildings and monuments recognised for their architectural and historic merit should be incorporated in category 10 of Annex H, which permits Member States to apply a reduced rate to supplies relating to housing.84 A new category 6a, it suggested, should, in turn, extend the option of a reduced rate to ‘the supply of music or lms whether recorded on compact discs or on similar audio and audiovisual formats, including for hire’.85 The nal text of Directive 2006/18/EC, adopted on 14 February 2006, dilutes both the Commission and Parliament proposals.86 The Council did not endorse the Parliament’s amendments for extending reduced rates in the eld of culture. On the other hand, it invited the Commission to assess the impact of reduced rates in certain economic sectors, so as to gather additional 82 According to a number of consumer behaviour studies, VAT rate reduction can result in signicant expansion of the cultural market, stimulating sales (and thus, compensating governments for any loss of revenue resulting from VAT reduction) and increasing, in the long run, national treasuries’ VAT revenue, hampered so far by piracy. In the music sector, in particular, research by the French trade body, Syndicat National de l’Edition Phonographique, suggests that a 5.5% rate reduction can lead to a sales increase of 40% over three years. 83 See European Parliament, Report of 25 November 2003 on the proposal for a Council Directive amending Directive 77/388/EEC as regards reduced rates of value added tax, Committee on Economic and Monetary Affairs, Rapporteur: Christa Randzio-Plath, A5–0410/2003. 84 See Legislative Resolution of the European Parliament of 4 December 2003 on the proposal for a Council Directive amending Directive 77/388/EEC as regards reduced rates of value added tax, OJ C 89E, 14/4/2004, p. 138, Amendments No. 16 and 27. 85 Ibid., Amendment No. 21. 86 Council Directive 2006/18/EC amending Directive 77/388/EEC with regard to reduced rates of value added tax, OJ L 51, 22/2/2006, p. 12.

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information on their possible contribution to attainment of other public policy objectives. Whether the evidence gathered will strengthen accommodation of cultural considerations in the VAT rates framework, via relief of the tax burden imposed on particular cultural media, for the moment remains unclear. 4.1.3 Special Arrangements for Works of Art, Collectors’ Items and Antiques It is commonly accepted that artistic goods are usually subject to repeated transactions, moving between private and professional hands more frequently than ordinary merchandise. They may leave the stream of taxable operations, when purchased by a non-taxable person, that is the nal consumer, but subsequently re-enter the market, when acquired by a taxable person. Given that expenditure often occurs more than once, application of the normal tax scheme to such products would be highly problematic. The consumed item, reintroduced into the economic circuit, would be once again fully subject to VAT at resale. In these circumstances, the vendor’s liability for VAT would have to be calculated according to the total value of the item, and not the value added to it, raising problems of double taxation. The resulting difference would increase the vendor’s tax burden and, in all likelihood, encourage vendors and purchasers to bypass ordinary commercial channels. These difculties led to recognition of the specicity of the art market in the text of the sixth VAT Directive, as originally adopted. Article 32 allowed Member States to retain pre-existing national schemes for works of art, antiques and collectors’ items until the adoption by the Council of a relevant Community taxation system. Directive 94/5/EC,87 enacted on 14 February 1994 on the basis of Article 93 EC, supplements the common system of VAT by introducing special arrangements for such cultural goods. 4.1.3.1

First harmonisation attempts

Issued on 22 November 1977, the Commission’s communication Community action in the cultural sector advocated uniform VAT charges for cultural goods and services.88 It stated that harsh taxation systems which resulted in high purchase prices for cultural goods, especially contemporary works of art, restricted their circulation and seriously deterred their production. According

87

See supra n. 49. European Commission, Communication to the Council, Community action in the cultural sector, Bull. EC (1977), Supplement 6/77, at 11. 88

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to the Commission, ‘if cultural goods were to be made subject to VAT’, its effect should be neutral and kept within reasonable limits.89 Arguably, at that time the Commission was not entirely convinced concerning an automatic VAT liability for cultural goods. It nonetheless announced its intention to submit a proposal for a Council Directive under the terms of which the base of assessment for original works of art, antiques and collectors’ pieces would be the art dealer’s prot margin, the dealer being able to opt either for the margin regime or for a xed taxable basis of 30% of the selling price.90 Two months later, the Commission presented its framework for an optional special scheme for original works of art, collectors’ items and antiques91 (amended on 16 May 1979).92 The regime was to apply to all acts of supply performed by taxable persons, acquiring such items with a view to resale, and transactions conducted by persons exercising an intermediate function, with a taxable amount xed at 30% of the selling price. In line with the French tax regime, supplies and imports of works of art by the artists themselves would be exempt. In its communication Stronger Community action in the cultural sector, the Commission commented that its proposal, although not exclusively cultural in scope, took an initial step towards adapting VAT to the living and working conditions of plastic artists, as well as to the particular characteristics of the art market.93 Lightening the burden of VAT within the Community would aid the recovery of the contemporary art market, directly beneting artists, while offering less incentive to export valuable antiques to non-member countries.94 The Commission attached to this—basically economic—reasoning, important cultural considerations. Besides the argument relating to protection of cultural workers, the Commission saw VAT reduction as an efcient mechanism to decrease the number of cultural exports and keep cultural goods within the Community, acknowledging that the transfer of works of art outside Member States’ borders could be felt as a cultural loss. Despite these ‘good intentions’, a negative reaction within the Council, and amendments

89

Ibid. Ibid. A similar method of calculation was already operational in France. 91 European Commission, Proposal for a seventh Council Directive on the harmonisation of the laws of the Member States relating to turnover taxes—Common system of value-added tax to be applied to works of art, collectors’ items, antiques and used goods, COM(1977) 735. 92 European Commission, Amendments to the proposal for a seventh Council Directive on the harmonisation of the laws of the Member States relating to turnover taxes—Common system of value-added tax to be applied to works of art, collectors’ items, antiques and used goods, submitted to the Council pursuant to the second paragraph of Article 149 of the EEC Treaty on 16 May 1979, COM(1979) 249. 93 European Commission, supra n. 17, at 11. 94 Ibid. 90

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proposing the establishment of a system à la carte prompted the Commission to withdraw its proposal. A new proposal was presented in 1988.95 Though substantially modied, this did not abandon the general principle of taxation at the prot margin. The Commission stressed that the objective of achieving the single market by 1 January 1993 necessitated adoption of legislation with the purpose of avoiding double taxation and distortions of competition as far as possible, but underlined the need for a common special scheme also from a cultural standpoint: ‘for certain items of a cultural nature, a special measure should be envisaged to promote the conservation and enrichment of the cultural heritage of the Community’.96 With the same rationale, the European Parliament called for urgent and coordinated measures with respect to ‘cultural assets which constitute the inalienable heritage of the Member States, . . . aimed at ensuring the preservation of that heritage in its entirety’.97 According to the framework proposed, the special arrangements should apply to supplies of works of art, antiques and collectors’ items effected by taxable persons (taxable dealers),98 when acquiring the goods concerned in the course of their business from a private person or from taxable persons, not entitled to deduct VAT at purchase, with a view to resale.99 The taxable amount was to be the difference between the selling price charged by the dealer without VAT, and the purchase price paid by the dealer including VAT. When supplying to taxable persons, the art professional might choose between the special scheme and the normal VAT system. The general rule under the sixth VAT Directive was that exports were exempt from VAT,100 whilst imports were subject to it.101 The Commission

95 European Commission, Proposal for a Council Directive supplementing the common system of value added tax and amending Articles 32 and 28 of Directive 77/388/EEC— Special arrangements for second-hand goods, works of art, antiques and collectors’ items, COM(1988) 846. 96 Ibid., Preamble. 97 Legislative Resolution of 23 November 1989 embodying the opinion of the European Parliament on the proposal from the Commission to the Council for a Directive supplementing the common system of value added tax and amending Articles 32 and 28 of Directive 77/388/EEC—Special arrangements for second-hand goods, works of art, antiques and collectors’ items, OJ C 323, 27/12/1989, p. 122. 98 Any taxable person engaged in the occupation of intermediary should be deemed to be a taxable dealer, when dispatching goods under a sales or purchase commission contract. According to the European Parliament, auctioneers should also be considered as taxable persons. See Legislative Resolution, cited above, Amendment 2. 99 For supplies made by a taxable dealer having acquired from a taxable person who had invoiced VAT or had imported the goods and had been charged with VAT, the normal VAT system should apply. 100 See Art. 15(1) and (2), supra n. 35. 101 Ibid., Art. 2(2).

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reversed this rule. Goods dispatched or transported to a destination outside the Community’s territory would be liable for VAT, reecting the cultural argument that tax charges could discourage the export of works of art, and with the obvious aim of keeping cultural patrimony intact within the Community. Contrariwise, cultural goods imported from a third country by a taxable dealer or cultural organisations recognised as such, would not give rise to VAT obligations.102 As for intra-Community trade, until the abolition of taxation on imports and tax remission on exports, the supply of goods would be subject to VAT, when dispatched or transported to another Member State by a taxable dealer, and exempt from VAT, when imported from another Member State by a taxable dealer. Certain Member States reacted strongly to these proposals. In an attempt to combine divergent national interests and gain the consent of all Member States, in view of the unanimity requirement of Article 93 EC,103 the nal text of Directive 94/5/EC, which also makes special arrangements for supplies of second-hand goods,104 differs substantially from the Commission’s proposal. 4.1.3.2

The framework adopted

Directive 94/5/EC introduces a variety of measures, of both permanent and temporary basis. The permanent provisions include a new Article 26a, to be inserted in the text of the sixth VAT Directive, and Article 12(3)(c). The former establishes a special scheme for dealers of second-hand goods, including works of art, collectors’ items and antiques, and makes special arrangements for sales by public auction. The second novel provision enables Member States to make use of a reduced rate for supplies of works of art, in particular circumstances. Transitional provisions relate to certain Member States’ derogations, now expired, aiming to help them adjust to the new system while avoiding an outow of works of art to third country markets. As far as intra-Community trade by art dealers is concerned, according to Article 26a(B)(2), Member States must provide for special arrangements taxing the art dealer’s prot margin on the supply of works of art, collectors’ items 102 Works of art exported without being charged VAT and re-entering the Community within 36 months should be liable for VAT. 103 Member States’ division between those interested in maintaining revenue receipts and those keen on retaining pre-existing preferential tax treatment schemes in order to protect traditional markets created so much controversy within the Council that the Commission threatened to seriously consider the possibility of bringing before the European Court of Justice an action against the Council for failure to act. For the problems encountered during the negotiations, see Aujean, ‘La TVA et les objets d’art en droit Européen’, in Q.B. Sutton and M.A. Renold (eds), Les objets d’art dans l’Union Européenne (1994) 19. 104 A broad legislative packet, covering both works of art and second-hand goods, won the support of the European institutions as potentially neutralising conicting national positions.

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and antiques acquired within the Community. The taxable amount is the art professionals’ prot margin, i.e. the difference between the selling price they set and the purchase price they paid. As regards the supply of cultural goods purchased by the creator or his successors in title, taxable dealers may opt to apply the special arrangements.105 With respect to public auctions, Member States may choose, in accordance with Article 26(a)(C), to apply the margin scheme, or a scheme providing for a special taxable amount. Sales must be effected by an organiser of sales by public auction, acting in his own name and pursuant to a contract under which commission is payable on the sale. Regarding trade with third countries, the Directive, in contrast with the 1988 Commission proposal, makes imports liable for VAT106 and exports tax-free.107 New Article 12(3)(c) allows Member States to make use of a reduced rate, or one of the reduced rates they usually apply, to imports of works of art, collector’s items and antiques. The Directive further enables Member States, availing of the option to apply a reduced rate on imports, to apply the reduced rate to supplies of works of art by their creator or his successors in title.108 Otherwise, the special regime could work to the detriment of European artists, by inducing dealers to import works of art for resale at a reduced rate instead of purchasing them within the Community at the standard rate. It is worth noting that agreement would not have been reached without particular consideration of concerns expressed by the British delegation on the negative impact that taxation of imports could entail for the art market. Imports of works of art qualied, in the UK, for a VAT exemption, and the UK was anxious that high-value transactions would relocate to third countries with free imports to avoid an additional tax burden incurred on entering the EC territory. Fears that the Directive would be blocked by the UK in Council prompted a concession to allow the UK to apply an effective rate of 2.5% to imports of works of art, collectors’ items and antiques, until 30 June 1999.109

105 See Art. 26a(B)(4), supra n. 49. For all transactions subject to the margin scheme, the Directive allows the taxable dealer to apply the normal VAT system. When use is made of both the normal and the special schemes, even on a case-by-case basis, separate accounts of the transactions falling under each of the arrangements have to be kept (Article 26a(B)(8)). 106 Ibid., Art. 26a(B)(4). 107 Ibid., Art. 26a(B)(5), read in conjunction with Art. 15. 108 In order to gain the consent of those Member States, where no reduced rate was applicable, the possibility to decrease the basis of assessment when taxing at the standard rate, so as to obtain an equivalent effect to the application of a reduced rate, also gained ground within the Council (Ibid., Art. 11(A)(4) and (B)(6)). 109 Ibid., Art. 28(1)(a). The UK decided to apply the super-reduced rate of 2.5% only to imports of works created prior to 1 April 1978. The rest became liable for VAT at the standard rate of 17.5%. A derogation to apply special arrangements in respect of the calculation

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An incidental case of cultural mainstreaming?

Directive 94/5/EC follows economic logic. Its aim is to achieve a degree of harmonisation favouring expansion of a European art market without scal frontiers. The rationale for introduction of a special regime for supplies of works of art, collectors’ items and antiques is the economic nature of the art market which, characterised by repeated transactions, can raise issues of double taxation. Though not seriously reected on at the time of its adoption, the Directive may have important cultural repercussions. The principle that tax must be based on the prot made by an art dealer when reselling, rather than on the total value of the item, limits the tax burden borne by art professionals. In consequence, it may bolster their activities, while also lowering the price imposed to the nal consumer. The application of the margin scheme, by safeguarding the nances of art dealers, can improve their purchase patterns and increase the volume of private sales performed, fostering dissemination of cultural content. On the other hand, cultural diffusion objectives are probably better promoted via instruments that reinforce the purchasing power of public cultural institutions. The margin system, by reinforcing the competitive position of private market actors, might affect the ability of public museums and galleries to acquire and make works of art broadly accessible. Consideration should also be given to tax reforms and supportive mechanisms in their regard. Concerning trade with third countries, the decision not to make exports subject to VAT might adversely affect Member States’ cultural policies designed to retain cultural heritage on national territory. Art dealers, not taxed for supplying goods outside EC territory, might prioritise external transactions, instead of selling within the Community where they are liable for VAT. Apparently, the European institutions did not take a protectionist position, in this context. Conversely, as regards taxation on imports, the legislation adopted might induce art dealers to buy within the EC and support ‘local’ culture. Purchases from third countries must bear both the tax burden and other related transport and insurance expenses. It is doubtful whether the Council was fully aware of these cultural ramications. Remarks made about the inuence exerted by the rules enacted on trade in works of art are speculative, and lack statistical data to conrm them.110 It would therefore be wrong to claim that Directive 94/5/EC

of the taxable amount for the supply of works of art, collectors’ items and antiques was also granted to Germany until 30 June 1999, but was never applied in practice. 110 It is regrettable that the Commission, in its report of 28 April 1999 on the impact of Directive 94/5/EC on the competitiveness of the EC art market (COM(1999) 185), did not

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embodies concrete efforts at cultural mainstreaming. As mentioned, the motives behind the legislation enacted were market-based in nature. Some could see recognition of the specicity of the art market via introduction of a series of technical rules as amounting to a limited cultural mainstreaming exercise. Quite clearly, however, the Directive did not respond particularly to cultural concerns, nor were any specic cultural objectives identied as deliberately pursued via VAT harmonisation. Seen through a cultural prism, the established framework reects cultural policy choices made at the EC level in a rather incidental manner. Indeed, European institutions are quite capable of passing harmonising legislation touching upon the cultural sector, without full awareness of the impact of doing so. When cultural benets occur, these are a ‘bonus’. The awkward implication of an unconscious balancing between the goal of market integration and cultural policy objectives is, of course, unintentional obstruction of the cultural mandate conferred by Article 151 EC. 4.1.4

Taxation and Cultural Mainstreaming—Conclusions

Since the 1960’s the Community has moved steadily towards harmonisation of VAT legislation at the European level, with a view to intensifying economic integration, while minimising distortive effects. The process has been a delicate one, with the European legislator constrained to adopt an approach, policy design and implementation aspects responsive to national concerns and sensitivities. One issue recently raised within the context of VAT harmonisation is whether VAT, broadly acknowledged as a revenue-accumulating instrument, may serve as a mechanism to promote objectives inherent in other policy areas. In relation to culture, the creation of a special scheme for the supply of works of art, collectors’ items and antiques by art professionals, and the scope for Member States to reduce the tax burden borne by some cultural goods and services might be thought to reveal a certain level of cultural mainstreaming. In reality, cultural mainstreaming in the eld is sometimes deliberate but incomplete, and at other times rather incidental. It does not reect a general Community-level objective to relieve tax on culture: the cultural sector is not automatically exempted from VAT obligations and boundaries as to the preferential tax treatment afforded to certain cultural products are maintained under criteria which are not self-evident. The latter issue is likely to assume greater prominence with the Community’s changeover to the denitive VAT regime in coming years, and stimulate deeper discussion examine the effects of the margin system on the attainment of cultural production and dissemination objectives.

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on the possible contribution that scal tools can make to the attainment of cultural policy goals.

4.2

Culture and Copyright

The European Community has a long-standing commitment to harmonisation of Member States’ copyright legislation.111 Differences between national copyright systems distort competition in intra-Community trade, and generate legal uncertainty for cultural operators. Also alerted by jurisprudence of the European Court of Justice,112 the European legislator therefore identied the area of copyright and related rights as a sector where harmonisation at Community level was crucial. Since 1991, several regulatory measures have been adopted aiming to guarantee proper functioning of the internal market in cultural goods and services.113 Legislative enactments tackled specic issues raised by application of free movement principles, either recognising special categories of rights (and other particular elements of protection, such as the time remit of copyright), or special modes of exploitation, for instance, satellite broadcasting and cable retransmission. Cultural considerations have been integral to a legislative process aspiring to create a legal environment supportive of creativity and innovation. Instruments adopted have sought to correct legislative disparities between national copyright laws, but also to ensure a high level of copyright protection for authors, acknowledging their crucial role in the Community’s cultural life. By way of illustration, Directive 93/98/EEC has harmonised the term of

111 Padro, ‘Highlights of the Origins of the European Union Law on Copyright’, 23 European Intellectual Property Review (2001) 238. 112 See, in particular, Cases 62/79, Coditel, [1980] ECR 881, C-158/86, Warner Brothers Inc. and Metronome Video ApS v Erik Viuff Christiansen, [1988] ECR 2605, and C-341/87, EMI Electrola GmbH v Patricia Im- und Export and others, [1989] ECR 79. For a broad overview of the case-law, see Jehoram, ‘The EC Copyright Directives, Economics and Author’s Rights’, 25 IIC—International Review of Industrial Property and Copyright Law (1994) 821, and by the same author, ‘European Copyright Law—Even More Horizontal’, 32 IIC—International Review of Industrial Property and Copyright Law (2001) 532. 113 See Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs, OJ L 122, 17/5/1991, p. 42, Council Directive 92/100/EEC on rental right and lending right and on certain rights related to copyright in the eld of intellectual property, OJ L 346, 27/11/1992, p. 61, which was repealed by Directive 2006/115/EC (OJ L 376, 27/12/2006, p. 28). Council Directive 93/83/EC on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission, OJ L 248, 6/10/1993, p. 15, Council Directive 93/98/EEC harmonising the term of protection of copyright and certain related rights, OJ L 290, 24/11/1993, p. 9, and Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases, OJ L 77, 27/3/1996, p. 20.

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copyright protection at 70 years after the death of the author or after his work is lawfully made available to the public,114 far exceeding the 50-year minimum protection requirements prescribed by the Berne Convention on the protection of literary and artistic works.115 Directive 92/100/EEC created a new set of rights at Community level, namely rental and lending rights, reinforcing and complementing protection afforded to cultural operators.116 In proceedings relating to the validity of the latter,117 the Court openly afrmed that the framework adopted is ‘of increasing importance to the economic and cultural development of the Community’118—goals which ‘conform with the objectives of general interest pursued by the Community . . . laid down [inter alia] by Article 128 [now Article 151] of the EC Treaty’.119 Undoubtedly, balancing market integration with cultural objectives is not easy. Recent developments in the eld of copyright harmonisation vividly demonstrate the difculties involved in adopting legislation which, alongside internal market objectives, embodies cultural policy goals. Directive 2001/29/ EC on certain aspects of copyright and related rights in the information society (Copyright Directive)120 and Directive 2001/84/EC on the resale right for graphic and plastic artists (Resale Right Directive)121 instantiate some of the main problems in enacting harmonising rules, which seek to comply with the requirements of Article 151(4) EC, as now described. 4.2.1

Copyright in the Information Society

Legal history manifests a continuous process of adaptation of copyright law to technological developments.122 The advent of the information society has proffered no exception to the rule. Via the emergence of interconnected 114

See Council Directive 93/98/EEC, cited above. See Art. 7 of the Berne Convention for the protection of literary and artistic works, available at: www.wipo.int. 116 See Council Directive 92/100/EEC, supra n. 113. 117 Case C-200/96, Metronome Musik GmbH and Musik Point Hokamp GmbH, [1998] ECR I-1953. 118 Ibid., at para. 22. See also para. 24, where the Court noted that in the absence of an exclusive rental right, the remuneration of those who invest in artistic creation ‘would cease to be properly guaranteed, with inevitable repercussions for the creation of new works’. 119 Ibid., at para. 23. 120 Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, OJ L 167, 22/6/2001, p. 10. 121 Directive 2001/84/EC of the European Parliament and of the Council of 27 September 2001 on the resale right for the benet of the author of an original work of art, OJ L 272, 13/10/2001, p. 32. 122 Already in 1988, the Commission in a Green Paper on copyright and the challenge of technology (COM(1988) 172) cautioned that legislative disparities between domestic copyright protection regimes could become more pronounced in view of the development of trans-border 115

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networks, new technologies have abolished national frontiers and opened vast opportunities for artistic creation and increased cultural ows. Changes experienced in the production and distribution patterns of cultural content have brought centre stage the inefciency of EC copyright measures, and underlined the need for a re-appraisal of the regulatory approach followed so far.123 4.2.1.1

Rethinking copyright

In the digital world, heterogeneous categories of works, technologies and methods of exploitation converge. This entails both quantitative and qualitative change in market structures and consumption habits. Not only is the market of copyrighted goods and services substantially enriched, with new product series alongside traditional ones, but the forms of marketing cultural content also experience a prodigious expansion: rst, via emergence of on-demand services, provided electronically at distance and on specic request from the consumer; secondly, through development of digital broadcasting which, with its unlimited transmission capacity, encourages trans-border exploitation, and allows content providers to target niche markets. New technologies have not only diversied the forms of production and distribution of cultural content. Anyone with the right equipment—easily acquired at affordable prices—can now obtain identical copies of a work, make digital alterations to it and disseminate it in immaterial form. The number of network users and possibilities of inuencing the cultural landscape by copying, digitally reworking and distributing content without rst obtaining the author’s consent are vast and constantly increasing. Copyright has been at the centre of such developments. Cultural industries have persistently called for updated copyright protection. Others have seriously questioned the very concept of copyright, arguing that ‘[d]igital technology is detaching information from the physical plane, where property law of all sorts has always found foundation’.124 Accordingly, an intellectual property

content exploitation on the basis of new technologies, including video and digital audio tapes, compact discs, satellite and cable television, computer programs and electronic databases. 123 See, generally, R. Towse, Copyright in the Cultural Industries (2002), I. Stamatoudi and P.L.C. Torremans, Copyright in the New Digital Environment (2000), D. McClean and K. Schubert, Dear Images: Art, Copyright and Culture (2002), B. Hugenholtz, The Future of Copyright in a Digital Environment: Proceedings of the Royal Academy Colloquium organised by the Royal Netherlands Academy of Sciences (KNAW) and the Institute for Information Law, Amsterdam (1996), Jones, ‘An Artist’s Entry into Cyberspace: Intellectual Property on the Internet’, 22 European Intellectual Property Review (2000) 79, and Wiese, ‘The Justication of the Copyright System in the Digital Age’, 22 European Intellectual Property Review (2000) 387. 124 See Barlow, ‘The Economy of Ideas: Selling Wine without Bottles on the Global Net’, available at: http://www.eff.org/~barlow/EconomyOfIdeas.html, at 2.

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regime, based on the traditional dichotomy between the idea—a public good, belonging to the whole of humanity and which must spread freely—and the expression of that idea, protected by copyright, is not justied. For some, only ethics and technology can properly address the ambiguous situation created by the absence of any physical support that ows from digitisation, and the difculties encountered in enforcing copyright legislation, given the ease, speed, accuracy and volume with which a person can copy and disseminate protected material. A Lex informatica, founded on technology and contractual relations between content providers and users, would have an advantage in its capacity for automatic compliance.125 Copyleft, a contractual practice originally developed by the ‘free software movement’, which advocates free use, modication and distribution of software,126 is more user-friendly in its point of view, asserting that public rights to information must be prioritised against proprietary interests. Suggested as an alternative to existing copyright regimes, copyleft has entered the cultural sector via the emergence of ‘free art’ and ‘creative commons’ licenses, which enable the reproduction, alteration and further distribution of an artistic work. Contractual arrangements bind the author not to make use of his exclusive rights under copyright, and prohibit the user from claiming protection for modications made to copies of the original work. So questioned, is the mediating role played by copyright between creators and users. Of particular importance for promotional purposes, especially for new artists, licences of this kind are said to support non-monopolisation of art, protecting and promoting artistic practice freed from the rules of the market economy. 4.2.1.2

Information society and copyright: the EC challenge

The Community’s contribution to the debate has its origins in a quite different perspective. The persistence of the copyright model in the virtual world has been considered an essential condition of success of the information society in Europe. Noting that creative content and innovation should play a critical role in the development of online networks, the 1994 Bangemann report identied copyright protection as a fundamental part of the regulatory

125 See Hugenholtz, ‘Code as Code, or the End of Intellectual Property as We Know It’, available at: http://www.ivir.nl/publications/hugenholtz/maastricht.doc, and Perlmutter, ‘Convergence and the Future of Copyright’, 23 European Intellectual Property Review (2001) 111. 126 See, generally, Lambert, ‘Copyleft, Copyright and Software IPRs: Is Contract Still King?’, 23 European Intellectual Property Review (2001) 165.

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system required to establish the information superhighway.127 To this end, a re-evaluation of all measures enacted in the eld was initiated. Its purpose was to examine whether the existing rules could efciently address the new technological challenges. The process culminated in adoption of a Green Paper in 1995 and a follow-up document in 1996.128 According to the Commission, the launch of the information society depended on the existence of a exible regulatory framework. This would facilitate the creation of an appropriate information infrastructure, and also guarantee a functional internal market for production and exploitation of new goods and services. Given that much material to be carried on the information distribution platforms would be copyright protected, the Commission cautioned the need for special attention to copyright issues, both to avoid inhibiting free circulation of cultural content and encourage strong public support for the use of new networks. From a purely economic perspective, it was stressed that a simple, secure and reliable copyright regime was a precondition of investment in creative and innovative activities, stimulating development of new products and services. The competitiveness of cultural industries was closely related to the ability of creators and content providers to benet from exploitation in all potential domestic markets. Online availability of cultural content would be guaranteed only if all necessary safeguards were in place to assure maximum protability and prevent nancial results being improperly appropriated. Whilst copyright’s importance was seen as deriving essentially from its role in maintaining adequate and secure investment conditions, its cultural dimension was not completely neglected. In the Commission’s view, strengthening copyright protection in the new digital era was a key part of Community cultural policy, in line with Article 151(4) EC. Ensuring proper remuneration for authors and artists, ‘the driving force of the European cultural heritage’, could stimulate increased artistic production.129 Maintenance of the right balance between authors’ protection and economically viable content exploitation

127 Bangemann Report, Europe and the Global Information Society—Recommendations of the High-level Group on the Information Society to the Corfu European Council, Brussels, 26 May 1994. 128 European Commission, Green Paper on copyright and related rights in the information society, COM(1995) 382, and Follow-up to the Green Paper on copyright and related rights in the information society, COM(1996) 568. 129 See the Green Paper, cited above, at 11. For an overview of the copyright incentive theory which inuenced the Commission, see R. Burrell and A. Coleman, Copyright Exceptions: The Digital Impact (2005), at 170–171.

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should be safeguarded, so that ‘the information society and European culture develop in harmony’.130 Indisputably, creativity needs to be properly rewarded, regardless of the medium by which its outputs reach the consumer. Otherwise, authors would be reluctant to create new multimedia products or digitise their works, embodied in traditional formats, adversely affecting the diversity of content available in new distribution channels. As the European Parliament pointed out, ‘[i]n the absence of an adequate legal framework introduced at the appropriate time, the creation of material for the new multimedia sector would be discouraged or even wiped out by piracy, thus penalising authors, interpretive and performing artists and producers of other protected material. The harmful effects would inevitably have repercussions on the related industries, the users of other protected material (such as the providers of on-line and off-line services) and in particular on consumers, who would have less material (or material of lower quality) at their disposal’.131 4.2.1.3

The framework adopted

The Commission’s 1995 Green Paper identied key topics,132 on which wideranging consultation was launched. On the basis of the results of that exercise, four aspects were singled out as requiring immediate action: the reproduction right; the right of communication to the public; the distribution right, including the principle of exhaustion; and legal protection of the integrity of technical identication and protection schemes.133 The substance of comments received was accommodated in the 1998 proposal for a European Parliament and Council Directive on the harmonisation of certain aspects of copyright and related rights in the information society,134 which eventually led to the adoption of Directive 2001/29/EC, based on Articles 47(2), 55 and 95 EC.

130

Ibid., Green Paper. European Parliament, Report of 28 January 1999 on the proposal for a European Parliament and Council Directive on the harmonisation of certain aspects of copyright and related rights in the Information Society, Committee on Legal Affairs and Citizens’ Rights, Rapporteur: Roberto Barzanti, A4–0026/1999. 132 The issues identied were: the applicable law, the exhaustion of rights and parallel imports, the reproduction right, the communication to the public right, the digital dissemination or transmission right, the digital broadcasting right, moral rights, the acquisition and management of rights and nally, technical systems of identication and protection. 133 Concerning the rest of the points identied by the Green Paper (broadcasting right, applicable law and enforcement, rights-management and moral rights), it was suggested that further reection was needed before taking any further step. 134 European Commission, Proposal for a European Parliament and Council Directive on the harmonisation of certain aspects of copyright and related rights in the information society, COM(1997) 628. 131

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This legal instrument has a twofold aim. On one hand, by contrast with the previous fragmented regulatory approach, it harmonises certain aspects of copyright law across the board for any kind of medium support. On the other hand, it brings EU copyright protection into line with international developments in the eld, specically the conclusion of the Internet Treaties under the auspices of the World Intellectual Property Organisation (WIPO).135 The latter set minimum international copyright standards for the new online environment: the WIPO Copyright Treaty (WCP) protects authors of literary and artistic works, and the WIPO Performances and Phonograms Treaty (WPPT), performers and phonogram producers.136 Both Treaties were welcomed by the EU and provided the Commission with an extra argument in pushing for harmonisation. In passing the Directive, admittedly the EC was performing a difcult task. The Directive attempts to maintain copyright law’s traditional balance between the divergent, often conicting rights and interests of right-holders, cultural industries and users. Its intention has been to protect content creation and strengthen it vis-à-vis international competition, at the same time securing the industry’s innovative potential and the interests of cultural content users. The Directive stipulates that a rigorous, effective system for protection of copyright and related rights is ‘one of the main ways of ensuring that European cultural creativity and production receive the necessary resources’.137 A harmonised legal framework, which provides for a ‘high level of intellectual property protection’, is expected to ‘foster substantial investment in creativity and innovation . . . and lead in turn to growth and increased competitiveness of the European industry both in the area of content provision and information technology and most generally across a wide range of industrial and cultural sectors’.138 Yet, certain exceptions and limitations are permitted in the public interest, so as not to lose sight of user interests. Interestingly, protection of copyright and related rights is also considered as a cultural policy matter.139 According to the nal text of the Directive, the cultural implications of the information society require that ‘account be taken of the specic features of the content of new products and services

135

See supra n. 120, recital 15. The Internet Treaties ll loopholes left by the three previous major multilateral agreements, namely the Berne Convention for protection of literary and artistic works (1971), the Rome Convention for the protection of performers, producers of phonograms and broadcasting organisations (1961) and the Agreement on trade-related aspects of intellectual property rights (1995). 137 Supra n. 120, recital 11. 138 Ibid., recital 4. 139 Ibid., recital 12. 136

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available’,140 and a need to preserve ‘the independence and dignity of artistic creators’.141 Copyright protection is ‘crucial to intellectual creation . . . in the interests of authors, performers, producers, consumers, culture, industry and the public at large’,142 in the sense that ‘if authors and performers are to continue their creative and artistic work they have to receive an appropriate reward for the use of their work’.143 To assist assessment of whether the desired reconciliation of divergent interests has been achieved, the legal framework adopted will now be analysed in detail. The Directive leaves intact existing Community provisions on the term of copyright protection, the legal protection of computer programs and databases, rental and lending rights and copyright and related rights applicable to broadcasting of programs by satellite and cable retransmission.144 It provides for harmonisation of three exclusive rights (the reproduction right, the communication to the public right and the distribution right),145 and enumerates exceptions and limitations to each. It also introduces an obligation on Member States to protect technological measures and rights-management information.146 Two-level protection: exclusive rights and technological fences Protected material, converted into electronic form and transmitted digitally, is vulnerable to copying. The traditional understanding of the reproduction right as limited to the making of physical copies has therefore been re-examined. Already harmonised for some categories of right-holders,147 the reproduction right has been broadly redened as ‘an exclusive right to authorise or prohibit direct or indirect, temporary or permanent reproduction by any means and in any form, in whole or in part’148 for authors (of their works), for performers (of xation of their performances) and for phonogram producers (of their programs). Beyond the WIPO Treaties, the Directive also introduces, amongst 140

Ibid., recital 8. Ibid., recital 11. 142 Ibid., recital 9. 143 Ibid., recital 10. 144 Ibid., Art. 1(2). 145 It has been argued that a single ‘right to exploit or disseminate’ should have been introduced, replacing the current ‘bundle’ of separate economic rights, since rights, drafted deliberately to be technologically neutral, might be quickly called into question by the rapidity of technological developments. See Perlmutter, supra n. 125, at 115–116. 146 As a logical extension to the initiatives launched, the EC has recently taken interest in the effective enforcement of the rights harmonised. See Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights, OJ L 157, 30/4/2004, p. 45. 147 See the Computer Programs Directive, the Database Directive and the Rental and Lending Directive, supra n. 113. 148 Supra n. 120, Art. 2. 141

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the beneciaries of the right, lm producers in respect of the original and copies of their lms, and broadcasting organisations for xations of their broadcasts, whether transmitted by wire or over the air, including by cable and satellite. The communication right requires Member States to provide authors with the exclusive right to authorise or prohibit any communication to the public of their works, by wire or wireless means, including broadcasting.149 It is understood as covering all acts of making works available to the public in a way that members of the public may access them from a place and at a time individually chosen by them.150 Thus, apart from the traditional forms of communication to the public, a specic right of on-line communication by means of the new digital technology is recognised. A similar right, though specic to on-demand exploitation, is attributed to performers and phonogram producers, and also, beyond the WPPT, to lm producers and broadcasters.151 The notion of individual choice refers to on-line exploitation by interactive transmissions and hence excludes the offer of works in a predened form, such as traditional broadcasting and pay-TV services. Harmonisation of the distribution right is probably the only issue not directly connected to the advent of new technologies. Article 4 provides an exclusive right for authors, in respect of the original of their works or copies thereof, to authorise or prohibit any form of distribution to the public by sale or otherwise, in a tangible form. The rst sale or other transfer of ownership in the Community by the right-holder, or with his consent, exhausts the right to control resale in the Community, without prejudice to rental and lending rights contained in Directive 92/100/EC.152 Crucially, the principle of exhaustion does not apply in an electronic environment. Each single act of transmission of a protected work or other subject matter on-line must be subject to the author’s authorisation.153 An additional layer of protection consists of the recognition of an obligation on Member States to provide adequate legal protection for technological

149

Ibid., recital 23. Ibid., Art. 3(1). The denition of ‘public’ is left to Member State discretion. In line with Article 8 of the WCT, recital 27 provides that the mere provision of physical facilities for enabling or making a communication does not in itself amount to a communication within the meaning of the Directive. 151 Ibid., Art. 3(2). Phonogram producers and performers pressed for recognition of an exclusive broadcasting right. Given that digital broadcasting was still at its infancy, it was decided to wait for the market to evolve before taking action in the eld. See the Commission’s follow-up to the Green Paper, supra n. 128, at 20. 152 Supra n. 113. 153 The same applies as regards a material copy of a work or other subject-matter made by a user of an on-line service with the consent of the author, and to rental and lending services of the original work and its copies. See supra n. 120, recital 29. 150

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measures and rights-management information. This complements the establishment of the bundle of exclusive rights just examined. For the purposes of the Directive, technological measures include any technology, device or component that, in the normal course of its preparation, is designed to prevent or restrict acts, in respect of works or other subject matter, which are not permitted by the right-holder.154 This denition embraces both the unauthorised reception and use of a work.155 Member States have a duty to provide ‘adequate legal protection against the circumvention of any effective technological measure’ and ‘against the manufacture, import, distribution, sale, rental, advertisement for sale or rental, or possession for commercial purposes’ of devices performing circumvention functions.156 The Directive goes beyond the WIPO Treaties by establishing a complete regulatory scheme, which covers not only the particular act of circumvention but preparatory acts (i.e. the trafcking of devices enabling or facilitating circumvention of technological measures) as well. As regards rights-management information (RMI), the denition contained in the Directive encompasses any information provided by the right-holder which identies the work protected, its creator and the terms and conditions of its use.157 In a network environment, any digitised cultural creation (such as the representation of a painting, a musical work, book or lm) may incorporate RMI, enabling the right-holder to spot each single use and make arrangements to secure payment.158 According to the Directive, adequate legal protection must be provided against ‘the removal or alteration’ of any such information ‘without authority’ and against ‘the distribution, importation for distribution, broadcasting, communication or making available to the public

154 Ibid., Art. 6(3). For a detailed description of technological measures, see Institute for Information Law (IVIR), Study on the protection of technological measures, November 1998, available at: www.ivir.nl. 155 Technological measures may control initial/subsequent access (for example, to the content of a web site through subscription or to a CD track which can be downloaded and then listened for x times) and the use of a work. Serial copy management systems, for instance, permit the making of digital copies only when use is made of the original work. Digital copies of protected material cannot serve as a source for cloning. 156 Supra n. 120, Art. 6(1) and (2). The Directive species, by means of Art. 6(3), that technological measures are effective, when they consist of devices controlling the use of a protected work or other subject matter by the right-holder ‘through application of an access control or protection process, such as encryption, scrambling or other transformation . . . or a copy control mechanism’. 157 Ibid., Art. 7(2). 158 On rights-management information, see Institute for Information Law (IVIR), Study on the protection of copyright management information, December 1998, available at: www. ivir.nl.

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of protected works and other subject-matter . . . from which such information has been removed or altered’.159 Though Member States enjoy a high degree of discretion as to implementation, the scope of protection afforded in an on-line environment appears overall to be much broader than which applies in the analogue world. Right owners are empowered by the Directive to control the actual use made of their works; traditionally, they could only control the means of their exploitation, the act of consumption, or reception of information exceeding the scope of protection. Reading a digital book or playing a digital track on-line will now be traced and monitored necessitating, above all, the management of relevant rights. Given the above, it is clear that the Directive supports rights owners in two ways: rst by enriching their exclusive copyright and related rights with recognition of new rights, and the adjustment and completion of old ones; secondly, by granting them a factual monopoly technically to ‘fence’ their creative content and secure payment for each single use.160 From a cultural mainstreaming point of view, this is critical, as it provides authors and artists with all necessary instruments to ensure that their creative activity is properly rewarded—an element at least arguably fostering creativity. Although the Directive’s core aim was to address the needs of the cultural industries in an era of digital mass consumption, its side effects in protecting and promoting cultural diversity should not be underestimated. Safeguarding cultural diversity presumes the preservation and encouragement of cultural expression, irrespective of the medium used. By establishing a liable environment for trade in cultural goods and services, the framework may provide an incentive for increased cultural production, inducing operators to gain condence in new exploitation modes. The high level of protection afforded and characteristics of the new environment, in particular digitisation, which lowers market entry barriers, enable artists to produce and publish much more creative works than would be possible via traditional contractual relations with intermediaries. Protecting and maintaining creativity is also in the interest of consumers. With greater availability of cultural content, a wider selection becomes possible.

159

Supra n. 120, Art. 7(1). Complementary protection may be sought by the Conditional Access Directive (Directive 98/84/EC, OJ L 320, 28/11/1998, p. 54), which protects measures that control initial access to audiovisual broadcasting and information society services provided against remuneration on the basis of conditional access. Right-owners of protected material dealing directly with customers may qualify as service providers for the purpose of this Directive. See Koelman, ‘A Hard Nut to Crack: The Protection of Technological Measures’, 22 European Intellectual Property Review (2000) 272, at 277. 160

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It may be the case, however, that such wider choice will only become available when access to, and legitimate use of, disseminated content is guaranteed. This point leads into the most controversial aspect of the Directive, the reconciliation within a copyright framework of two different objectives: protection and promotion of a trade environment, conducive to the production of creative output, and stimulation of wider dissemination of cultural content, both consistent with Article 151 EC. On one side, as explicitly stated in the Directive, ‘[t]he objective of proper support for the dissemination of culture must not be achieved by sacricing strict protection of rights or by tolerating illegal forms of distribution of counterfeited or pirated works’.161 On the other, facilitating diffusion of cultural output remains a valid goal. In this respect, the Directive seeks ‘to promote learning and culture by protecting works and other subject-matter while permitting exceptions and limitations in the public interest’.162 Its ultimate purpose in doing so is to avoid erosion of established forms of access to content or the creation of new barriers to it. EC attempts to strike a balance: the user perspective Recognition of certain exceptions and limitations to the rights harmonised was one of the issues most debated during the negotiation of Directive 2001/29/EC. It was argued, mainly by right-holders, that many existing national limitations should not survive into the digital era. Historically, most were introduced in view of creators’ incapacity to control effectively and be rewarded for use made of their work given the infeasibility of direct transactions with each individual user. In a digital environment, it was suggested, exemptions are no longer justied. Networks, by offering a variety of methods for the self-administration of rights, should enable copyright holders to better control whether a user complies with the agreed terms of exploitation.163 Such an approach could appear convincing for a limited number of copyright exceptions. But its market failure rationale does not take account of the fact that many national copyright limitations were rather formulated to protect certain fundamental freedoms (for instance, freedom of expression, the right to information and the right to privacy) or accommodate cultural, educational and social public policy considerations. From this perspective, whereas certain exceptions should ‘not justify simply converting them to the digital environ-

161

Supra n. 120, recital 22. Ibid., recital 14. 163 In addition, the marketing of protected works by direct contractual relations between the author and the user should allow for the development of new innovative ways to meet consumers’ demands. 162

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ment’,164 there were cases where limitations and exceptions should ‘continue to be indispensable complements to the exclusive rights’.165 In view of the variation across national copyright systems, scholarly assessments were made of existing exceptions to identify those which should be conrmed or extended in the digital era.166 In accordance with the agreed statement to Article 10 of the WCT, thought was also given to ‘devising new exceptions and limitations that are appropriate in the digital networked environment’. Though the Commission had made such an evaluation when drafting the Computer Programs and Database Directives,167 it did not seriously consider this option in the case of the Copyright Directive. Afrming that all necessary safeguards should be taken to preserve a fair balance of rights between the different categories of right-holders, and between right-holders and users of protected subject-matter,168 the Commission opted for limited harmonisation. An exhaustive list of 9 exceptions, all optional save one, was put forward. From these, national authorities could choose those best matching their public policy prerogatives. Following erce lobbying by interested parties, the provision was enriched, resulting in the adoption of a nal text containing no fewer than 21 exceptions and limitations.169 All must be judged in the light of the three-step test of the Berne Convention, incorporated in Article 5(5) of the Directive, according to which exemptions and limitations will only apply ‘in certain special cases which do not conict with a normal

164 Hugenholtz, ‘Fierce Creatures, Copyright Exemptions: Towards Extinction?’, available at: http://www.ivir.nl/publications/hugenholtz/PBH-FierceCreatures.doc, at 11. 165 Vinje, ‘Copyright Imperilled?’, 21 European Intellectual Property Review (1999) 192, at 194. 166 See, in particular, Institute for Information Law (IVIR), Study on contracts and copyright exemptions, December 1997, available at: www.ivir.nl. 167 See Article 9(1) of the Computer Programs Directive, which amounts to a prohibition to contract against the right to make a back-up copy, study or decompile a program, and Article 15 of the Database Directive, which prohibits contractual arrangements against the right to extract and re-utilise insubstantial parts of the database, and against the performance of certain acts necessary for the purposes of access to, and normal use of, the contents of the database, supra n. 113. 168 See recital 21 of the Commission’s proposal, supra n. 134. 169 The Netherlands and the Scandinavian countries proposed the introduction of a general fair use exception. This is recognised in common law countries as a type of limitation to the exercise of a copyright owner’s exclusive rights in the form of an equity defence argument for copyright infringements. Introduced for uses, whose social desirability outweighs the loss of the copyright owner, or in relation to exploitation modes that the right-holder would have licensed if insurmountable transaction costs were not to be faced, the fair use doctrine, also known as fair dealing, represents a exible instrument for balancing copyright objectives on the basis of broadly dened criteria, open to interpretation on a case-by-case basis: the nature of the use made; the specic characteristics of the protected work; the substantiality of the portion of the work used; and the impact of the use to the work’s exploitation market. See Pan, ‘Will Fair Use Function on the Internet?’, 98 Columbia Law Review (1998) 169.

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exploitation of the work or other subject-matter and do not unreasonably prejudice the legitimate interests of the rightholder’.170 The only mandatory exception covers temporary acts of reproduction, transient or incidental, which form an integral and essential part of a technological process, carried out with the sole purpose of enabling a network transmission or a lawful use of a work or other subject-matter, authorised by the right-holder or permitted by law.171 This provision safeguards expectations of access to, and legitimate use of, cultural content, since interested users would otherwise have to obtain the author’s authorisation each time they wish to surf the internet. The optional exceptions and limitations under Article 5 of the Directive can be separated into two categories: those relating only to the reproduction right, and those which apply both to the reproduction right and the right of communication to the public.172 The rst category includes reprography and photocopying; analogue and digital acts of reproduction without a direct or indirect commercial character made by a natural person for private use; specic acts of reproduction made by publicly accessible libraries, educational establishments, museums or archives, which are not for direct or indirect economic or commercial advantage; ephemeral recordings of works made by broadcasting organisations by means of their own facilities and for their own broadcasts; and reproduction of broadcasts made by social institutions pursuing non-commercial purposes. Exceptions concerning both the reproduction and the communication to the public rights relate inter alia to uses for illustration in teaching or scientic research, to the extent justied by the non-commercial purpose to be achieved; uses for the benet of people with disabilities; uses by libraries and other similar establishments, concerning the communication or making available of works and other subject-matter of their collections for the purpose of research and private study; uses of works, such as works of architecture or sculpture, made to be located permanently in public places; uses for the purpose of advertising the public exhibition or sale of artistic works; and news reporting. A catch-all exception, applying only to analogue uses of minor importance, already permitted under national law, may be found in Article 5(3)(o) of the Directive. 170 On the three-step test, see S. Ricketson, The Berne Convention for the Protection of Literary and Artistic Works: 1886–1986 (1987), Heide, ‘The Berne Three-Step Test and the Proposed Copyright Directive’, 21 European Intellectual Property Review (1999) 105, and Picciotto, ‘Copyright Licensing: The Case of Higher Education Photocopying in the United Kingdom’, 24 European Intellectual Property Review (2002) 438. 171 Supra n. 120, Art. 5(1). In accordance with recital 33 of the Directive, browsing and caching are covered by the exception. 172 Pursuant to Article 5(4) of the Directive, Member States may extend all exceptions and limitations of the reproduction right to the right of distribution.

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Many of the exceptions and limitations prescribed by the Directive address specic cultural policy objectives connected to access to, and dissemination of, cultural content. These are designed to meet and promote public cultural demand while allowing cultural institutions to perform their functions without being strangled by copyright claims. They embody precise cultural policy choices made at the national level in favour of cultural diffusion. In a number of instances, the European Parliament, guided by an authorfriendly rationale suggested, as a precondition for the grant of an exemption, fair compensation of authors for use made of their works. In practice, this means that compulsory, obligatory licenses must be introduced for relevant uses. The Directive, as nally adopted, provides for a right to fair compensation in three instances: reprographic reproduction (Art. 5(2)(a)), private copying (Art. 5(2)(b)) and reproduction of broadcast programs by social institutions (Art. 5(2)(e)).173 Member States remain free to extend fair compensation to scenarios in which it is not explicitly required by the Directive.174 The optional nature of the exceptions, and their large number, has been criticised as a failure to harmonise.175 As Member States may simultaneously maintain most existing national limitations, and avoid implementing the entire list—free to ‘pick and choose at will’176—it has been argued that ‘the Commission’s original aim of limiting the number of exceptions to a bare minimum . . . has backred dramatically’.177 In this respect, it should be recalled that harmonisation need not necessarily entail uniformity, particularly when action is taken in such a sensitive context. Member States display different cultural sensitivities, and the optional list allows national authorities exibility to implement exceptions, in line with domestic cultural priorities pertaining to cultural content dissemination.

173 The Council specied that when determining the conditions of fair compensation, the particular circumstances of each case must be taken into account. Fair compensation is required only when right-holders are actually or potentially harmed by acts coming under the scope of the specic exceptions mentioned. In situations where the prejudice is minimal, for example, in the case of time-shifting, no obligation for payment arises. When the right-holder has received payment in another form (i.e. as part of a licence fee) no compensation is due. See, supra n. 120, recital 35. 174 Ibid., recital 36. 175 See Hart, ‘The Proposed Directive for Copyright in the Information Society: Nice Rights, Shame about the Exceptions’, 20 European Intellectual Property Review (1998) 169, Hugenholtz, ‘Why the Copyright Directive is Unimportant, and Possibly Invalid’, 22 European Intellectual Property Review (2000) 499, Doherty and Grifts, ‘The Harmonisation of European Union Copyright Law for the Digital Age’, 22 European Intellectual Property Review (2000) 17, and Guibault, ‘Le tir manqué de la Directive européenne sur le droit d’auteur dans la société de l’information’, 15 Cahiers de propriété intellectuelle (2003) 537. 176 See Bernt Hugenholtz, cited above, at 500. 177 Ibid.

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Conversely, an exhaustive enumeration of exceptions and limitations may run counter to cultural diversity preoccupations. National exceptions, in the past introduced to respond to national cultural concerns, but outside the scope of the list, were removed or modied to be consistent with the Directive. This happened in the UK which, in the eld of research, had to narrow the scope of the exception under national legislation of reproduction of literary, dramatic, musical and artistic works.178 Prior to adoption of the Directive, no requirement was imposed as to the commercial or non-commercial purpose of the copying made. Following the transposition measures of 31 October 2003,179 an exception is now available only for non-commercial research. Private organisations, but also non-public universities and academic institutions which attract commercial funding need to seek the permission of the copyright owner, to avoid infringing copyright. Similar constraints are imposed with respect to education, and in relation to the copying activities of publicly accessible libraries, museums and archives. According to the Directive, these may be granted an exception only for reproductions which are not made for direct or indirect economic or commercial advantage. Given the exhaustive character of enumerated exceptions neither is the introduction by Member States of new exceptions and limitations permitted, even if these are appropriate in a digital environment to protect and further promote the dissemination and exploitation of cultural content. In light of the dynamic character of the information society, and so the extreme difculty of predicting in advance the precise circumstances in which it might be desirable to make an exception available, the complete foreclosure of the possibility to tailor new exceptions might damage Member States’ capacity freely to dene and conduct their cultural diffusion policies. The interrelation of copyright exceptions/limitations and protection for technological measures: a troublesome case At rst sight, the Directive appears to preserve the traditional balance that copyright law establishes between right-holders and consumers. Due attention is given to user rights by establishing certain exceptions favouring the distribution of creative material. On the other hand, right-owners’ interests are safeguarded by recognising the necessity of introducing fair remuneration systems: fair uses are not necessarily free uses.

178

T. Cook and L. Brazell, The Copyright Directive: UK Implementation (2004), at 53–55, and Hart, ‘Implementation of the Copyright Directive in the United Kingdom, 26 European Intellectual Property Review (2004) 254, at 255. 179 Copyright and Related Rights Regulations 2003, SI 2003/2498.

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A closer look at the legislation reveals, nonetheless, that there may be wider, unexpected repercussions for public expectations of legitimate use. Legal protection of technological measures is said to apply without prejudice to public policy concerns.180 But Member States are not obliged to apply the exceptions and limitations of Article 5 of the Directive to anti-circumvention measures they implement. This suggests that the new regime actually places authors and content providers in a position to fence their content for all uses, even those that are non-infringing under the Directive. A beneciary of an exception has no right to circumvent technological protection to perform the lawful act. Whether the Commission intended to prohibit circumvention for permitted uses is disputed. In its initial proposal, the Commission followed the example of the WIPO Treaties,181 indicating that any prohibition on acts of circumvention should be limited to circumvention for purposes of infringement, excluding the non-infringing acts covered by the Directive.182 In the same spirit, the Commission refused to incorporate, in its amended proposal, the Parliament’s amendment according to which ‘exceptions and limitations should not prevent the use of technical means, nor prejudice their protection under Article 6’.183 Notwithstanding, the Council opted for protection against circumvention of

180

Supra n. 120, recital 51. See Article 11 of WCT, which states that ‘Contracting Parties shall provide adequate legal protection and effective legal remedies against the circumvention of effective technological measures that are used by authors in connection with the exercise of their rights under this Treaty or the Berne Convention and that restrict acts, in respect of their works, which are not authorised by the authors concerned or permitted by law’, and the similar provision of Article 18 of the WPPT on obligations concerning technological measures used by performers and producers of phonograms. 182 See recital 30 of the Commission’s Proposal for a European Parliament and Council Directive on the harmonisation of certain aspects of copyright and related rights in the information society, supra n. 134, which stipulates that ‘such a legal protection should be provided to technological measures that effectively inhibit and/or prevent the infringement of any copyright, rights related to copyright or sui generis rights provided by law’, and Article 6, which states that ‘Member States shall provide adequate legal protection against any activities, including the manufacture or distribution of devices or the performance of services, which have only limited commercially signicant purpose or use other than circumvention, and which the person concerned carries out in the knowledge, or with reasonable grounds to know, that they will enable or facilitate without authority the circumvention of any effective technological measures designed to protect any copyright or any rights related to copyright as provided by law or the sui generis right provided for in Chapter III of European Parliament and Council Directive 96/9/EC.’ 183 See Amendment 47 of the Legislative Resolution of 10 February 1999 embodying Parliament’s opinion on the proposal for a European Parliament and Council Directive on the harmonisation of certain aspects of copyright and related rights in the information society, OJ C 150, 28/5/1999, p. 171. 181

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all technological measures, regardless of whether circumvention enables an act beneting from an exception under the Directive.184 As a compromise, a peculiar provision was added in Article 6(4) of the Directive, obliging Member States to provide, in the absence of voluntary measures taken by right owners (including agreements between right-holders and the parties concerned), appropriate measures to ensure that right-holders make available to the beneciaries of exceptions/limitations the means to enjoy them. A similar provision pertaining to private copying was also inserted, affording Member States considerable latitude in deciding whether to take action or not. Put simply, right-owners are asked to accommodate users’ concerns by taking measures which do not block legally permitted uses. In default, Member States must intervene, to enable the legitimate exercise of derogations, with the exception of private copying, where the Member States may decide to refrain from taking corrective action. Member State intervention is thus subsidiary to that of right-holders. But Article’s 6(4) broad terms make it difcult to imagine how Member States may identify cases necessitating intervention. Establishing mechanisms for that purpose is particularly complex, given privacy concerns. Moreover, and of greater importance, the Directive refuses to establish a clear obligation on right-owners to take appropriate measures, and offers no indication as to the nature and characteristics such measures should own (save mentioning the possibility of agreements between parties, which may not necessarily take the users’ side). By doing so, the Directive leaves right-holders free to decide whether to accommodate users’ interests or not. Surprisingly, the Article 6(4) scheme does not apply to the whole list of Article 5 but only to certain specically indicated exceptions,185 and under the condition that the beneciary ‘has legal access to the protected work or other subject-matter concerned’.186 Though the reasons for distinguishing between the exceptions, as regards the limitation on the protection of technological

184 See recital 48 and Article 6(3) of the Council Common Position No. 48/2000 of 28 September 2000 with a view to adopting Directive 2000/. . ./EC of the European Parliament and of the Council of . . . on the harmonisation of certain aspects of copyright and related rights in the information society, OJ C 344, 1/12/2000, p. 1. 185 Article 6(4) applies to: reprography and photocopying; specic acts of reproduction with no direct or indirect, economic or commercial advantage made by publicly accessible libraries, educational establishments, museums or archives; ephemeral recordings of works made by broadcasting organisations by means of their own facilities and for their own broadcasts; reproductions of broadcasts made by institutions pursuing non-commercial purposes; uses for the sole purpose of illustration of teaching or scientic research of a non-commercial character; uses for the benet of people with disabilities; and uses for the purpose of public security or to ensure the proper performance or reporting of administrative, parliamentary or judicial proceedings. 186 Supra n. 120, 1st indent of Art. 6(4).

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measures, remain unclear, Article 6(4) demonstrates that it is not concerned with access to content, and certainly not free access. Only the user who has already acquired legitimate access (usually by rightfully purchasing protected material) will be empowered to perform the non-infringing act covered by the exception. Further, the scheme is not to apply to interactive services: it is explicitly stated that conditions for their provision will be dened by the parties on the basis of contractual terms.187 When one considers the constant development of interactive services, which may emerge as the basic model of content dissemination in the new environment, exclusion of on-demand services from the arrangements made is of paramount importance. Blocking any on-demand service by means of technological lock-ups risks undermining the objective of increased dissemination of cultural content in electronic formats. The issue of private copying also warrants attention. Here, Member States are afforded extensive discretion. Despite strict denition of the private use exception,188 fears that wide-scale digital private copying would replace the normal exploitation of works, and reduce demand for originals, prompted the European Parliament to push for fair compensation, demanding a distinction between remuneration systems for analogue private copying and similar schemes for digital private reproduction. Digital private reproduction is expected to be more widespread and, as a consequence, to have a greater economic impact on cultural industries. So the Council, in accordance with the European Parliament, instructed the Member States, when determining fair compensation, to give due consideration to the availability of effective technological measures that enable cultural content providers to exercise greater control over the use of their works and be compensated directly.189 Whether the provision should be construed as an invitation to Member States to combine fair remuneration systems with technological protection, or as establishing a mechanism of adequate remuneration pending the arrival on the market of effective technical measures is open to interpretation. Either way, concern about creating impediments to legitimate private copying seems justied. As the situation stands, the majority of the Member States providing for a private use copying exception in their national legal orders have opted to extend analogue remuneration regimes to the digital environment.190 First

187

Ibid., 4th indent of Art. 6(4). The private use exception covers only acts conducted in the private sphere by individuals, excluding any form of commercial copying. 189 Supra n. 120, recital 38. 190 See Institute for Information Law (IVIR), Final Report on the future of levies in a digital environment, March 2003, available at: www.ivir.nl. See also Farchy and Rochelandet, 188

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introduced in Germany in 1965,191 and having subsequently spread to other EU countries, analogue schemes consist of a set of levies imposed on the manufacture, distribution or importation of media and recording devices able to operate copying functions. Such schemes assume that, given the practical impossibility of licensing and enforcing copyright in the private arena, authors would not be able to control private use made of their work, and so would be unlikely to receive fair compensation. The application of such remuneration schemes on digital recording devices in all EU countries, except Cyprus, Malta, Ireland, Luxembourg and the UK, creates an uneasy situation. It is highly likely that, when such systems coexist with copy-control technological measures, right-holders will be compensated twice, rst by receiving a portion of the levy imposed on the equipment, and then by the royalties due for the use made, which is technically protected. Alternatively, the user will have to pay the levy in order to compensate the author for future private copying, but technological lock-up of the material will inhibit such copying to be performed. Finally, since multipurpose equipment, such as ordinary PCs, may be used for purposes other than copying, payment might be made for a use which does not take place. In all cases, the combination of technological measures with a system of fair remuneration inspired by the analogue experience is nancially detrimental to consumers and jeopardises dissemination of cultural content. Precisely in such instances, Member States should take measures to protect private use. Arguably, the choice of optional state intervention might have been based on the assumption that national levy systems would phase out, in view of the progressive availability of technological protection devices on the market providing alternative ways of compensating right-holders.192 Even in this scenario, however, one can envisage cases requiring state action, to preserve legitimate private reproduction overridden by contractual arrangements.

‘Copyright Protection, Appropriability and New Cultural Behaviour’, in R. Towse (ed.), supra n. 123, 178. 191 See Institute for Information Law (IVIR), cited above, at 11. 192 In October 2004, the Commission consulted Member States on the scope of the private use exception and existing systems of remuneration. Replies revealed divergent state policies on what constitutes fair compensation, differences in the application of copyright levies in terms of the rates applicable and the types of equipment and media covered, and a low level of uptake of technological protection measures. An additional follow-up consultation was launched on 19 June 2006 to ensure that later Commission proposals are technically viable and practically workable.

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4.2.1.4 Cultural mainstreaming: the case of conflicting cultural policy goals From the cultural point of view, it seems that the Community took on ambitious goals: rst, to support authors and artists by offering them the possibility of full exploitation of their creative efforts, in order to provide incentives for increased cultural production; second, to foster distribution of such content by allowing for the removal of copyright liability in the case of certain uses, because of the specic dissemination purposes they serve. Both objectives must be seen in light of Article 151(2) EC, entrusting the Community with the task of encouraging cooperation between the Member States and, if necessary, supporting and supplementing their action, to promote artistic and literary creation and help improve the knowledge and dissemination of the culture and history of the European peoples.193 Creation and dissemination of cultural content are fundamental for the preservation and further enhancement of the cultural richness of the Member States. This is a cultural policy concern the Community legislator must take into account when adopting harmonising legislation in other policy elds, according to Article 151(4) EC. In the specic circumstances surrounding adoption of Directive 2001/29/EC, both objectives were compatible with the goal of ensuring the proper functioning of the internal market, since both sought to sustain an innovative, stable and secure environment for the development of unhindered trade in cultural goods and services. As stated by the Commission and the Parliament, the very success of the information society depended on the production and availability of diversied content. One would have expected, then, that cultural mainstreaming would have been easy in this context. Yet the system established, by following a pure right-owner-friendly approach, endangers legitimate use of protected material. The unrestrained powers given to creators and providers of such content are capable of jeopardising public expectations for access to various formats of cultural heritage. Instead of setting high standards, maximising cultural dissemination within the EU, the regime introduced serves only to reward the contractual or technical lock-up of content. That said, serious doubts are raised over the efciency of the cultural cross-sectional clause of Article 151(4) EC. When two different cultural policy objectives, such as the creation and dissemination of cultural content, prima facie compatible, are rendered antagonistic, how can other policy areas, of different policy logics, be expected to accommodate them properly? Here, the obligation for the Community to consider cultural aspects, in order to

193

See Art. 151(2) EC.

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respect and promote the diversity of its cultures, included both production and dissemination concerns. But the peculiarity of the mainstreaming process resided in the fact that the adjustments required arose not from conict between internal market and cultural preoccupations, but between cultural objectives as such. The EC has opted to prioritise the objective of increased cultural production to the detriment of dissemination concerns. Why has such a hierarchy developed? What criteria prompted European institutions to make such a choice? Can it be argued that Article 151 implies less favourable treatment for dissemination purposes? Turning for guidance to paragraph 2, the two objectives plainly rank equally in importance. Was the preference accorded to production considerations, then, based on the assumption that when the creator’s protection conicts with legitimate public expectations for the exercise of certain uses, the author’s creative effort should gain precedence, since without it there would be no material to make use of in the rst place? This argument is also unconvincing, underplaying the fact that creators are equally dependent on use made of their works. Even economic reasoning yields a similar conclusion. Nobody doubts that broad availability of diversied content, widely accepted and supported by the public, is necessary for the information society to bear fruit. What would be the point in producing diversied material, which cannot be accessed in attractive terms or which is totally blocked? The public would react negatively, and far from achieving the Community’s ideal of an inclusive information society, the likely result would be an information society of elites able to bear its nancial burdens. Thus is revealed the only credible solution. The main reason for prioritisation of production concerns was insistent lobbying by authors and cultural industries. Although many of their arguments were of a solid basis, one would have expected the EC to demonstrate a more measured balancing of the divergent interests in place. The one-sided approach followed discloses an incomplete mainstreaming effort. This could have been avoided, and the cultural benets of the action undertaken secured, if the Community had acted more prudently as regards the scope of exceptions and their interaction with the application of technological measures. Internal market goals, predominantly economic in logic, would have been attained, with minimal harm to cultural interests, so supporting cultural diversity, had the two conicting cultural objectives been more successfully reconciled.

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The Resale Right for Artists

The resale right is commonly referred to as droit de suite, as it was rst introduced in France in 1920.194 It ensures that an author of an original work of art, and after his death his legal heirs or other persons entitled under him, receive a percentage of the resale price of his artistic work when it is resold. Recognised by the Berne Convention as an optional right subject to reciprocity,195 the resale right incorporates both economic and moral aspects. On one hand, it is based on the principle of inalienability, which acknowledges a continuing relationship between artists and their creations. It is hence closely related to the author’s moral rights.196 On the other hand, by enabling artists to share in the economic success of their works, when they are resold by art-market professionals, it presents the characteristics of a usual right to remuneration. While not mitigating its moral demand, it has for that reason been conceived at Community level as a form of ‘return of rights’ to the author in relation to a value which although existing in the work from the very moment of creation, ‘has encountered particular obstacles to its being fully recognised’.197 4.2.2.1

The necessity of harmonisation

Harmonisation of the resale right has long been discussed. The Commission’s 1977 communication on Community action in the cultural sector anticipated the

194 Law of 20 May 1920, as amended by Law of 11 March 1957, Journal Ofciel de la République Française, J.O. 2723, 1957, Bulletin Législatif Dalloz, 197. 195 Article 14ter of the Berne Convention, introduced by the revision of 26 June 1948, creates no obligation on the states members to the Convention to accord resale right protection. It determines: ‘1. The author, or after his death the persons or institutions authorised by national legislation, shall, with respect to original works of art and original manuscripts of writers and composers, enjoy the inalienable right to an interest in any sale of the work subsequent to the rst transfer by the author of the work. 2. The protection provided by the preceding paragraph may be claimed in a country of the Union only if legislation in the country to which the author belongs so permits, and to the extent permitted by the country where the protection is claimed. 3. The procedure for collection and the amounts shall be matters for determination by national legislation.’ 196 Moral rights enable authors and performers to object to any distortion, mutilation or other modication of their work, prejudicial to their honour or reputation. The rationale behind recognition is that the personality of the artist is expressed through his/her creations and therefore should be granted protection. 197 European Parliament, Report of 3 February 1997 on the proposal for a European Parliament and Council Directive on the resale right for the benet of the author of an original work of art, Committee on Legal Affairs and Citizens’ Rights, Rapporteur: Ana Palacio Vallelersundi, A4–0030/1997, at 16.

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introduction of a directive in order to ‘ensure the harmonisation of the laws on resale rights in several Community countries and the general application of these rights throughout the Community’.198 According to the Commission, a general application of a resale right scheme would not only ‘eliminate the socially unacceptable inequality between artists in the various countries of the Community but also a situation which, in so far as it distorts competition’, rst, due to the attraction of all major art sales in those Member States with no resale right legislation and, secondly, because of the different rates applied in those Member States with a resale right regime, was inadmissible from a common market point of view.199 A few years later, in a communication entitled Stronger Community action in the cultural sector, the Commission highlighted the importance of droit de suite for artists, since ‘it is very rare for their talent to be appreciated immediately’, and stressed that harmonising domestic resale right systems should form part of the efforts deployed to improve the living and working conditions of cultural workers.200 In the framework programme of 1988–1992, launched with the aim of creating a European cultural area, emphasis was placed upon ‘the encouragement of the most representative areas of cultural diversity’, covering plastic arts.201 For the Commission, protecting copyright and neighbouring rights at the Community level would help ‘preserve and develop cultural creativity and diversity’.202 Admittedly, adoption of Directive 2001/84/EC was not guided purely by cultural considerations. Enacted on the basis of Article 95 EC, its main objective is to ensure equal treatment for artists in all Member States, eliminating legislative disparities with regard to the existence of droit de suite and its scope of application. These were said to negatively affect the proper functioning of the common market in works of modern and contemporary art. The obligation to pay a royalty was seen as a factor taken into consideration by any operator wishing to sell a work of art. Consequently, it was argued that recognition or non-recognition of a resale right at national level had a signicant impact on the competitive environment of the European art market. Countries without a resale right appeared particularly attractive for large art

198

European Commission, supra n. 88, at 14. Ibid., at 15. 200 European Commission, supra n. 17, at 22. 201 European Commission, Communication on a fresh boost for culture in the European Community, COM(1987) 603, at 3. 202 European Commission, Communication on new prospects for Community cultural action, COM(1992) 149, at 8. 199

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transactions,203 whilst variations between national resale right legislation in terms of types of transactions covered, beneciaries and rates applicable, the calculation basis and the enforcement methods used, further conditioned the placement of sales.204 Additionally, plastic artists were deemed to be disadvantaged as compared with operators active in other cultural sectors. Literary, musical and audiovisual works allowed for continuous content exploitation on the basis of reproduction and distribution rights, since their ‘originality’ is not affected by their incorporation in a material or tangible support. By contrast, plastic artists were considered to be vested with limited exploitation opportunities, as ‘the exclusive uniqueness of a plastic work is bound up with its rst physical manifestation’.205 Introduction of resale right might guarantee similar treatment for all categories of cultural practitioners.206 Another incentive for harmonisation arrived with the Phil Collins judgment, which decided that copyright and related rights fall within the scope of application of Community law, and ‘are necessarily subject to the general principle of non-discrimination’.207 Following the Court’s ruling, domestic provisions containing reciprocity resale right clauses in accordance with the Berne Convention could not be relied on to deny the nationals of other Member States the rights conferred upon national authors. Whilst a British artist, selling in Paris, was entitled to claim a percentage of the sale price of his original work as a resale royalty, a French artist, selling in the UK, which did not recognise a resale right, was not.

203 A resale right was recognised in all the then 15 Member States, except Austria, the Netherlands, Ireland and the UK. 204 France, Spain and Luxembourg applied a low rate of 3%, Belgium a rate of 4%, Germany, Greece and the Scandinavian countries a rate of 5% and Portugal a rate of 6%. In Italy, rates varied from 1% to 10%. The right entitled to a portion of the gross resale price in France. In Italy, it was calculated on the basis of the capital gain. On resale right domestic legislations prior to enactment of Directive 2001/84/EC, see C. Doutrelepont, Le droit et l’objet d’art: le droit de suite des artistes plasticiens dans l’Union Européenne (1996), at 31–80. 205 Supra n. 197, at 15. The main source of income of an operator lies in the rst sale of his work. Subsequent exploitation is possible, mainly through exhibition and display to the general public. Reproduction arouses minimal interest. See S. Stokes, Arts and Copyright (2001), at 70–71. 206 Supra n. 121, recital 3. As a possible alternative to the resale right for plastic artists, it was suggested to recognise a so-called ‘display right’ allowing for royalty payments when the work of art is displayed at public venue. See, in this respect, Carleton, ‘Copyright Royalties for Visual Artists: A Display-Based Alternative to the Droit de Suite’, 76 Cornell Law Review (1990–1991) 510. 207 Joined Cases C-92/92 and C-326/92, Phil Collins v Imtrat Handelsgesellschaft mbH and Patricia Im- und Export Verwaltungsgesellschaft mbH and Leif Emanuel Kraul v EMI Electrola GmbH, [1993] ECR I-5145, at point 27.

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Driven by economic imperatives, the Directive sought to correct such market dysfunctions. Yet, by creating a new copyright right at the Community level,208 it simultaneously took steps towards promoting artistic creation, by providing artists with an ‘adequate and standard level of protection’.209 Popularly, resale royalties are sometimes viewed as a form of ‘insurance’ for the author, based on the romantic stereotype of the impoverished artist who sees his works selling for enormous amounts.210 Nevertheless, it is generally agreed that artists build their reputation over time, and therefore should share in the appreciation of their work. Indeed, it is the intellectual effort of creators which is acknowledged by EC recognition of a resale right.211 No doubt, in adopting the resale right legislation, the Community also tried to preserve the second value, of maintaining the competitiveness of the European art market. Should the approach followed be considered as undermining a high level of protection for artists? To illuminate this issue, an overview of the regime established, attending particularly to the various procedural phases of the harmonisation process and its institutional dynamics, is essential. 4.2.2.2

The framework adopted and issues of conflict

The Directive introduces, for the benet of artists, including non-EU nationals on the basis of reciprocity,212 an inalienable resale right, which cannot be waived even in advance, to receive a royalty based on the sale price obtained for any resale of their work.213 Works covered by the right must be original works of graphic and plastic art, such as pictures, collages, paintings, drawings, engravings, prints, lithographs, sculptures, tapestries, ceramics, glassware and photographs or copies made by the artist or under his authority in limited numbers.214 Original manuscripts of writers and composers are excluded.215 Every resale, involving any art market professional as a seller, buyer or an

208 According to recital 4 of the Directive (supra n. 121), the resale right ‘forms an integral part of copyright’. 209 Ibid., recital 4. 210 See Hansmann and Santilli, ‘Royalties for Artists versus Royalties for Authors and Composers’, 25 Journal of Cultural Economics (2001) 259. 211 Supra n. 121, recital 5. 212 Ibid., Art. 7. 213 Ibid., Art. 1(1). 214 Ibid., Art. 2. In certain instances, the Directive expands the range of works covered by previous national resale right legislations. For example, Finland and Spain expressly excluded photographic works from the works of art giving rise to resale right claims. 215 Manuscripts are included in the Berne Convention among the types of work generating a resale royalty. The European Parliament suggested their exclusion from the scope of the Directive at rst reading, arguing these can be subject to reproduction. See Legislative Resolution of 9 April 1997 embodying Parliament’s opinion on the proposal for a European Parliament

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intermediary, is liable to droit de suite,216 with the exception of private sales to non-prot public museums.217 Transactions by individuals acting in their private capacity escape resale right obligations due to privacy concerns, and practical difculties in terms of right enforcement. Professional sellers may be exempted from the levy if they acquire the work directly from the author and resell it within a three year period.218 The royalty depends on the resale price net of tax.219 Member States may provide that art market professionals shall bear liability single or share it with the seller.220 The right is transferable after the artist’s death for up to 70 years to those entitled,221 and is therefore relevant mainly to modern and contemporary art. Member States must set a minimum price, not exceeding a Community threshold of €3,000, for sales subject to the royalty.222 The royalty follows a tapering scale of rates for several price bands, ranging from 4%, for sales up to €50,000, to 0.25% for sales of value exceeding €500,000. The maximum royalty payable is set at €12,500.223 In order to effectively enforce a resale right claim, authors are given the right to obtain information from any art market professional for a three-year period after the act of resale.224 Collection and distribution matters are left to the discretion of the Member States.225 The scheme adopted, an outcome of the conciliation process between the Parliament and the Council, is a compromise that resulted from serious political haggling on issues that deeply divided European institutions and the Member States. Though aimed at guaranteeing ‘a high, uniform level of protection’ for creators,226 the Directive represents a limited harmonisation exercise,227 reecting wide-spread fears expressed about the negative inuence it would exert on the competitiveness of the European art market.228

and Council Directive on the resale right for the benet of the author of an original work of art, OJ C 132, 28/4/1997, p. 88, Amendment 9. 216 Supra n. 121, Art. 1(2). 217 Ibid., recital 18. 218 Ibid., Art. 1(3). 219 Ibid., Art. 5. 220 Ibid., Art. 1(4). 221 Ibid., Arts 6(1) and 8(1). 222 Ibid., Art. 3. 223 Ibid., Art. 4. 224 Ibid., Art. 9. The European Parliament extended the right of information from one year, according to the initial Commission proposal, to three years. 225 Ibid., Art. 6(2). 226 See Opinion of the Economic and Social Committee on the proposal for a European Parliament and Council Directive on the resale right for the benet of the author of an original work of art, OJ C 75, 10/3/1997, p. 17, at point 2.2. 227 Supra n. 121, recital 15. 228 Ibid., recital 8.

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One cannot altogether dismiss critiques concerning the potential economic consequences of the Directive.229 It has been suggested that uniform introduction of droit de suite would lower initial sales prices,230 beneting only those successful artists who reach high prices at resale231 or, worse, only their heirs. It would create extra administrative burdens on art-market professionals, potentially driving sales into the black art market. Most importantly of all, it would likely direct art transactions into countries, such as the United States and Switzerland, which do not apply a resale right.232 The UK, home to the largest art market in the EU,233 strongly opposed to the Directive. Its government, backed by the British Art Market Federation (BAMF), the trade’s representative body in the country, alleged that the Commission had not produced sufcient evidence of distortion of competition in the internal art market, and questioned the proposal’s compliance with the principles of subsidiarity and proportionality.234 The overriding British concern, though, was that the Directive would seriously harm the art market by dislocating high-value art transactions to the United States.235 Zero-harmonisation, through the abolition of the right, creating a level playing eld with the EU’s main art competitors, was preferable.236 When assessing the advantages and drawbacks of the introduction of droit de suite at Community level, one must give weight to the fact that the resale 229 For a broad overview, see House of Commons, Culture, Media and Sport Committee, Sixth Report of Session 2004–2005, The market for art, London, April 2005, available at: http://www.publications.parliament.uk/pa/cm200405/cmselect/cmcumeds/414/414.pdf, at para. 45. 230 Mantell, ‘If Art is Resold, Should the Artist Prot?’, 39 The American Economist (1995) 23, and Filer, ‘A Theoretical Analysis of the Economic Impact of Artists’ Resale Royalties Legislation’, 8 Journal of Cultural Economics (1984) 1. 231 Berger, ‘Why Resale Rights for Artists Are a Bad Idea’, Selected Problems in Art Law (2001), available at: www.law.harvard.edu. 232 In the US, only California has droit de suite legislation. 233 The UK is reported to represent over 60% of the EU art trade. See Arts Council of England, McAndrew and Dallas-Conte, ‘Implementing Droit de Suite (Artists’ resale right) in England’, March 2002, available at: http://www.artscouncil.org.uk/documents/publications/325.pdf, at 20. 234 See UK Parliament, Select Committee on European Legislation, 26th Report, Artists’ Resale Rights (1998), available at: http://www.parliament.the-stationery-ofce.co.uk/pa/ cm199798/cmselect/cmeuleg/155xxvi/15506. htm, at point 4.7. Additionally, it was stressed (at point 4.8.) that ‘the proposal could set a precedent by giving artists a right to remuneration of a kind not available to other intellectual property rights holders and could lead to demands for equitable treatment from creators of other ‘goods’ which are traded on the secondhand market’. 235 BAMF claimed that, by 2005, the introduction of the resale royalty would lead to a loss of sales of 78% (£60 million per annum), placing 5,000–8,000 jobs in the art market at risk. See supra n. 233, at 21. 236 Ibid., at point 4.7.

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right only applies to contemporary and modern art.237 Neither the artists’ and galleries’ rst sale market, nor the resale market for works belonging to the public domain, are affected. Besides, the resale right features amongst a series of factors that may inuence sales placement. Taxation, commissions, import and export expenses, contributions to artists’ funds and shipping costs are all elements which condition the nal resale price and thus, accordingly, the sale’s location.238 At any rate, the European art market may not be as vulnerable as some consider. To give an example, there has been no concrete evidence of sales transfer from Germany, which applied a 5% resale right, to neighbouring Switzerland.239 Similarly, higher mediation charges, imposed by the two main UK auction houses, Sotheby’s and Christie’s, in the early 1990s, are not reported as having had a negative impact on sales.240 Be that as it may, serious concerns over the effect of harmonisation on the art market prompted long-lasting negotiations. During these, the main areas of disagreement were Community and national thresholds, the rates applicable, the ceiling xed and the transposition and transitional time periods. Each is now briey considered in turn. The Commission’s initial proposal suggested a minimum sale price of €1,000, triggering application of the resale right.241 This suggestion was intended to avoid a high threshold, beneting recognised artists alone, and to ensure that the costs of the administration of the right did not outweigh income generated for the artist. Member States were to remain free to introduce lower thresholds, ‘to further the interests of young artists’: the resulting disparities were not likely, given the low commercial value of the works concerned, to affect the common art market.242 To reduce the risk of sellers

237

Supra n. 197, at 25. It is estimated that, given high freight costs, trade diversion to avoid the royalty is commercially viable for works of art over €50,000. These represent only 15% of the EU art sales. See European Commission, Memo 1999/68 of 14 December 1999, Proposed Directive on artists’ resale right—Clarication, available at: http://europa.eu/rapid/pressReleasesAction. do?reference=MEMO/99/68&format=HTML&aged=1&language=EN&guiLanguage=en. 239 Ibid. 240 Supra n. 233, at 24. 241 European Commission, Proposal for a European Parliament and Council Directive on the resale right for the benet of the author of an original work of art, COM(1996) 97, Art. 3(1). For reasons of coherence, the amounts proposed in ECU are mentioned in the Euro currency. 242 Ibid., Art. 3(2) and recital 16. 238

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resorting to third country markets, a regressive scale of rates was proposed for several price bands.243 The proposal was widely supported by the European Parliament at rst reading. The mechanism of price bands was welcomed as a perfect combination of economic imperatives with ‘the principle of protecting creative artists as a social value underpinning European intellectual property law’.244 A further subdivision with lower rates for higher prices was, however, judged pertinent to lessen the risk of sales migrating to third countries.245 To enable a greater number of artists to benet from a resale royalty, the threshold was reduced at €500.246 The Parliament also advocated calculating the royalty on the basis of the added value of the work between the rst and subsequent transfers.247 These suggestions were not endorsed by the Commission. Its amended proposal maintained the initial rates set.248 Calculation of the royalty as a percentage of the sales price was also retained.249 According to the Commission, a margin system had the advantage of not penalising the seller when higher prices compared to the rst sale price were not reached at resale, but was likely substantially to complicate the right’s administration and collection procedure. Above all, the resale right was associated with the subsequent exploitation of the work, encompassing the intellectual effort of the artist, and not with the prot made out of it.250

243 Ibid., Art. 4. The royalty was set at the following rates: 4% of the sale price between €1.000 and €50,000; 3% of the sale price between €50,000 and €250,000; and 2% of the sale price above €250,000. 244 Ibid., Amendment 19. 245 The European Parliament proposed a tapering scale of 4% of the sale price between €500 and €50,000; 3% of the sale price between €50,000 and €100,000; and 1% of the sale price above €100,000. 246 European Parliament supra n. 215, Amendment 45. 247 Ibid., Amendment 51. 248 European Commission, Amended Proposal for a European Parliament and Council Directive on the resale right for the benet of the author of an original work of art, COM(1998) 78. 249 The European Parliament proposed at rst reading (supra n. 215, Amendment 51) to determine the amount of the author’s resale right by taking the difference between the purchase price, paid by the person liable for the resale right, after deduction of taxes, restorations costs and other expenses not linked to the creation of the work of art, and the amount invoiced. 250 Society of Authors of Fine and Graphic Arts, VG BILD-KUNST, Pfenning, Study on the practical aspects of the exercise of the droit de suite, including in the digital environment, and its effects on developments in the international art market and on the improvement of the protection of visual artists on behalf of UNESCO, February 2001, available at: http://unesdoc. unesco.org/images/0012/001255/125505e.pdf#page=37.

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In the Council,251 the proposal was subjected to erce attacks. A minimum resale price of €4,000 was xed, with the argument that almost all sales at lower prices are domestic market transactions without any consequence for the proper functioning of the internal market.252 The scale of rates was modied, to highlight that ‘the resale right tapers off’;253 the gures for the proposed bands were altered; and two further bands, affecting the higher priced transactions, established.254 The total royalty amount the author could receive was capped at €12,500. As regards transposition of the Directive into domestic law, the Council opted for a ve-year period, starting from the beginning of the year following that in which the Directive would be adopted.255 With the aim of allowing Member States not currently applying a droit de suite properly to incorporate it in their legal systems, an optional, temporary derogation, with a maximum time limit of ten years, was introduced with respect to the application of the resale right to the authors’ successors in title after death.256 Reaction was strong. The high threshold, excluding large numbers of operators claiming droit de suite payments, met with opposition by authors’ associations,257 and was extensively criticised by the Parliament258 and the

251 Council Common Position No. 42/2000 adopted on 19 June 2000 with a view to adopting Directive 2000/. . ./EC of the European Parliament and of the Council on the resale right for the benet of the author of an original work of art, OJ C 300, 20/10/2000, p. 1. 252 Ibid., Art. 3. 253 Ibid., Statement of the Council’s reasons, point 17. 254 Ibid., Art. 4. The rates system was xed as such: 4% for the portion of the sale price up to €50,000; 3% for the portion of the sale price from €50,000.01 to €200,000; 1% for the portion of the sale price from €200,000.01 to €350,000; 0.5% for the portion of the sale price from €350,000.01 to €500,000; and 0.25% for the portion of the sale price exceeding €500,000. Given that a 5% rate was already applied in several Member States, an optional derogation enabling Member States to apply a 5% instead of a 4% rate for a sale price up to €50,000 was introduced, affecting mainly domestic market sales. 255 Supra n. 251, Art. 12(1). The Council invited the Commission to submit proposals curtailing the transitional period in case of conclusion of an international agreement on resale right during the ten-year period. 256 Ibid. 257 GESAC (Groupement Européen des Sociétés d’Auteurs et Compositeurs) noted that the application of the €4,000 threshold in France would exclude approximately 14,500 sales from resale right royalties, representing an 88% of the national market. The European Visual Artists Association and the Dutch Federation of Artists Associations claimed that a €4,000 threshold would exclude 90% of sales from remuneration in the Netherlands. 258 European Parliament, Legislative Resolution of 13 December 2000 on the common position adopted by the Council with a view to the adoption of a Directive of the European Parliament and of the Council on the resale right for the benet of the author of an original work of art, OJ C 232, 17/8/2001, p. 173, Amendment 6.

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Commission,259 which insisted on adoption of a €1,000 threshold. The Commission further observed that the long transposition and transition periods of the Directive would delay harmonisation for approximately 15 years, creating an unfortunate precedent for other internal market initiatives.260 The conciliation committee, conveyed to reach a nal agreement, opted for a €3,000 minimum threshold, allowing Member States to establish lower domestic thresholds, should they wish, to promote the interests of their cultural operators. In the nal text of the Directive, adopted on 27 September 2001, the time limit to transpose the Directive was set at 1 January 2006,261 and an optional, four-year derogation from the rule which extends the resale right to the artists’ heirs was granted to those Member States not previously applying a resale right.262 4.2.2.3 Cultural mainstreaming: intrinsic attainment of cultural policy objectives or prioritisation of competitiveness concerns? In recital 5 of the Directive, explicit reference is made to Article 151(4) EC. Does this mean that concrete efforts were made to reconcile the internal market paradigm with cultural concerns? Or, did competitiveness considerations gain precedence over European institutions’ duty to respect and protect the diversity of the cultures of the Member States? To answer, a distinction must rst be drawn between the recognition of the right by the Directive, and the detailed rules of the framework agreed. The UK was short of allies in opposing the introduction of a Community resale right. It seems therefore that political will to improve the living and working conditions of artists was in place. Certainly, the primary concern of Directive 2001/84/EC is to secure the proper functioning of the internal art market. At the same time, the rules enacted offer an optimal example of internal market legislation, which is inherently also a cultural policy measure, since it directly addresses issues pertaining to artistic creation and trade in the arts. Harmonisation could have been pursued in two different ways: through the recognition of a droit de suite or through its withdrawal from the legal orders of

259 See European Commission, Communication to the European Parliament pursuant to the second sub-paragraph of Article 251(2) of the EC Treaty concerning the common position of the Council on the adoption of a proposal for a Directive on the resale right for the benet of the author of an original work of art, SEC(2000) 1516, at point 3.3.2, Art. 3. 260 Ibid., at point 3.1. 261 Supra n. 121, Art. 10. 262 Ibid., Art. 8(2). A possible extension of two additional years, subject to consultation and transparency procedures, was also agreed (Art. 8(3)). In a declaration annexed to the procedure, the Commission insisted on the exceptional nature of these deadlines.

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the Member States. The nal choice made reects the deliberate intention of the Community to pursue economic objectives in the least culturally damaging way. As the Parliament stated, zero-harmonization, through the abolition of the right, ‘would undermine certain basic principles of European culture, such as the recognition of artistic creation’.263 The Directive’s challenge was ‘the challenge of creating a European cultural area’,264 where tensions between internal market prerogatives and the need to establish a legal environment conducive to the harmonious development of artistic creation in the Community are properly balanced. The resale right—‘an essential prerogative for authors’—is a factor which may contribute to the protection and promotion of cultural diversity in Europe.265 By providing extra nancial resources to the artist, it has the advantage of acting as an incentive for the author to maintain a high artistic value for future creative activities.266 Subsequent production of impressive work broadens the artist’s reputation, increasing the value of previous creations and, as a result, generates higher resale royalties. The scheme, by making artists investors in their own work,267 can stimulate artistic productivity and raise quality standards. Its characteristics reect a desire to safeguard the interests of cultural creators to the greatest extent possible. Its non-assignable and inalienable nature helps avoid circumvention. In its absence, art market professionals could convince rst-sale artists to refrain from the exercise of the right in the future, or develop standard purchase techniques that force authors to renounce to droit de suite claims.268 The same could fairly be said of the time remit of the right. It has been argued that the length of the protection should be limited to the lifetime of the author, since a possible extension would only serve to benet heirs. Yet prohibiting the succession of the right would have enabled art professionals to escape royalty obligations via use made of long-term lease practices with an option to purchase after the artist has deceased. Turning to the detailed rules of the resale right Directive, the situation alters. Constrained by the need to obtain the political agreement of those

263

Supra n. 197, at 16. Ibid. 265 Supra n. 121, recital 4. 266 Solow, ‘An Economic Analysis of the Droit de Suite’, 22 Journal of Cultural Economics (1998) 209. 267 Rushton, ‘The Law and Economics of Artists’ Inalienable Rights’, 25 Journal of Cultural Economics (2001) 243. 268 Another argument suggests that the right’s inalienability safeguards the interests of third parties. If an individual artist could waive a droit de suite claim, this would increase the per capita transaction costs incurred by other artists when exercising their droit de suite rights. See Hansmann and Santilli, supra n. 210, at 277. 264

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Member States without a resale right legislation in force, the parameters of the framework adopted are moulded by concern to preserve the competitiveness of the European art market. More precisely, the €3,000 threshold is too high, well above any limit previously in operation in EU Member States.269 This diminishes the protection granted, since a large number of transactions will probably fail to reach the levels set. Works of art typically not attaining such prices (sketches, photographs, engravings, lithographs and ceramics) will rarely achieve resale right royalties. As for applicable rates,270 the political choice made, to draw a distinction between successful and less-successful artists, so as to prevent harming the competitiveness of the European art market, while sustaining those artists most in need, would have made sense if resale right claims were secured for less famous authors. Given the €3,000 threshold, whose practical effect is to exclude unknown operators from the scope of the Directive, it is doubtful whether the tapering scale of rates favours artists at an early stage in their careers. The exclusion of promotional sales from resale right liability also merits attention. The Council adopted the Parliament’s amendment on this point, supporting art galleries and art dealers that promote young artists.271 The rationale was that art galleries often invest in emerging artists, acquiring works directly from them. Resale may then carry more risk than prot. The extension of resale royalties to cover such sales could induce dealers to invest less effort in new talent. Another argument suggests that resale royalties permit young artists, when selling to an art gallery, to inuence the dealer’s pricing and consequently the quantity of works sold.272 It is broadly accepted that artists at the start of their career try to convince dealers to provide promotional services, for instance, through transfers of ownership of works of art, and to avoid marking sale prices high, in order to sell as many works as possible and build a reputation. The resale right could present, in such cases, a valuable weapon for the artist: it would balance the interest of art dealers in capturing the full value of

269 Most of the national thresholds previously applied were lower than €1,000. Luxembourg and Portugal did not apply a minimum threshold at all. 270 The provisions adopted also risk increasing administration costs and endanger efcient enforcement. The rate-splitting needs extra calculations, complicating the management of the resale right. It is apposite to note that prior to adoption of the Directive, Belgium had to replace a system of scales with a scheme based on a single rate in order to improve resale right enforcement. See McAndrew and Dallas-Conte, supra n. 233, at 69. 271 Supra n. 215, Amendment 17. 272 Karp and Perloff, ‘Legal Requirements that Artists Receive Resale Royalties’, 13 International Review of Law and Economics (1993) 163.

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their promotional efforts in a single sale, against the objective of selling the widest possible number of works. With the intention not to ‘penalise authors by depriving them from their royalties’,273 the Council sought to limit the exception to cases where the seller has acquired the work directly from the author less than three years before the resale, provided that the resale price does not exceed €10,000. Can the underlying logic of a preferential treatment for art galleries succeed when prices approximate or reach such gures? Works able to attain such prices will seldom be those of unknown or less-successful artists. Art market professionals will benet, not be put in a position of risk where they require protection. In general, the aim of preserving the competitiveness of the European art market, reected in the whole text of the Directive, seems at odds with a high level of protection for the arts. One could be tempted to argue that a ourishing art market in Europe equally favours artistic creativity and therefore promotes cultural diversity. This point was raised by the European Parliament, in stating that the relocation resulting from establishing excessively burdensome artists’ resale rights would have a detrimental effect on ‘both artists and professionals working in the art market’.274 Granted, the interests of artists are not necessarily in conict with the interests of the art industry, and a successful art market in London benets creators, as well, through establishment of better conditions for the distribution and dissemination of their works. It is highly questionable, however, whether this concern motivated the British position. Without a doubt, it was the ‘switching effect’ a resale right could entail that shaped the UK authorities’ position. 4.2.3

Copyright and Cultural Mainstreaming—Conclusions

In its 1991 Follow-up to the Green-Paper—Working programme in the eld of copyright and neighbouring rights, the Commission noted that copyright ensures that ‘creativity is sustained and developed in the interest of authors, the cultural industries, consumers and ultimately of society as a whole’.275 Such statements reect the balance that copyright usually seeks to strike between the potentially competing interests of market operators, and to achieving which much effort has been devoted by the European institutions when enacting relevant harmonising legislation.

273

Supra n. 251, Statement of Council’s reasons, point 8. Supra n. 215, Amendment 11. 275 European Commission, Follow-up to the Green-Paper—Working programme of the Commission in the eld of copyright and neighbouring rights, COM(1990) 584, at 2, point 1.3. 274

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The preceding analysis shows that the accommodation of cultural concerns in the instruments adopted has not been straightforward. In the case of Directive 2001/84/EC, cultural considerations were intrinsically linked to the legislative framework established, with a view to ensuring the proper functioning of the modern and contemporary art market. Integration of cultural policy objectives in the legislation took the form of the introduction of a resale right at the Community level, which, by broadening authors’ protection, may exert positive inuence on cultural production, so supporting the core ingredient of cultural diversity, namely cultural expression. Notwithstanding, a high level of copyright protection for authors was seen as conicting, to some extent, with the operation of a competitive European art market. The nal text of the Directive attached due (or perhaps excessive) weight to the latter. On other occasions, European institutions have had to cope with a balancing exercise, not between competing objectives, under different EC headings, but between objectives each of which is recognised by the cultural provisions of the EC Treaty. Directive 2001/29/EC demonstrates the possibility of pursuing, under Article 151(4) EC, diverse cultural policy goals which, though compatible with the objectives to be attained under the Treaty article providing the legal basis of the legislative measure, evoke different trajectories. In such cases, special effort will be needed to reconcile the conicting cultural interests at stake. Current practice reveals that the EC may not be willing to see things from this perspective, or sufciently committed to implement Article 151(4) EC. Mainstreaming, on this footing, will be a matter of political will, its outcomes hinging on the strength and determination to lobby effectively for it.

4.3

Culture and the Audiovisual Sector

The audiovisual sector is positioned on the cusp between the economy and the cultural sphere. It has an economic value, but is also a powerful tool to communicate cultural ideals and symbols. In 1974, the European Court of Justice claried that transmission of television signals fell within the scope of the EEC Treaty under the provisions of the free movement of services.276 Since then, thinking evolved considerably, and the EC’s role in the eld has been enriched with substantial non-economic elements. Media are said to ‘play a central role in the functioning of modern democratic societies’.277 Community

276

See Case 155/73, Sacchi, [1974] ECR 409. European Commission, Communication to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions, The future European regulatory audiovisual policy, COM(2003) 784, at point 1. 277

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action in the area is conceptualised as aiming ‘at promoting the development of the audiovisual sector in the Union, notably through the completion of the internal market’, while ‘supporting paramount objectives of general interest’, which include cultural and linguistic diversity.278 Can it be argued that the EC, in the design of its audiovisual activities, has lived up to its own denition of the sector as ‘a cultural industry par excellence’?279 Is it true that protection and promotion of cultural diversity has gained a preponderant position in Community legislation regulating the internal audiovisual market? Or has it, instead, been a rhetorical device deployed to conceal the dominance of powerful market interests? This section explores the level of cultural mainstreaming in Community efforts to ensure proper functioning of an internal audiovisual market. The analysis relates principally to the famous Television without Frontiers (TWF) Directive, enacted in 1989,280 amended in 1997281 and reviewed by the European institutions at the time of writing.282 The Directive is discussed in paragraph 4.3.2, to test the cultural benets and shortcomings of the regime introduced both before and after insertion of Article 151(4) in the EC Treaty. In this context, particular attention is devoted to its modernisation, initiated at the beginning of 2003 in order to update the legislative framework, in line with turbulent and multi-faceted technological and market changes. To contextualise the TWF Directive, paragraph 4.3.1 sketches the historical contours of EC audiovisual action, elucidating whether cultural considerations were salient. Paragraph 4.3.3 draws brief conclusions on the extent to which legislative outcomes have been attentive to cultural concerns. Consistent with the methodological approach otherwise followed, this part examines the Community’s performance in cultural mainstreaming in harmonising legislation relating to the audiovisual sector. This is not to trigger contestation of the signicance of cultural considerations for the enactment of measures within the EC audiovisual policy more broadly speaking, especially, incentive measures designed to encourage the development of the European

278

Ibid. Ibid. 280 Council Directive 89/552/EEC of 3 October 1989 on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities, OJ L 298, 17/10/89, p. 23. 281 Directive 97/36/EC of the European Parliament and of the Council of 30 June 1997 amending Council Directive 89/552/EEC on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities, OJ L 202, 30/7/1997, p. 60. 282 See Craufurd Smith, ‘European Community Media Regulation in a Converging Environment’, in N.N. Shuibhne (ed.), Regulating the Internal Market (2007) 105, at 118. 279

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audiovisual industry. As already mentioned, the MEDIA programme,283 adopted on the basis of Article 308 EC, and its successors, the MEDIA PLUS, MEDIATraining and MEDIA 2007 programmes, founded on Articles 157(3) (industrial policy) and 150(4) (vocational training policy) EC,284 can also be viewed from a cultural standpoint. 4.3.1

The Birth of a European Audiovisual Policy

The Treaty of Rome did not assign to the Community specic competence in the cultural or audiovisual sector. Regulating the media, until the 1980s, was primarily a matter for Member States, within national autonomy. Despite differences in domestic political and socio-cultural structures, regulation in Western Europe was, in general, guided by public service precepts, according to which broadcasters were expected to full specically cultural aims amongst their other functions.285 Technological developments, including the advent of satellite and cable television, gave the sector new impetus, leading to a shift from the public service paradigm to a more market-orientated approach.286 Moving away from the traditional scarcity of frequencies, national governments—some extremely keenly, others less enthusiastically—adopted deregulatory strategies, opening up broadcasting markets and encouraging new media platforms. The high economic stakes and strong pressure from industrial and commercial operators tended to favour the abolition of public service monopolies and removal of technical and regulatory barriers to market entry. Increased cross-border broadcasting revealed the divergence of national media regimes. This could impede attainment of the Community’s fundamental objective to establish a common market where services could be freely provided across intra-Community borders. National differences in media

283 See Council Decision 90/685/EEC of 21 December 1990 concerning the implementation of an action programme to promote the development of the European audiovisual industry (Media, 1991 to 1995), OJ L 380, 1/12/1990, p. 37. 284 See Council Decision 2000/821/EC of 20 December 2000 on the implementation of a programme to encourage the development, distribution and promotion of European audiovisual works (MEDIA Plus—Development, Distribution and Promotion), OJ L 336, 30/12/2000, p. 82, based on Article 157(3) EC, Decision 163/2001/EC of the European Parliament and of the Council of 19 January 2001 on the implementation of a training programme for professionals in the European audiovisual programme industry (MEDIA-Training, 2001–2005), OJ L 26, 27/1/2001, p. 1, based on Article 150(4) EC, and Decision 1718/2006/EC of the European Parliament and of the Council of 15 November 2006 concerning the implementation of a programme of support for the European audiovisual sector (MEDIA 2007), OJ L 327, 24/11/2006, p. 12, based on Articles 150(4) and 157(3) EC. 285 P.J. Humphreys, Mass Media and Media Policy in Western Europe (1996), at 111–158. 286 Ibid., at 159–197.

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regulation gave rise to a series of disputes, settled by the ECJ from the late 1970s onwards.287 Its answer in these cases was straightforward: in the absence of harmonisation of national broadcasting laws, non-discriminatory national restrictions could be justied by imperative requirements of general interest, if proportionate and necessary to attain the goals pursued, which could include cultural policy grounds. The fact that Member States were allowed to restrict retransmission, on their territory, of television broadcasts originating from other Member States set alarm bells ringing for DG III-Internal Market and Industrial Policy, the unit within the Commission responsible for market liberalisation. Simultaneously, it was argued that cross-border broadcasting could be an important vehicle for increased cultural exchange, so promoting European cultural and political integration. Reaching people directly, it could be a valuable instrument in forging a European collective identity, laying foundations for the emergence of a sense of belonging to a common entity.288 It was mainly DG X, responsible for information and communication affairs, which observed the potential of satellite broadcasting to strengthen the Community’s popular appeal.289 While DG III addressed trans-border broadcasting from an economic, internal-market angle, DG X favoured a media policy, which would not just react to the existence of national barriers to trade, but which would have an important cultural dimension. Intra-institutional rivalry became more acute with DG IV-Competition’s intervention. More liberal in orientation, DG IV was interested in dismantling national media monopolies. Yet, another actor was to become even more signicant on the audiovisual scene. As already noted, in 1977, DG XII-Research, Science and Education had published a communication, Community action in the cultural sector.290 This was prepared by a small division, an early predecessor of DG-Culture, set up in 1973 with a view to examining the impact of Community law on cultural goods, services and practitioners. Although not suggesting the launch of a Community cultural policy stricto 287 See, in particular, Cases C-52/79, Debauve, [1980] ECR 833, 60/84 and 61/84, Cinéthèque SA and others v Fédération nationale des cinémas français, [1985] ECR 2605, C-288/89, Stichting Collectieve Antennevoorziening Gouda and others v Commissariaat voor de Media, [1991] ECR 4007, C-353/89, Commission v Netherlands, [1991] ECR 4069, C-148/91, Vereniging Veronica Omroep Organisatie v Commissariaat voor de Media, [1993] ECR 487, and C-23/93, TVIO SA v Commissariaat voor de Media, [1994] ECR I-4795. 288 See R. Collins, From Satellite to Single Market, New Communication Technology and European Public Service Television (1998), at 14–32, D. Goldberg, T. Prosser and S. Verhulst, EC Media Law and Policy (1998), at 8–24, and P.J. Humphreys, supra n. 285, at 258–259. 289 Polo, ‘La naissance d’une direction audiovisuelle à la Commission: La consécration de l’exception culturelle’, Politique Européenne, Administrer l’Union Européenne (2003), No. 11, 9, at 14. 290 European Commission, supra n. 88.

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sensu, the communication claried that the cultural sector came within the scope of the EEC Treaty, and advocated stricter application of its economic rules, so as to create an environment propitious for cultural activities in Europe.291 Recognising the cultural dimension of mass media, in particular given the large-scale penetration of television and radio in everyday life, the communication raised the issue of quality content and cautioned against ‘cheap popularisation’.292 The second communication, Stronger Community Action in the Cultural Sector, was published in 1982 by the same unit (meanwhile transferred to the Commission’s General Secretariat).293 This placed greater emphasis on the audiovisual theme. Expansion of the audiovisual media, it was stated, would have social, economic and cultural repercussions, which needed to be addressed by specic measures.294 Whereas action intended to improve the living and working conditions of cultural operators could appropriately deal with the social interests involved, the economic and cultural dimension of the audiovisual sector required close collaboration with the Council of Europe and the Member States. Consequently, national authorities were invited to place higher on their cultural agendas content dissemination needs and quality standards. Efforts to conceptualise Community intervention in the audiovisual eld were assisted by the European Parliament, in particular its Committee on Youth, Culture, Education, Information and Sport. During the 1980s, the latter was active in preparing reports and issuing resolutions in favour of a European media policy. Momentum grew in 1982 with the well-known Hahn report on radio and television broadcasting.295 This noted that the audiovisual sector was a crucial factor in European unication, highlighting that the desired political integration was unlikely to be achieved whilst mass media were controlled at the national level. With regard to the role of information in ‘shaping public opinion’, in the Hahn resolution, which followed the report, the European Parliament took the position that broadcasting could help achieve an ever closer union, ‘increasing European awareness’ and promoting ‘the essence of European culture, namely diversity in unity’.296 To that purpose, it called on the Commission to explore 291

Ibid., at 5. Ibid., at 25. 293 European Commission, supra n. 17. 294 Ibid., at 12. 295 European Parliament, Report of 23 February 1982 on radio and television broadcasting in the European Community on behalf of the Committee on Youth, Culture, Education, Information and Sport, Doc. 1–1013/81, PE 73/271/n. 296 European Parliament, Resolution of 12 March 1982 on radio and television broadcasting in the European Community, OJ C 87, 5/4/1982, p. 110, at 111. 292

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the political and legal bases for establishing a television channel, ‘European in origin, transmission range, target audience and subject matter’.297 This proposal was embraced by the Commission: in its report on realities and tendencies in European television it welcomed the initiative of the European Broadcasting Union for the setting up of a pan-European satellite channel.298 Subsequently in 1984, three resolutions were passed, on policy commensurate with new trends in European television, broadcast communication in the European Community and European media policy.299 With these, the Parliament went further, suggesting the introduction of a Community fund for programme production and the development of a European legal framework for broadcasting. All three resolutions implicitly attributed an instrumental, unifying role, to the cultural dimension of broadcasting. In the same year, action took on a more ofcial character, with the rst meeting of the Ministers responsible for cultural affairs within the Council. Agreement was reached upon creating a support system for cinema and television co-productions, setting up common measures to ensure minimum European content in television programming and drawing up guidelines for the sequence of windows for lm exploitation. The appointment of the new college of commissioners in 1985 marked an important moment. This led to the creation of a separate DG X entrusted with cultural affairs, amongst other issues, and the launch of a wide public debate on audiovisual matters on the basis of the Green Paper Television without Frontiers, prepared by DG III.300 The paper framed the issue from an internal market perspective, focusing on the creation of a single Community-wide broadcasting area. It acknowledged that ‘action needs to be taken . . . in the broadcasting eld because of the importance of its effect, already considerable and steadily growing, on the process of European integration’.301 However, it approached broadcasting mainly in technical and economic terms, given that ‘its economic dimension is necessarily the starting point for policy making in an Economic Community’.302

297

Ibid. European Commission, Report on realities and tendencies in European television, COM(1983) 229. 299 European Parliament, Resolution of 30 March 1984 on policy commensurate with new trends in European television, OJ C 117, 30/4/1984, p. 201, Resolution of 13 April 1984 on broadcast communication in the European Community, OJ C 127, 14/5/1984, p. 147, and Resolution of 25 April 1984 on European media policy, OJ C 172, 2/7/1984, p. 212. 300 European Commission, Green Paper on the establishment of the common market for broadcasting, especially by satellite and cable, Television Without Frontiers, COM(1984) 300 nal/2. 301 Ibid., at 2. 302 Ibid., at 3. 298

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In more detail, it was argued that ‘the considerable investment in infrastructure and programme industries will be the more easily and rapidly found if, from the outset, those providing the new services can count on access to a single broadcasting area corresponding to the European Community as a whole’.303 DG III thus proposed the removal of legal obstacles which, ‘actual and potential, lie in the path of those seeking to develop broadcasting activities across the frontiers of the Member States’.304 A gradual approach was identied as the best way to proceed, and ‘more likely to achieve the necessary degree of consensus’.305 Far-reaching proposals ‘in the sensitive areas of the right of access to broadcasting activity (establishment) or of programme content’ were earmarked for later.306 In contrast with approval from commercial channels and the advertising industry, the lack of any cultural policy component in DG III’s paper sparked strong criticism from the European Parliament, the Economic and Social Committee and DG X. Alliances were created between those institutional actors, Member States favouring a more interventionist approach, content producers and members of artistic circles. Controversial assumptions about broadcasting and its cultural role as an integrative mechanism became less prominent and the focus switched to maintenance of Europe’s cultural diversity.307 The structural weaknesses of the European media landscape proved important here. The signicant trade decit in comparison to US performance, and widespread fears about the standardisation of programming along economic, commercial lines brought cultural diversity arguments to centre stage. Cultural and linguistic differences, until then seen as factors leading to market fragmentation, were reinterpreted as an asset to protect and preserve. Hence, the European Parliament—combining the old integrationist approach with the new cultural diversity impulse—underlined in its resolution on a framework for a European media policy ‘the increased importance of radio and television for the democratic development of the European Community, the emergence of a European consciousness and the maintenance of Europe’s cultural diversity and identity’.308 In its view, a ‘comprehensive European media policy’ should cover ‘support for Europe’s programme making, safeguards to maintain the effectiveness of public broadcasting, 303

Ibid., at 2–3. Ibid., at 4. 305 Ibid., at 5. 306 Ibid., at 6. 307 Collins, ‘Unity in Diversity? The European Single Market in Broadcasting and the Audiovisual, 1982–92’, 32 Journal of Common Market Studies (1994) 87, at 94–97. 308 European Parliament, Resolution on a framework for a European media policy based on the Commission’s Green Paper on the establishment of the common market for broadcasting, especially by satellite and cable, OJ C 288, 11/11/1985, p. 113, at point N. 304

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maintenance of cultural diversity and freedom of information by preventing the establishment of monopolies in the media and harmonisation of general broadcasting principles, technical standards and legal provisions within a European convention on the media’.309 Efforts to foreground the audiovisual sector’s cultural dimension were supported by institutional reforms within the Commission.310 The newly created DG X was equipped with a special unit, entitled ‘cultural and audiovisual action’—notwithstanding that the Community still lacked competence for a genuine cultural or audiovisual policy. More prominently, following the Council of Ministers meeting at Rhodes in 1988, and the holding of the Audiovisual Assizes in 1989, the audiovisual became a separate fourth eld of DG X’s policy-making, on equal footing with communication, information and culture. This entailed the transfer to DG X of the TWF dossier (retained by DG III until adoption of the relevant Directive) and the task of monitoring its application. The Commission’s 1990 communication on audiovisual policy advocated a three-pronged project for Community initiatives in the audiovisual eld: setting the rules of the game through the establishment of an environment favourable to the competitiveness of the audiovisual industry; promoting programme production and distribution; and mastering new technologies.311 According to the Commission, adoption of the TWF Directive, consolidation of the results obtained from the pilot phase of the MEDIA programme, and elaboration of a strategy with regard to high-denition television (HDTV), all launched in 1989, should form the platform for future developments. This shift, from action limited to broadcasting, to a more generally-framed audiovisual policy, combining regulatory instruments with support mechanisms, placed cultural diversity in a different light. Previously cultural diversity was viewed as a factor of market partitioning ‘in terms of language, preferred types of broadcast and maximum viewing hours, not to mention the obstacles arising in the eld of distribution and transmission’.312 Now, by contrast, it became ‘a source of renewal to an industry in which creativity plays a decisive role’.313 The Treaty of Maastricht, signed on 7 February 1992, afrmed the desirability of tackling audiovisual matters from a cultural perspective by including audiovisual creation amongst the areas where the Community should encourage cooperation between the Member States and, if necessary,

309 310 311 312 313

Ibid., at points 2–3. Supra n. 289, at 21–23. European Commission, Communication on audiovisual policy, COM(1990) 78. Ibid., at 11. Ibid.

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support and supplement their action.314 A few months later, the Ministers of Culture meeting within the Council placed the audiovisual amongst those sectors where the Community’s recently acquired cultural competence should translate into action.315 These changes to policy reasoning and institutional organisation conditioned the development of audiovisual policy at the Community level, so that it sought to cope not just with internal market preoccupations, but also with concerns relating to content creation and diffusion. The integration of cultural elements, reecting a cultural diversity protection ethos, within a basically economic market liberalisation paradigm, led to re-appraisal of the objectives that Community intervention in the audiovisual eld should pursue. Action focused not just on ensuring the establishment and proper functioning of a frontier-less European area for broadcasting, but also on identifying appropriate ways to reinforce the European programme industry, within and without the internal market framework.316 It should not, therefore, come as any surprise that, in contrast with past statements,317 the Commission stressed in its communication on the principles and guidelines for the Community’s audiovisual policy in the digital age that ‘it is the social and cultural role of the audiovisual media that forms the point of departure for policy making’.318 4.3.2

The Television Without Frontiers Directive

Much has been said and written about Council Directive 89/552/EEC of 3 October 1989 on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting services, amended by Directive 97/36/EC of 30 June 1997.319 This cornerstone of the Community’s audiovisual policy is commonly

314

See Art. 151(2) EC. Conclusions of the Ministers of Culture meeting within the Council of 12 November 1992 on guidelines for Community cultural action, OJ C 336, 19/12/1992, p. 1. 316 See European Commission, Green Paper, Strategy options to strengthen the European programme industry in the context of the audiovisual policy of the European Union, COM(1994) 96, at 4, where it was stressed that ‘the safeguarding of the diversity of national and regional cultures, often expressed in terms of maintaining the choice available to the public, is . . . clearly linked to the development of a predominantly European programme industry, which must ultimately be protable’, and at 26, where the Commission openly admitted that specic rules exceeding what was legally strictly necessary to secure freedom to provide broadcasting services had been enacted. 317 Supra n. 300, at 3. 318 European Commission, Communication to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions, Principles and Guidelines for the Community’s audiovisual policy in the digital age, COM(1999) 657, at p. 7. 319 Supra ns. 280 and 281. 315

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known in EU jargon as the Television without Frontiers Directive. Adopted on the basis of Articles 47(2) and 55 EC (Belgium and Denmark voted against),320 the Directive forms part of the ‘new approach’ to Community regulatory intervention for establishment of the internal market followed after 1985. Based on the principle of mutual recognition, it aims to create a common broadcasting area within the Community where the unhindered provision of point-to-multipoint television broadcasting services is guaranteed. This goal is to be secured by laying down minimum rules ‘to permit and ensure the transition from national markets to a common programme production and distribution market and to establish conditions of fair competition without prejudice to the public interest role to be discharged by the television broadcasting services’.321 In line with Article 10(1) of the European Convention of Human Rights and Fundamental Freedoms on freedom of expression, and based on the principle of origin, according to which all broadcasts are to comply with the law of the Member State in which they originate,322 the Directive’s central rule is contained in Article 2(2). Article 2(2) stipulates that ‘Member States shall ensure freedom of reception and shall not restrict retransmission on their territory of television broadcasts from other Member States for reasons which fall within the elds coordinated by this directive’. In addition, a minimum set of European standards is imposed in a number of elds, covering television advertising, sponsorship and teleshopping, the protection of minors and public order, the right of reply, events of major importance for society and nally—and most hotly debated—the promotion of distribution and production of television programmes. This section does not present the Directive in detail,323 but instead focuses on those provisions interesting from a cultural mainstreaming point of view: Chapter 2, which contains Article 4 on the European content requirements and Article 5 on the arrangements made for independent production.

320 On national objections to the Directive, see Hirsch and Petersen, ‘Regulation of Media at the European Level’, in K. Sinne and W. Truetzschler (eds), Dynamics of Media Politics: Broadcast and Electronic Media in Western Europe (1992) 42, at 47–49. 321 See recital 3 of the consolidated text of the Directive, available at: http://europa.eu.int/ eur-lex/en/consleg/pdf/1989/en_1989L0552_do_001.pdf. 322 Ibid., Art. 2(1). 323 On this, see Wallace and Goldberg, ‘The EEC Directive on Television Broadcasting’, 9 Yearbook of European Law (1989) 175, Jones, ‘Television Without Frontiers’, 19 Yearbook of European Law (1999/2000) 299, Woods and Scholes, ‘Broadcasting: The Creation of a European Culture or the Limits of the Internal Market?’, 17 Yearbook of European Law (1997) 47, and D. Ward, The European Union Democratic Decit and the Public Sphere (2002), at 60–67.

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Article 4 obliges Member States to ‘ensure where practicable and by appropriate means, that broadcasters reserve for European works, within the meaning of article 6, a majority proportion of their transmission time, excluding the time appointed to news, sports events, games, advertising, teletext and teleshopping’. This provision was a source of great controversy during negotiations for the Directive. The vagueness of the wording used represents a rather hard-won compromise. The same applies to Article 5, which entrusts Member States with the task of ensuring, again when practicable and by appropriate means, that broadcasters reserve at least 10% of transmission time or, alternatively at the discretion of the Member States, 10% of their programming budget, for European works produced by operators who are independent of broadcasters. An adequate proportion must be earmarked for recent works, transmitted within 5 years of their creation. In both cases, given broadcasters’ information, educational, cultural and entertainment role, the proportions prescribed must be achieved progressively.324 The idea of content requirements for European works and independent productions, the so-called European quota rules, can be traced to 1985. In that year, the European Parliament, advocated measures to ‘safeguard European broadcasting quality and to increase European content in broadcasting’ so as to ‘provide a creative and cultural stimulus in Europe’.325 DG III, in its initial proposal for a Council Directive,326 and under considerable pressure from DG X, suggested that domestic broadcasters should reserve at least 30% of their programming time for Community works. In the case of initial transmissions, at least one third of these should target rst broadcasts in the Community. It also proposed a progressive increase in order to reach a 60% oor three years after the expiry of the deadline for national transposition. Additionally, at least 5% of broadcasters’ programming budget should be reserved for Community works created by independent producers, again progressively increased to 10% within the same timeframe.

324 According to the ‘non-slip back’ clause of Article 4(2) of the consolidated text of the Directive (supra n. 321), where the majority proportion cannot be attained, it must not be lower than the average proportion of 1990 for Greece and Portugal and of 1988 for the rest of the Member States. 325 Supra n. 308, at point 5. The European Parliament proposed the introduction of content requirements for Community-produced televised lms (50%), investment arrangements in favour of co-productions between programme-makers from at least two Member States and rules on media chronology. 326 European Commission, Proposal for a Council Directive on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of broadcasting activities, COM(1986) 146 nal/2.

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The Parliament sought at rst reading to increase the percentage of Community works from 30% to 60%, and stressed that adequate time should be allocated to recent works also within the programme category of independent productions.327 These proposals, and other signicant changes advanced by the Parliament at second reading,328 faced a barrage of criticism within the Council. A much more exible language was therefore adopted, similar to that used by the Council of Europe’s Convention on Transfrontier Television, adopted on 5 May 1989.329 As matters now stand, Member States must guarantee that domestic broadcasters, whether public service or private commercial operators, comply with the European content requirements. Exception is made for channels broadcasting entirely in a language other than those of the Member States,330 television broadcasts for local audiences, which do not form part of a national network,331 and programmes intended exclusively for reception in third countries, which are not received directly or indirectly by the public in one or more Member States.332 The question of whether the European content rules apply to national broadcasters as a whole, to each of them or independently to each national channel has aroused considerable concern; the Commission, when monitoring the application of the content arrangements, has opted for the single-channel interpretation.333 The majority proportion reserved for European works in practice means that a minimum 51% of transmission time must be devoted to European audiovisual creations, on an annual basis. Whether an audiovisual work is European is determined, not by applying content criteria, but by origin. Apart from the obvious case, of works originating in the Member States, origin depends

327 Legislative Resolution of 20 January 1988 embodying the opinion of the European Parliament delivered at rst reading pursuant to Article 149(2)(a) of the EEC Treaty on the proposal from the Commission of the European Communities to the Council for a Directive on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of broadcasting activities, OJ C 49, 22/2/1988, p. 64. 328 See European Parliament, Decision at second reading of 25 May 1989 (cooperation procedure) concerning the common position of the Council on the proposal from the Commission for a 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, OJ C 158, 26/6/1989, p. 138, Amendments 3, 7, 8 and 9. 329 Council of Europe, Convention on Transfrontier Television of 5 May 1989, available at: www.coe.int. The Convention is not to apply to intra-Community relations (Art. 27(1)). 330 See recital 29 of Directive 97/36/EC, supra n. 281. 331 See Art. 9 of the consolidated text of the Directive, supra n. 321. 332 See Art. 2(6) of Directive 97/36/EC, supra n. 281. 333 See European Commission, Communication to the Council and the European Parliament on the application of Articles 4 and 5 of Directive 89/552/EEC, COM(1994) 57, at 5.

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on a complex set of rules set out in Article 6 of the Directive.334 Crucially, broadcasters are not prevented from focusing exclusively on national works or from repetitively transmitting old European repertoire. Moreover, since no distinction is made between low-budget studio productions and high-quality ction, compliance may be conned to studio programming. With respect to independent productions, numerical criteria are employed, and Member States are allowed to choose between a transmission time and a programming budget percentage. Dening the notion of ‘independent producer’ is left to the discretion of Member States, in line with domestic market characteristics.335 As for the ‘adequate proportion of recent works’ to be transmitted within 5 years of production, such mild language effectively enables national authorities to select whichever manner of implementation they nd convenient. News, sports events, games, advertising, teletext services and teleshopping are excluded from the time base upon which proportions must be calculated. A broadcaster may increase transmission of programmes falling outside the remit of the content rules, in order to comply more easily with the Directive. Since no reference is made to particular viewing hours, broadcasters may further moderate the effect of the content provisions by scheduling European works and independent productions in off-peak hours. Clearly, the main weakness of Articles 4 and 5 is the lack of legal certainty inherent in the condition ‘where practicable and by appropriate means’. This has prompted many to argue that the European content quotas do not constitute a concrete legal obligation of a binding nature. Such an argument may have been decisive in adoption of the Directive: it may be queried whether Germany or the UK, opposed to a quota system from the outset, would have given their consent, had they not obtained a statement in the Council minutes that the content requirements are merely political by nature.336 Article 249 EC determines that a directive is binding upon each Member State as to the result to be achieved. Accordingly, the binding and non-

334 Amongst the criteria of Article 6 feature the authors’ and workers’ residence, the producer’s place of establishment, the exercise of supervision and control upon production and the share of contribution to the total production and co-productions costs. 335 A list of criteria was added by recital 31 of Directive 97/3/EC (supra n. 281) to guide Member States in their action: ownership of the production company; the amount of programmes supplied to the same broadcaster; and ownership of secondary rights. Initially, the Commission had proposed: the broadcaster’s capital holding (maximum 25% for one single broadcaster and 50% for a group of broadcasters); and the proportion of business done with the same broadcasting company (maximum 90% over a three-year period, except when the producer makes only one programme or series during this reference period). See supra n. 333, at 5 and 25. 336 De Witte, ‘The European Content Requirements in the EC Television Directive—Five Years After’, 1 Yearbook of Media and Entertainment Law (1995) 101, at 114.

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binding parts of a legal act may not be distinguished without contravening the principle of uniform interpretation and application of Community law. European quotas are mandatory. Of course, this does not correct the vagueness of the language used which, combined with an unusual progressive achievement mechanism, affords Member States considerable latitude as to modes of implementation. The position taken by the Commission strongly supports this conclusion. In a reply to a written question by the European Parliament, it stated that, although the text of the Directive is, in its entirety, legally binding, the words ‘where practicable’ do introduce ‘an element of exibility indicating that the attainment of the objectives can be overridden by technical constraints or economic imperatives’.337 It would therefore be ‘difcult to imagine specic cases of application of those articles that could be the subject of a clear ruling by the Court of Justice’.338 In case the Commission’s stance might be interpreted as a concealed commitment not to start infringement proceedings against a Member State for failure to comply with Articles 4 and 5 of the Directive, in its rst monitoring report the Commission claried that the ‘where practicable’ argument does not allow an escape from the content obligations ‘where European works exist in sufcient number for the type of channels in question or where the European programme industry is potentially able to produce them in sufcient quantity’.339 Revision of the Directive, to update the regulatory framework in the light of the opportunities for growth in the audiovisual sector opened by new technologies and the advent of the information society was due by the end of 1994.340 Given the background legal uncertainty described, one might have expected revision to bring clarication. In its Green Paper on strategy options to strengthen the European programme industry, the Commission made a few preliminary remarks on the future of European quotas.341 In favour of their maintenance, as a sound framework for the cross-border development of the European programme industry, it recognised the need for tighter monitoring to prevent operators from taking advantage of the lack of precision as to their

337 Written Question No. 758/89 by Kenneth Collins to the Commission of the European Communities, Broadcasting Directive, OJ C 97, 17/4/1990, p. 21. 338 Ibid. 339 European Commission, supra n. 333, at 20. 340 See Art. 26 of Directive 89/552/EEC, supra n. 280, which states that the Commission shall submit to the European Parliament and the Economic and Social Committee, no later than the end of the fth year after the date of adoption of the Directive, a report on its application and, if necessary, make further proposals to adapt it to developments in the eld of television broadcasting. 341 Supra n. 316.

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obligations.342 In the Commission’s view, the Directive’s exible mechanisms should not rule out the gradual emergence of a common interpretation, possibly via the ECJ.343 On this basis, in its 1995 formal proposal,344 the Commission advocated reinforcement of the content requirements. By deleting the ‘where practicable and by appropriate means’ condition, it proposed a changeover to mandatory arrangements. Specialised operators (i.e. thematic television channels), it underlined, should form part of the system. Member States should allow television broadcasting organisations which devote at least 80% of their transmission time to cinematographic works, drama, documentaries or animation, to choose between complying with the majority proportion condition and allocating 25% of their programming budget for European works. The Economic and Social Committee proposed, instead of separate arrangements depending on the generalised or thematic nature of a broadcaster, a clear-cut obligation for a mandatory payment of a xed amount into a support fund for audiovisual production.345 However, the European Parliament’s ambitious tone consolidated negative reaction within the Council.346 Suggestions to extend the scope of the Directive to cover new on-demand services347 and for more stringent rules for the compulsory application of content requirements348 ultimately resulted in the original hesitant wording of Articles 4 and 5 being kept.349

342

Ibid., at 37. Ibid. 344 European Commission, Proposal for a European Parliament and Council Directive amending Council Directive 89/552/EEC on the coordination of certain provisions laid down by law, regulation or administrative action in the Member States concerning the pursuit of television broadcasting services, OJ C 185, 19/7/1995, p. 4. 345 Economic and Social Committee, Opinion on the proposal for a European Parliament and Council Directive amending Council Directive 89/552/EEC on the coordination of certain provisions laid down by law, regulation or administrative action in the Member States concerning the pursuit of television broadcasting services, OJ C 301, 13/11/1995, p. 35, at point 3.13. Operators could opt to comply with a broadcasting quota system if they so wished. 346 Legislative Resolution of 14 February 1996 embodying Parliament’s opinion on the proposal for a European Parliament and Council Directive amending Council Directive 89/552/ EEC on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities, OJ C 65, 4/3/1996, p. 96. 347 Ibid., Amendments 77 and 18. 348 The Parliament proposed to exclude programmes produced mainly in the studio, and not falling either wholly or partly into the category of drama, documentaries or original artistic performances from the transmission time base (Amendments 29 and 34). It also suggested that Member States should facilitate the showing of non-national European works (Amendment 29). It opted for a narrower denition of specialised channels to prevent general-interest broadcasters from claiming such status in order to evade stricter production and transmission quotas (Amendment 30). 349 On the amended text of the TWF Directive see Castille, ‘La directive “Télévision sans frontières”: synthèse et évolution des négociations’, in C. Doutrelepont and M. Waelbroeck 343

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Under Article 4(3) of the Directive, the Member States must inform the Commission every two years concerning the application of the European content rules on the basis of statistical statements. The Commission must then produce a general report, which allows the Council to review implementation. According to the 2006 Commission report,350 which covers the period 2003–2004 for the EU-25, whereas the average transmission time reserved for European works in all Member States fell from 65.18% in 2003 to 63.32% in 2004, the average compliance rate for all channels in all Member States increased from 68.20% in 2003 to 72.80% in 2004. With respect to independent works, the average proportion of works broadcast was 31.39% in 2003 and 31.50% in 2004,351 and the average compliance rate was 78.40% in 2003 and 81.92% in 2004. Finally, as regards recent European works by independent producers, that is, works broadcast within ve years of their production, the average share of channels complying with the Directive ranged from 71.66% in 2003 to 69.09% in 2004. The Commission has observed that the gures on the average transmission time for European works indicate, for the rst time, a slight decrease in the scheduling of European works, but transmission was stabilised at a level well above 60% of total qualifying time. Furthermore, though EU average transmission for independent productions was lower, when compared with the previous evaluation period of 2001–2002,352 the levels reached far exceeded the minimum proportion of 10%, and were relatively high for transmission of recent independent works. So, the Commission concluded, the application of Articles 4 and 5 was satisfactory, in particular given enlargement and

(eds), Questions de droit de l’audiovisuel européen (1997) 65, Waelbroeck and Ingberg, ‘Les modications de la directive télévision sans frontières’, in C. Doutrelepont (ed.), L’actualité du droit de l’audiovisuel européen (1996) 11, and Keller, ‘The New Television Without Frontiers Directive’, 3 Yearbook of Media and Entertainment Law (1997–1998) 177. 350 European Commission, Seventh Communication to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on the application of Articles 4 and 5 of Directive 89/552/EEC “Television without Frontiers”, as amended by Directive 97/36/EC, for the period 2003–2004, COM(2006) 459. 351 Only two countries, France and Portugal, apply the 10% requirement for independent works to a broadcaster’s programme budget, as opposed to programme hours—in both cases in respect of public service broadcasters (France 2, France 3, and RTP). See Graham & Associates Limited, Study on the impact of measures concerning the promotion of the distribution and production of TV programmes (Community and national) provided for under Article 25(a) of the Directive on Television Without Frontiers on behalf of the European Commission, May 2005, available at: http://ec.europa.eu/comm/avpolicy/docs/library/studies/nalised/4–5/27–03–nalreport.pdf. 352 See European Commission, Sixth Communication to the Council and the European Parliament on the application of Articles 4 and 5 of Directive 89/552/EEC “Television without Frontiers”, as amended by Directive 97/36/EC, for the period 2001–2002, COM(2004) 524.

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the steady growth of the number of television channels in Europe.353 Still, it invited the Member States to improve monitoring, as some had failed to supply full and comprehensive information concerning the proportions referred to in Article 5 of the TWF Directive.354 4.3.2.2 The objectives of the European content rules: economic, cultural or both? European content requirements have been regarded with great scepticism since the day they were adopted. They have been accused of encroaching on national cultural policies and falling outside the Community’s remit; they have been seen by many as an infringement of the freedom of expression of broadcasters; they have been criticised as economic protectionism in disguise, in breach of international law obligations.355 What has not been fully discussed is whether they are a concrete example of cultural mainstreaming avant la lettre. At the time of adoption of the rst TWF Directive, the Community had no explicit audiovisual or cultural powers. This did not hold back European institutions which, as previously recounted, formulated an audiovisual policy with clearly designed objectives, not restricted to market liberalisation, and including a concern for cultural diversity. From this angle, the TWF Directive and in particular, its content provisions can be seen as part of a Community audiovisual strategy, which is not conned simply to removing trade barriers. It is generally agreed that pre-existing national content requirements did not give rise to obstacles impeding the provision of trans-border broadcast-

353 The total number of reported channels covered by Articles 4 and 5 of the TWF Directive increased from 584 in 2003 to 767 in 2004. In the previous reference period (2001–2002), their number was 472 in 2001 and 503 in 2002. The data provided illustrate an increase of 61% over four years (2001–2004), mainly due to the 2004 EU enlargement. Looking at EU-15, there was still a signicant rise (39%, with an increase of 12% for 2003–2004). 354 Italy was the most striking example, ‘exempting’ all satellite and cable channels from its statistical statement. The Czech Republic, France, Denmark and Sweden did not communicate data for all channels coming under their jurisdiction. Latvia did not provide any information on recent works. 355 For a comprehensive discussion, see Wilkins, ‘Television Without Frontiers: An EEC Broadcasting Premiere’, 14 Boston College International and Comparative Law Review (1991) 196, Lupinacci, ‘The Pursuit of Television Broadcasting Activities in the European Community: Cultural Preservation or Economic Protectionism?’, 24 Vanderbit Journal of Transnational Law (1991) 14, Filipek, “‘Culture Quotas’: The Trade Controversy over the European Community’s Broadcasting Directive”, 28 Stanford Journal of International Law (1991–1992) 283, Salvatore, ‘Quotas on TV Programmes and EEC Law’, 29 Common Market Law Review (1992) 967, Drijber, ‘The Revised Television Without Frontiers Directive: Is It Fit For The Next Century?’, 36 Common Market Law Review (1999) 87, and Katsirea, ‘Why the European Broadcasting Quota Should Be Abolished’, 28 European Law Review (2003) 190.

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ing services.356 Member States had never imposed conditions based on the origin or independent nature of an audiovisual work transmitted by operators outside their jurisdiction. In fact, a unied system of content obligations could hinder the free ow of programmes across the Community, creating an additional burden for broadcasters, especially for commercial operators and new market entrants. What, then, were the goals pursued in introducing Articles 4 and 5? Accounting the special characteristics of the European audiovisual industry, its diversication and structural weaknesses, one may argue that eliminating trade impediments is not enough to achieve free circulation of broadcasting programmes. The creation of a common broadcasting area presupposed, in addition to the elimination of obstacles to the free movement of broadcasts, the adaptation and promotion of factors favouring content production and distribution, so as to guarantee operation of the enlarged market similarly to domestic ones. The TWF Directive, seeking to create a common audiovisual space, could not remain blind to programme industry concerns, voiced since the very conception of an audiovisual policy at the Community level. European content requirements might be more effective in generating the necessary structural market adaptations than pilot programmes and support mechanisms endowed with limited nancial resources. Securing the free ow of programmes within the Community could not, in itself, guarantee a ourishing, competitive European programme industry, able to take advantage of economies of scale and scope that result from an integrated market. Channel proliferation, in conjunction with a signicant increase in programme demand, revealed the need for complementary measures to adjust production facilities to the new economic environment. High-cost domestic programme production, insufcient national audiovisual expenditure and distribution systems fragmented by cultural and linguistic preferences obstructed the emergence of a European programme production capacity capable of satisfying programme scheduling needs. Fears that market liberalisation would result in a ood of cheap third-country programme imports, so driving out more expensive domestic creations, given budgetary constraints and prot maximisation incentives, bore heavily on the TWF agenda. North American producers were able to amortise production costs within a large national market. Their programmes, reaching European borders at low prices, would be attractive to new commercial broadcasters, facing considerable launch expenses. Would there be any point

356 Note, however, that content requirements, if decided at state level, would confer a general competitive advantage on commercial cross-border broadcasters over public service operators, which are usually more heavily regulated.

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in commissioning costly domestic audiovisual products, when low-cost foreign audiovisual works, already successful, could be easily found on the market? From this perspective, content requirements should primarily be viewed as an industrial policy choice, aiming to correct imbalances arising from establishment of a common broadcasting space. As the Directive suggests, coordination was needed ‘to make it easier for persons and industries producing programmes having a cultural objective to take up and pursue their activities’.357 On the one hand, by guaranteeing a place for European audiovisual creations in national television broadcasting, the Community sought to counteract the discrepancy between increased demand for programming, and the low level of European audiovisual production. In view of the strength of American lm producers, which saw in the European broadcasting area a considerable potential for expansion, on the other hand, the Community took steps to improve the international competitiveness of European cultural industries. Quota arrangements might be the best instrument ‘to promote markets of sufcient size for television productions in the Member States to recover necessary investments’,358 to stimulate ‘new sources of television production, especially the creation of small and medium-sized enterprises’, and to create ‘new opportunities and outlets to the marketing of creative talents’.359 Though not primarily a cultural policy instrument, and while it principally follows an economic and industrial logic, the Directive is not totally lacking in cultural animus. Explicit reference to Article 151(4) EC in recital 25 of the 97/36/EC Directive provides textual evidence that Community institutions were exercised in cultural mainstreaming when adopting and revising this legal act. But is this theory backed by the nal outcomes of the legislative venture? Which cultural aspects were accommodated in the framework introduced? And how much weight have they been given? Allegations that the TWF Directive was a culturally protectionist measure designed to create a fortress Europe are well known. It has long been argued that European content requirements sought to protect European identity from American cultural imperialism. The creation of a common broadcasting area was understood as likely to increase Community exposure to US cultural penetration and lead, over the long run, to programme homogenisation. Low quality imports, went the argument, would replace higher quality Community works, and lack of diversity in programming would result in standardised dissemination of American lifestyles and ideals.

357 358 359

See recital 18 of the consolidated text of the Directive, supra n. 321. Ibid., recital 20. Ibid., recital 24.

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This framing of the debate seems misconceived. The issue is not about the excellence of European content compared to foreign productions, nor about encouraging the emergence of a common European cultural identity, in opposition to American culture. On the contrary, content requirements should be understood as a positive regulatory measure, which gives a Community dimension to national cultural preoccupations, recognising their valuable relevance within a primarily economic and industry-favouring environment. Propelled by the need to forge and cultivate cultural bonds, Member States in the past attached a great deal of attention to the organisation of their media structures.360 Content arrangements—varying from measures to invigorate the transmission or production of national works, to instruments designed to support domestic linguistic policies—were quite common. In most Member States, traditional public service broadcasting, in particular, had acquired a collective identity-building function, fostering national cohesion. Its role in promoting tolerance and mutual respect had also been acknowledged via the creation of obligations for diversied programming, catering for domestic cultural communities and to fairly represent minorities. The liberalisation of media markets altered the audiovisual scene greatly, placing new emphasis on audience size and prot maximisation. Although public service broadcasters remained under the obligation to satisfy the needs of the general public, commercial operators, in an attempt to open up markets, were asked to comply with minimum requirements, which did not contradict their prevailing economic premises. Within a market-based economy, where cost-effective solutions and commercially viable strategies became standard practice, programme diversication, radiating a vast array of interests and tastes within society, seemed to have lost much of its signicance. The integration of media markets at Community level was a factor which could exacerbate such trends. A free audiovisual space was not likely to uphold, on its own, culturally diverse programming. Fierce foreign competition was not the only concern. Markets in Member States of limited linguistic reach or with vulnerable media industries, risked being invaded by content originating in other Member States with stronger audiovisual structures and wide-ranging language capacities. Arguments about cultural preservation as respect for diverse cultural needs arose. Certainly, it should be rst and foremost a task for the Member States to seek to protect national identity and domestic sub-cultures. But it seemed that national authorities had in the meantime lost much of their power freely to design their audiovisual policies to attain cultural policy objectives. Discriminatory measures favouring the promotion of domestic cultural values were 360

And they still do.

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incompatible with Community law, and fell outside the grounds of exceptions of Article 46 EC, read together with Article 55 EC. Neither was it easy for Member States to make out the overriding requirements defence. Indistinctly applied measures, impeding the cross-border supply of broadcasting services, had to comply with the ECJ’s thorny proportionality test. In several instances, the Court ruled that it was not indispensable for national legislation to require broadcasting bodies established in other Member States to align themselves with the domestic model of the receiving state.361 There was therefore a regulatory gap, which it appeared could only be lled at Community level. The conundrums were resolved with the European content requirements, enacted as a corrective tool, to counteract any loss of cultural diversity resulting from establishment of the single market. By creating propitious conditions for the production and distribution of diversied content, European quotas sought to reect national cultural concerns at an upper regulatory level, and avoid arrangements arising, that would give them short shrift. Notably, the Directive went one step further. It embraced national concerns but located them in a bigger context. By simultaneously encouraging increased circulation of other European cultures in the broadcasts of each Member State, the Directive indirectly sought to promote cultural exchange. A common broadcasting market should not only refrain from jeopardising domestic cultural prerogatives but also further cultural interaction, enhancing the experience of other cultural practices. Given the sensitivity of the issues raised, caution was exercised to avoid exceeding what was strictly necessary to achieve the objectives pursued. Content requirements do not imply any particular qualitative or aesthetic assessment by the European institutions. The denition of independent productions is left to Member States and a wide notion of European works is adopted, extending beyond Community boundaries. No less importantly, the TWF Directive gives Member States considerable leeway to impose on domestic broadcasters more stringent rules in areas covered by the Directive.362 These

361

See Cases C-288/89 and C-353/89, supra n. 287, at paras 24 and 42 respectively. See Art. 3(1) of the consolidated text of the Directive, supra n. 321. Interestingly, in accordance with the Court’s case law, neither paragraph 1, nor paragraph 4 of Article 151 EC authorise a receiving State to make programmes emanating from other Member States subject to further controls (Case C-11/95, Commission v Belgium, [1996] ECR I-4115). In addition, a Member State may not oppose retransmission on its territory of broadcasts by an operator coming under the jurisdiction of another Member State on grounds that the content transmitted does not comply with the requirements of Article 4 and 5 of the Directive (Case C-14/96, Criminal proceedings against Paul Denuit, [1997] ECR I-2785). 362

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may vary according to the priority accorded to relevant goals within domestic cultural policies, and cover language regulation.363 Two independent studies were undertaken on behalf of the European Commission, the rst, completed in 2001, concerning the provisions existing within the Member States to implement the European content rules;364 the second, published in 2005, on the impact of measures concerning the promotion of the distribution and production of TV programmes from 1993 to 2002.365 Both found that several Member States have opted for stricter or additional measures in accordance with domestic cultural policy objectives. Available data do not cover the period 2003–2007, so it cannot be guaranteed that they are all still valid. Nevertheless, clearly Member States have availed themselves of the ability to establish stringent content rules for national broadcasters. Linguistic requirements, for instance, have been imposed in Belgium, Denmark, France, Greece, the Netherlands, Portugal, Spain, Sweden and the UK. In France, Germany and Italy, a stricter denition of the ‘relevant transmission time’ has been applied,366 whilst higher transmission time percentages have been set for independent productions in Finland, Italy, the Netherlands and the UK. Obligations relating to the broadcast of certain types of content or investment in the production of specic audiovisual genres have also been widely introduced.367 This said, the measurable impact of Articles 4 and 5 on the preservation and further enhancement of cultural diversity may be questioned. The Commission has so far remained silent on the issue, restricting itself to simply evaluate Member States’ compliance with the quota regime. But the 2005 independent study indicated above concluded that the European content rules have inuenced broadcasting behaviour.368 To the extent evidence shows that

363 Recognition of the need to protect domestic linguistic interests has been removed from Article 8 of the initial TWF Directive, which fell under Chapter III on the promotion of distribution and production of television programmes, to recital 26 of the consolidated text of the Directive after the 1997 revision, perhaps indicating hesitance on the part of the Community. 364 European Institute for the Media, Study on the provisions existing within the Member States and the EEA States to implement Chapter III of the ‘Television Without Frontiers Directive’ on behalf of the European Commission, Düsseldorf, May 2001, available at: http:// ec.europa.eu/comm/avpolicy/docs/library/studies/nalised/bird_bird/quot_en.pdf. 365 Supra n. 351. 366 Content categories, such as talk-shows and current-affairs programmes, are excluded from the time-frame. 367 France is the only Member State which distinguishes between audiovisual and cinematographic works, obliging all operators, public and private, to attain certain proportions at prime time for both within a general quota for European works xed at 60%. Examples of Member States requiring broadcasters to contribute to centrally administered lm funds include Austria, Finland, Portugal, and France. 368 Supra n. 351, at 180–181.

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the proportion of European works and independent productions broadcast in the EU has increased, European content requirements may be said to have sustained a growing volume of indigenous European programming.369 Progress has not been equal for domestic and non-domestic European works. As national preferences are strong, channels make less use of works made in another European country.370 For the period 1993–2000, the share of qualifying transmission time devoted to non-national European works has varied between 0% (in the UK) and 53.3% (in Ireland). In general, it is the smaller Member States which share a language with a larger neighbour (Austria, Belgium and Ireland) that have the highest proportion of imported European works; the largest TV markets (France, Germany, Italy, Spain and the UK) have the smallest. 4.3.2.3

The way forward

In an era of rapid technological developments and dynamic media markets, in which viewers are able to tailor audiovisual services to individual needs, triggering a move from channel-based to programme-based consumption, the accommodation of cultural diversity concerns at Community level legislation is seen by many as undermining the economic performance of the audiovisual sector. Public hearings, organised in Brussels on 2–4 April and 23–25 June 2003 to provide the Commission with information to assess the need to update or adapt the TWF Directive, in view of structural changes in the transmission modes of audiovisual services (and in accordance with the work programme announced in the 2003 fourth report on the Directive’s implementation)371 highlighted this trend. On the basis of a Commission discussion paper entitled Promotion of cultural diversity and competitiveness in the European programme industry,372 it was proposed to extend the Directive’s scope to new on-demand audiovisual services, so as to ensure that certain general public policy principles, including the protection and promotion of cultural diversity, apply horizontally to the sector. But opinions expressed during the hearings

369

Ibid., at 78 and 181. According to the study, most broadcasters view European programming as too tied to a specic national culture and taste to have appeal beyond respective home markets. Conversely, US material tends to appeal to a global audience. 371 European Commission, Fourth Report to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions, on the application of Directive 89/552/EEC ‘Television without Frontiers’, COM(2002) 778, at 21. 372 European Commission, Discussion Paper, ‘Promotion of cultural diversity and competitiveness in the European programme industry’ (2003), available at: http://ec.europa. eu/comm/avpolicy/docs/reg/modernisation/2003_review/twf2003–theme2_en.pdf. 370

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on the practical outcome of TWF revision concerning content requirements varied according to operators’ positions in the market chain. Content producers agreed that European content requirements have not outlived their usefulness and should continue to apply to all audiovisual transmissions with predetermined content.373 Operators of new transmission channels suggested that content arrangements should be imposed exclusively on traditional television broadcasting.374 The dichotomy was more evident in relation to possible changes to quota provisions. Private and public service broadcasters claimed a certain degree of exibility was still needed to accommodate specic conditions of each national media industry, and expressed a preference for positive incentive measures.375 Conversely, content producers invited the Commission to delete the ‘where practicable and by appropriate means’ condition, and to replace the vague ‘majority proportion’ for European works by explicit quantitative criteria, ranging from 51% to 60%.376 Proposals to increase the 10% for independent productions to 25% were advanced, with preference for investment obligations over transmission requirements. It was also noted that the current system impedes movement of European programmes beyond national frontiers. Due to diverse audience preferences, the main effect of securing a market for European works has been to stimulate national production, resulting in quotas absorbed mainly by domestic material.377 With the aim of improving circulation of European creations across national borders, the introduction of a sub-quota of 10% on European nonnational works, to be combined with extra support schemes, was proposed. Further independent studies were commissioned,378 expert meetings convened, between September 2004 and February 2005, a TWF seminar organised by the Luxembourg Presidency on 30–31 May 2005, and the Liverpool

373 On the contrary, interactive services, provided entirely on-demand, with the user selecting when, where and what to access, should escape content obligations. 374 The argument was that the current system penalises the emergence of new services. It was also submitted that the programme target of thematic channels often impedes compliance with the European content arrangements, given the lack of European productions in particular audiovisual genres, for instance, western movies or classical American lms. 375 Admittedly, support mechanisms may not replace regulation if funding is not considerably expanded. However, there is scant probability, at least for the time being, that a substantial increase in the provision of nancial resources will materialise. 376 It was also suggested that content arrangements should focus only on creative output (excluding studio productions), and give priority to new programming in order to limit the disproportionate use of archive material. 377 Broadcasting corporations, it was stressed, had no concrete incentives to become entrepreneurial enough to create audiovisual programmes, with appeal for audiences in other Member States, and engage in cross-border distribution. 378 See supra n. 351 and the comparative study on the impact of control measures on the television advertising markets in EU Member States and certain other countries available at: http://ec.europa.eu/comm/avpolicy/info_ centre/library/studies/index_en.htm#tvpub.

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Audiovisual Conference held on 22 September 2005 under British Presidency. In their wake, the Commission presented a proposal for a new Audiovisual Media Services Directive on 13 December 2005.379 Now under review by the European Parliament and the Council, the Commission’s model integrates traditional broadcasting and new audiovisual TV-like services, covering all audiovisual media services, that is, all audiovisual mass-media services, whether scheduled or on-demand, offered to the general public.380 The argument is acknowledged that maintaining the status quo would aggravate disparities in regulatory treatment between the various forms of content distribution: traditional broadcasting would still be coordinated by the TWF Directive, whereas on-demand audiovisual services would have to comply with different and often diverging national rules.381 The Commission therefore has opted for a unied, technology-neutral, regulatory regime, seeking to improve legal certainty and create a level-playing eld for all content delivery platforms. The revised framework is structured as follows. A basic tier of coordinated rules, founded on the principle of origin, and various general public policy objectives, applies to all audiovisual media services. Beyond this basic tier, a difference in regulatory density is introduced, on the basis of a distinction between linear and non-linear audiovisual services.382 Linear services primarily refer to traditional broadcasting, covering all scheduled audiovisual services whatever their mode of delivery.383 They are subject to a subset of specic rules, deriving from the TWF Directive, which are modernised and rendered

379 See European Commission, Proposal for a Directive of the European Parliament and of the Council amending Council Directive 89/552/EEC on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities, COM(2005) 646. 380 According to the Commission’s proposal, the new framework for audiovisual media services does not cover electronic versions of newspapers and magazines, audio transmission, radio services, non-economic activities, such as purely private websites, and services where audiovisual content is merely incidental. Similarly, it does not apply to audiovisual media services, intended exclusively for reception in third countries, and to audiovisual media services, which are not received by standard consumer equipment directly or indirectly by the public in one or more Member States. 381 The Electronic Commerce Directive does not deal with measures relating to cultural diversity, and allows Member States to derogate from the country of origin principle on public policy grounds. As a result, on-demand audiovisual media services can be subject to different content rules. See Directive 2000/31/EC of the European Parliament and the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the internal market (‘Directive on electronic commerce’), OJ L 178, 17/7/2000, p. 1. 382 According to the Commission’s proposal, Member States must remain free to apply stricter rules in the elds coordinated by the Directive to media service providers under their jurisdiction. 383 Linear audiovisual media services refer to audiovisual services provided by a media service operator, who determines the moment when a specic programme is transmitted and establishes the programme schedule.

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more exible. For non-linear services, namely on-demand audiovisual services, irrespective of mode of distribution,384 a softer regulatory model is proposed, so as not to unduly restrain future developments in the sector. In terms of cultural mainstreaming, the Commission’s document is not a backwards step. With respect to linear audiovisual services, whilst European content requirements, as formulated in Directive 89/552/EEC, are neither reinforced nor weakened, Member States are requested to ‘make provision for broadcasters to include an adequate share of co-produced European works or of European works of non-domestic origin’ when implementing Article 4.385 Arguably, introducing a sub-quota of non-national European programming might have been ‘a bridge too far’. Nonetheless, by supporting the idea of arrangements at national level to guarantee transmission of non-national European works, the Commission makes clear that European content requirements do not just constitute an industrial policy measure in favour of domestic audiovisual production industries. Rather, they are also a tool to facilitate programme exchange and cultural interaction between the Member States. As for non-linear audiovisual services, despite the lighter regulatory paradigm suggested, Member States are invited to ensure that such services equally ‘promote, where practicable and by appropriate means, production of and access to European works’.386 The Commission thus gives a political signal that new, on-demand services must contribute to the creation and distribution of European works, especially since they have potential to gradually replace traditional broadcasting. Technically this is made feasible via the introduction of investment obligations or minimum shares of European works in the catalogue of the audiovisual programmes provided and the attractive presentation of European works in electronic programme guides.387

384 Non-linear audiovisual media services refer to audiovisual services, where the user determines the moment when a specic programme is transmitted, chosen from content selected by the media service provider. 385 Supra n. 379, recital 36. 386 Ibid., new Art. 3f(1). 387 Ibid., recital 35 and new Art. 3f(3) and (4). See also European Parliament, Legislative Resolution of 13 December 2006 on the proposal for a Directive of the European Parliament and of the Council amending Council Directive 89/552/EEC on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities, P6_TA-PROV(2006)0559, Amendments 137 and 214, and European Commission, Amended proposal for a Directive of the European Parliament and of the Council amending Council Directive 89/552 EEC on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities (‘Audiovisual media services without frontiers’), COM(2007) 170, at 7 and 10.

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4.3.3

Audiovisual Policy and Cultural Mainstreaming—Conclusions

Rival policy goals, coupled with lack of an express EC competence in the eld, have thwarted the formulation of a genuine common audiovisual policy at Community level. Different policy orientations, ranging from market liberalisation to regulatory intervention, and a struggle between the prioritisation of commercial or cultural aspirations have made articulating a Community audiovisual framework extremely complex. European content requirements have been controversial throughout the history of EC media regulation. Deciding how to frame the issue has proved a headache for the Commission, which has had to mediate between the ambitious proposals advanced by the European Parliament, and resistance within the Council, and also to counter worldwide claims that Europe was closing its external cultural frontiers. European quotas are probably a genuine cultural mainstreaming device, intended to match economic, industrial and cultural considerations within a single legal act. The TWF Directive gives concrete (for some, excessive) expression to cultural policy objectives, linked to the production and circulation of diversied audiovisual content in a common, borderless, audiovisual space. It accommodates domestic cultural policy preoccupations at a higher regulatory level, but re-constructs and re-appraises them, in order to promote a legislative environment conducive to increased access to broad ranging cultural material and reinforced cultural interaction. Current modernisation of the TWF framework aims to deal with technological developments which are affecting the way audiovisual content is produced and distributed. In this context, content requirements are again, unavoidably, attracting attention. Whatever the nal outcome of the legislative process, it must be hoped that any modication to the quotas regime will not jeopardise protection and promotion of cultural diversity in a unied audiovisual market. Cultural mainstreaming assumes particular importance at a time where the multiplication of channels and outlets offers new possibilities for market developments and further cultural enjoyment. As the Commission noted in its 1999 communication on principles and guidelines for the Community’s audiovisual policy in the digital age, the fundamental goals of Community action in the audiovisual eld are not changed. Continuing to safeguard general interest objectives, including the preservation of Europe’s cultural and linguistic diversity, remains a core component of EC initiatives in a shifting audiovisual landscape.388 Maintaining a cautious approach, which avoids symbolic legislation, devoid of practical effect, is therefore crucial.

388

Supra n. 318, at 8–9.

Part C

Competition Law and Culture

Introduction Competition law is critical in a free market economy. On the premise of individual economic freedom, it guarantees that market participants, though subject to competitive pressure, may freely participate in the economic process. Together with the internal market provisions, it forms the core subject matter of the European economic constitution. Competition law and free movement principles intersect in many ways.1 In combination, their ultimate objective is to create an internal market without barriers to trade or distortions of competition. Negative integration, based on the application of the free movement principles, ensures that trade barriers are abolished. By impeding the emergence or maintenance of obstacles to trade by national authorities, it allows for competition to unfold, enabling undertakings and private parties to compete without signicant constraints from public power. Competition law is complementary, within this picture, prohibiting re-establishment of barriers through individual conduct or state aids. Interconnections between free movement provisions and the competition rules of the EC Treaty explain the choice made, for the purposes of this study, to scrutinise cultural mainstreaming in competition evaluation. Inquiry was earlier made into interrelations between the free movement principles and the EC objective of preserving and promoting the cultural diversity of the Member States, prescribed by Article 151(4) EC. For reasons of consistency, then, the analysis now considers the interaction of competition law with culture. In assessing whether Community institutions give due weight to cultural mainstreaming obligations in exercising their competences with respect to creation and maintenance of an undistorted market environment, all branches of competition law will be addressed: anti-trust, merger and state aid control.

1 See Szyszczak, ‘Competition and the Liberalised Market’, in N.N. Shuibhne, Regulating the Internal Market (2006) 87.

Chapter Five

Cultural Mainstreaming in EC Anti-Trust and Merger Control

It is common knowledge that EC anti-trust rules target the market behaviour of private operators active in any eld of economic activity. In accordance with Article 81(1) EC (ex-Article 85(1) EEC), all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States, and which have as their object or effect the prevention, restriction or distortion of competition are prohibited. Pursuant to Article 82 EC (ex-Article 86 EEC), any abuse by one or more undertakings of a dominant position within the common market, or in a substantial part of it is precluded, in so far as it may affect trade between Member States. An exemption to the absolute prohibition of Article 81(1) EC is found in Article 81(3) EC (ex-Article 85(3) EEC). This stipulates that Article 81(1) EC may be declared inapplicable in case of agreements contributing ‘to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benet’, provided that they do not ‘impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives’ and do not ‘afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question’. Some restriction of competition is thus tolerated given the efciencies cooperation between operators can generate, outweighing potential anti-competitive effects. In order to ensure uniform application of the Community’s anti-trust rules, Council Regulation (EEC) 17/62, adopted in 1962, claried the relevant procedural duties.1 With the aim of effectively addressing the impact of merger operations and acquisitions on competitive market structures, in particular in view of the absence of detailed merger rules in the EEC Treaty, the powers conferred to the Community were supplemented by Council Regulation 1 Council Regulation (EEC) No. 17/62 of 6 February 1962, First Regulation implementing Articles 85 and 86 of the Treaty, OJ 13, 21/2/1962, p. 204.

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(EEC) 4064/89, designed to facilitate appraisal of concentrations with a Community dimension.2 The instruments of EC competition policy have recently undergone profound review. Since 1 May 2004, national competition authorities and courts have been empowered, alongside the Commission, to apply Articles 81 and 82 EC in their entirety. Up to that point, the Commission had exclusive powers in the eld. To remove bureaucratic burdens and simplify the application of legal rules, a new procedural Regulation (EC) 1/2003 was enacted3 and a number of substantive rules on the evaluation of rms’ behaviour revised to render assessment more economics-based.4 New Merger Regulation (EC) 139/2004 brings changes to the substantive test to be applied in merger control.5 Competition law has been used on several occasions in a multifunctional way, promoting public policy goals alongside competition objectives. In early anti-trust cases, the European Court of Justice (ECJ) made clear that the EC (ex-EEC) competition rules should be construed in the context of the wider ambitions of the Community set out in Articles 2 and 3 EC (ex-Articles 2 and 3 EEC).6 The additional environmental, social or industrial benets yielded by private party agreements have, indeed, played a decisive role for approval in various instances.7 The modern application of the EC competition provisions is characterised by trends towards decentralisation and a more pro-economic approach. These are likely to prompt a heated debate over the accommodation of other policy 2 Council Regulation (EEC) No. 4064/89 of 21 December 1989 on the control of concentrations between undertakings, OJ L 395, 30/12/1989, p. 1. The Regulation was adopted on the basis of ex-Articles 87 and 235 EEC (now Articles 83 and 308 EC). 3 Council Regulation (EC) No. 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty, OJ L 1, 4/1/2003, p. 1. 4 See European Commission, Regulation (EC) No. 2790/1999 of 22 December 1999 on the application of Article 81(3) of the Treaty to categories of vertical agreements and concerted practices, OJ L 336, 29/12/1999, p. 21, Notice—Guidelines on Vertical Restraints, OJ C 291, 13/10/2000, p. 1, Commission Regulation (EC) No. 2658/2000 of 29 November 2000 on the application of Article 81(3) of the Treaty to categories of specialisation agreements, OJ L 304, 5/12/2000, p. 3, Regulation (EC) No. 2659/2000 of 29 November on the application of Article 81(3) of the Treaty to categories of research and development agreements, OJ L 304, 5/12/2000, p. 7, and Notice—Guidelines on the applicability of Article 81 to horizontal cooperation agreements, OJ C 3, 6/1/2001, p. 2. 5 Council Regulation (EC) No. 139/2004 of 20 January 2004 on the control of concentrations between undertakings, OJ L 24, 29/1/2004, p. 1. On the reform of the European merger control, see Díaz, ‘The Reform of European Merger Control: Quid Novi Sub Sole?’, 27 World Competition (2004) 177. 6 See Case 14/68, Walt Wilhelm v Bundeskartellamt, [1969] ECR 1, at para. 5, and Case 6/72, Europemballage Corporation and Continental Can Company Inc v Commission, [1973] ECR 215, at paras 24–25. 7 On the integration of non-competition concerns in competition assessment, see Monti, ‘Article 81 EC and Public Policy’, 39 Common Market Law Review (2002) 1057.

cultural mainstreaming in ec anti-trust and merger control 247 concerns in competition assessment. Though there are grounds to believe that the new framework does not question policy integration requirements,8 the emphasis placed on economic welfare may threaten the integration of other policy considerations in the evaluation of the market conduct of private operators. Competition law, in either its previous or current shape, may not contravene or jeopardise the fundamental goals of the EC project. Tied to the wider objectives identied at Community level, it is equally linked to cultural policy precepts, such as the preservation and promotion of cultural diversity, mandated by Article 151(4) EC. Arguably, in a competition law context, the practical importance of cultural mainstreaming relates to the weight given to the cultural benets or implications an agreement between undertakings might produce. In consequence, the aim of this section is to examine the degree to which cultural considerations have been accommodated in the EC’s competition reasoning with regard to private parties’ co-operation formats and strategic alliances. A few clarications with respect to Article 81 EC, to set the legal scene, before proceeding to examine specic competition cases, are warranted. As will be shown, cultural elements, when properly addressed, are placed within the context of Article 81(3) EC. A broadly dened rule of reason, going beyond competitive assessments, and permitting consideration of other policy goals, in the evaluation of the legality of operators’ market conduct, could permit an agreement producing cultural benets to escape application of Article 81(1) EC.9 The Court of First Instance (CFI) previously rejected the adoption of such an interpretative mechanism.10 Recently, the ECJ appears to be endorsing a ‘European rule of reason’, according to which an anti-competitive agreement, introduced for reasons of public interest, may escape application of Article 81(1) EC.11 Specically, in Wouters, the Court held that domestic rules, 8 See the Commission’s 2004 Communication on guidelines for the application of Article 81(3) EC (OJ C 101, 27/4/2004, p. 97), at para. 42, according to which ‘[g]oals pursued by other Treaty provisions can be taken into account to the extent that they can be subsumed under the four conditions of Article 81(3)’. 9 Deckert, ‘Some Preliminary Remarks on the Limitations of European Competition Law’, 1 European Review of Private Law (2000) 173, at 179. 10 Case T-112/99, Métropole v Commission, [2001] ECR II-2459, at paras 76–77. 11 The Court’s approach could be seen as a transposition of the Cassis de Dijon jurisprudence into a competition law context, and reecting a certain level of convergence between the application of the free movement provisions and the EC competition rules. See, in this respect, Mortelmans, ‘Towards Convergence in the Application of the Rules on Free Movement and on Competition?’, 38 Common Market Law Review (2001) 613. For others, the approach followed by the Court should not be regarded as an application of the ‘rule of reason’, but as conating paragraphs (1) and (3) of Article 81 EC, which operate as if they were a single provision. See D.G. Goyder, EC Competition Law (2003), at 94–95. Of course, the main difculty for the extension of the free movement case law to competition draws from

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adopted by the Dutch Bar Council, governing the formation of multidisciplinary partnerships, did not infringe Article 81(1) EC. This was regardless of their inherent effects restrictive of competition, and on the grounds that they were necessary for the proper practice of the legal profession, as organised in the Netherlands.12 Should the Court expand this approach, cultural public policy concerns might prove capable of rendering Article 81(1) EC inapplicable. Nevertheless, for the time being, it is beyond dispute that the cultural repercussions of an agreement are only acknowledged in the usual balancing exercise between its pro-competitive and anti-competitive effects under Article 81(3) EC. The cases presented focus on the so-called ‘cultural industries’, in particular, the audiovisual, music and publishing sectors, as cultural content forms the foundation of their business.13 Certainly, the economic dimension of their action triggers the application of competition law, as happens with any other type of economic activity. Yet their impact on cultural diversity, precisely as regards the production and distribution of a diversied cultural offering, is far greater than the inuence other industries might exert on cultural matters. What we watch in cinema theatres or on TV, listen to on the radio or read in our free time, reects the degree of cultural diversity resulting from the market structure of the cultural industries. The present analysis advocates that competition law, often justied as maximising consumer choice via better quality products, or products at better prices,14 can make a precious contribution to the preservation and stimulation

the observation that obstacles to trade, found permissible on grounds of legitimate domestic grounds, are always the result of national legislation. Conversely, competition law applies to the market conduct of private operators. Moreover, the mandatory requirements theory serves to resolve conicts between EC market integration objectives and national non-market values. It could thus be of relevance when EC competition goals clash with domestic non-competition cultural objectives, but does not sufce to address collision between EC competition goals and cultural objectives identied and pursued at the EC level. Indeed, it is often overlooked that it is not just the Member States who seek to attain cultural policy goals: the Community has a clear cultural mandate of its own that needs to be respected, not disregarded, within other EC policy frameworks. 12 The Court held that the Dutch Bar Council, having regard to the prevailing perception of legal services in the Netherlands, could have reasonably considered that the rules under review were necessary to ensure that the ultimate consumers of legal services, and the sound administration of justice, are provided with the necessary guarantees of integrity and experience. See Case C-309/99, Wouters, [2002] ECR I-1577, at paras 95–110. 13 This section builds on an earlier article investigating the incorporation of cultural considerations in competition assessment. See, in detail, Psychogiopoulou, ‘EC Competition Law and Cultural Diversity: The Case of the Cinema, Music and Book Publishing Industries’, 30 European Law Review (Sweet and Maxwell, 2005) 838. 14 For a broad overview of the justications of competition law, see T. Prosser, The Limits of Competition Law: Markets and Public Services (2005), at 17–20. See also D. Chalmers, C. Hadjiemmanuil, G. Monti and A. Tomkins, European Union Law: Text and Materials (2006), at 939–940.

cultural mainstreaming in ec anti-trust and merger control 249 of cultural diversity in Europe. A competition model founded on consumer welfare and economic efciencies can stimulate effective production and distribution patterns, conducive to a great variety of cultural goods and services reaching the European consumer. There are instances, however, where competition methodology does not sufciently counteract the detrimental effect market integration may have on the diversity of content. Due to the prioritisation of prot-maximisation models, there are occasions where the market does not offer appropriate means of delivering cultural diversity. In such cases, ‘classical’ consumer welfare does not coincide with cultural diversity considerations. Securing a wide choice of products for the consumer is not identical with availability of diversied content. The following discussion attempts to elucidate the Commission’s stance when agreements between undertakings are likely to have important cultural repercussions. The analysis is divided into three parts, in accordance with the nature of the cultural players involved, and particular competition concerns expressed. Attention is afforded to both branches of competition evaluation: assessment of operators’ market behaviour and control of market structures. The nal section discusses the Commission’s cultural mainstreaming attitude in general, identifying certain shortcomings and exploring options for a more coherent, consistent approach.

5.1

The Audiovisual Sector

The audiovisual sector, one of the principal vectors for conveying cultural values, undergoes radical transformations to follow technical progress. The advent of digitalisation and the introduction of new audiovisual services have substantially changed the media landscape, multiplying entertainment possibilities and leading to new viewing habits. In order to make the most out of these opportunities, at the same time preserving diversied programming, appropriate business models are needed. The European lm industry suffers from a number of structural deciencies: fragmentation along linguistic and cultural borders, undercapitalisation and limited access to nance. It is dominated by Hollywood pictures, which benet from production and advertising resources ten times higher than those in Europe.15 Film projects, developed by well-known studios, such as Universal, Twentieth Century Fox, Sony, Paramount, Warner Bros., Walt Disney,

15 See European Commission, ‘The Audiovisual Industry’, Education and Culture in Europe (2003), No. 21, 12.

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Dreamworks and Metro-Goldwyn Mayer (MGM),16 the so-called ‘majors’, active in the production of ‘mainstream’ lms, stand in clear contrast with smaller, ‘art-house’ productions made by independent operators, which are not generally aimed at international distribution.17 The situation is different for made-for-TV programmes, such as animation, ction and TV series. Designed to match local taste, North American productions are rendered less exportable. Signicant competition constraints have not arisen in the context of audiovisual production.18 The Commission’s scrutiny has rather focused on rights licensing and distribution/platform matters. The ensuing debate has caused controversy, and divided opinion on cultural considerations’ integration in competition assessment. 5.1.1

Rights Licensing

Audiovisual content ready for release is channelled through various distribution platforms, which operate mainly within national boundaries, due to territorially limited licensing practices and linguistic patterns. Several ‘exhibition’ windows under different timing conditions exist for motion pictures and other genres of audiovisual content, including theatrical exhibition, home entertainment, pay-per-view and near-video-on-demand, pay-TV and freeto-air television.19 With the exception of the UIP case, competition restraints 16 Note that the Commission cleared the acquisition of MGM by Sony, Comcast, a subsidiary of Comcast Corporation which is the largest cable television operator in the US, and a group of nancial investors. The Commission looked at the effects of the transaction in the various markets where Sony and MGM were active, and concluded that the combined rights portfolio of MGM and Sony would not alter the pre-merger competitive structure to any signicant extent across the EEA. The presence of a sufcient number of alternative content suppliers mitigated any risks of competition. See European Commission, Non-opposition to a notied concentration (Case COMP/M.3595—Sony/MGM), OJ C 139, 8/6/2005, p. 37. 17 Although co-production arrangements between powerful, consolidated production companies and fragmented, independent operators are becoming more common, the distinction between the two remains the predominant reality in Europe. 18 One of the few cases where anti-competitive effects were identied concerned the proposed RTL/Veronica/Endemol merger. See Commission Decision 96/649/EC of 17 July 1996 relating to a proceeding pursuant to Council Regulation (EEC) No. 4064/89 (IV/M.553—RTL/ Veronica/Endemol), OJ L 294, 19/11/1996, p. 14. 19 Theatrical exhibition of lms (usually up to eight months) takes place essentially in two ways: either the production company licences the distribution rights for one country to a local distributor, who then sub-licenses exhibition rights to cinema owners; or an operator, active at the international level, acquires the rights for several countries and sub-licences them to local distributors in individual countries, which again sub-licence to cinema exhibitors. Home entertainment encompasses various types of content (motion pictures, TV programmes, cartoons etc.). It involves rental and/or sales of relevant material in DVD or VHS format. As regards the pay-per-view and near-video-on-demand distribution formats (valid usually for three months), the TV rights of audiovisual content are licensed to operators, whose broadcasting

cultural mainstreaming in ec anti-trust and merger control 251 in the acquisition of rights for theatrical release are not widespread. Rights licensing for broadcasting has come under closer, more sceptical Commission scrutiny. Both individual and collective supply arrangements have qualied for examination. Merger operations likely to undermine content availability have also been kept in check. 5.1.1.1

Licensing of audiovisual content for theatrical release

On 11 February 1982, the Commission received notication of a series of agreements concluded between three of the main Hollywood studios, Paramount, Universal and MGM, setting up a joint venture company, Universal International Pictures (UIP). The object of the new entity would be to license worldwide (with the exception of the USA and Canada), on an exclusive basis, the rights to lms produced or distributed by the parent companies and their afliates, mainly for showing in cinema theatres. It aimed to avoid duplication of distribution channels and promotional expenditure. The agreements were deemed to fall within the scope of Article 81(1) EC as likely to entail important anti-competitive effects. The parent companies all engaged directly or indirectly through their subsidiaries in the distribution of feature lms and other entertainment programmes. By joining forces in the Community, they would cease to operate independently and therefore to compete amongst themselves in that market segment. In addition, by pooling distribution activities in one jointly owned operator, they would be able to coordinate their market behaviour, in particular as regards lm release conditions. Given the efciencies the agreements were said to generate for the European lm distribution market, an exemption was granted on the basis of Article 81(3) EC.20 At the Commission’s request, a number of modications were made to counteract any possible anti-competitive effects. The parties agreed to transform the exclusivity initially conferred upon UIP into the grant of a ‘right of rst refusal’ for theatre distribution rights. The parent companies would be obliged rst to offer their productions to UIP for distribution in the Community. In case of refusal, however, use could be made of alternative distribution means. Moreover, UIP and its partners would make themselves available, on the basis of their commercial judgment, for distribution of lms services are paid for by viewers on the basis of the single programmes viewed, rather than a full-package subscription fee. Pay-TV distribution relates to the licensing of rights for the creation of programming packages, accessed following payment of a subscription fee. Films may be released on ‘rst-window’ (usually for a six month-period) and then on ‘second-window’ (again for six months). Free-to-air television refers to traditional broadcasting. 20 Commission Decision 89/467/EC of 12 July 1989 relating to a proceeding pursuant to Article 85 of the EEC Treaty (IV/30.566—UIP), OJ L 226, 3/8/1989, p. 25.

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produced by third parties in the Community, including non-English language lms. They also retained the right not to purchase any or all Community distribution rights for co-productions. If third parties acquired such rights, they could freely exploit them, without regard to the joint venture. The undertakings entered into by the parties were all designed to help the European lm industry face pressure exerted by the vertically integrated Hollywood majors. If strictly respected, European lms would benet from an efcient market distribution structure while independent distribution networks would be allowed freely to develop. It is not clear from the Commission’s reasoning whether the remedies imposed were prompted by a cultural or industrial assessment of the declining European lm market.21 Yet, it could be argued that the Commission, through the ‘undertakings’ instrument, sought to ensure that the agreements would produce cultural benets in Europe. UIP’s contribution to the exploitation of non-American lms could stimulate diversity in the European lm market in terms of lm origin and type of content, enriching the audiovisual offering available. In 1993 the parties applied for the exemption to be renewed. The Commission’s investigation disclosed ‘sufciently solid proof ’ for an exemption refusal.22 Notwithstanding, UIP’s derogation was extended in 1999 for a veyear period.23 Despite allegations that UIP had effected a quantitative and qualitative reduction of the lms on offer, limiting the number of the screened European pictures and increasing the uniformity of the content provided,24 the Commission was unable to adduce evidence of anti-competitive practices, particularly as UIP had performed only moderately over the period of the rst exemption.25 Convinced that a less costly distribution organisation would result in steady and regular access to a wide variety of lms, to the benet of cinema operators and viewers, the Commission sought, through additional undertakings, to ensure greater behavioural autonomy amongst the parties and 21 The market is reported to have suffered declining audiences and sharp increases in lm production costs. See European Commission, XXII EC Annual Competition Report (1993), at 51. 22 Agence Europe, No. 7155, ‘The derogation granted to the joint venture “United International Pictures” for the distribution of US lms was not justied, in Mr Van Miert’s view’, 7/2/1998. 23 See Press Release IP/99/681 of 14 September 1999, ‘Commission renews UIP authorisation for ve years’. The Commission subsequently obtained the dissolution of UIP’s pay-TV joint undertaking, which distributed and marketed the parent companies’ lms to European pay-TV channels. See Agence Europe, No. 6936, ‘Commission obtains dissolution of UIP’s pay-TV for the distribution of Paramount, MGM and Universal lms’, 17/3/1997. 24 Agence Europe, No. 7554, ‘European directors urge Prodi Commission to review approval of UIP agreement’, 18/9/1999, and No. 7542, ‘European producers do not approve renewed authorisation by Commission of agreement between American ‘Majors’ for distribution of lms in Europe’, 2/9/1999. 25 See D.G. Goyder, supra n. 11, at 155.

cultural mainstreaming in ec anti-trust and merger control 253 fair treatment for competitors.26 Commitments with regard to the promotion of the professional development of European lm-makers and the organisation of lm festivals were also added to UIP’s list of obligations. 5.1.1.2

Licensing of audiovisual content to individual broadcasters

Digitalisation has disrupted traditional content consumption. Programming strategies have become a key factor in the development of new audiovisual services.27 The licensing of broadcasting rights for general-interest or thematic TV channels goes hand in hand with the launch of pay-TV. More importantly, recently released lms are decisive for the viability of pay-TV operators, largely dependent on the attractiveness of the content provided in order to penetrate the market.28 Although free-to-air and pay-TV may compete for the acquisition of TV programmes (made-for-TV motion pictures, TV series etc.), from a pay-TV operator’s perspective, the licensing of these rights does not have the same value as motion pictures in terms of consumer appeal. The acquisition of rights in ‘rst-window’ lms—motion pictures made available after their screening in cinema and on video and pay-per-view distribution channels—is an essential input for pay-TV broadcasters. An operator who does not have access to any ‘rst-window’ material may only offer older premium content (‘second-window’ lms), considered as of secondary quality, in terms of both demand and supply. Competition concerns are important here. On the basis of lengthy, preferential or exclusive, acquisition contracts an operator may turn into a content gatekeeper with foreclosing effects for potential entrants. Undoubtedly, such contracts allow for the nancial stability required to invest in the launch of new services. But signicant market power in rights availability can dictate 26 The undertakings built principally upon the 1989 decision. As regards the right of rst refusal, in particular, the parties accepted to consider each Member State, with the exception of Belgium/Luxembourg and the UK/Ireland, as a single territory. A partner holding distribution rights to a lm could seek alternative distribution channels in territories where UIP decided not to exercise its right. See, in detail, European Commission, Notice published pursuant to Article 19(3) of Council Regulation 17/62, OJ C 205, 20/7/1999, p. 6. A non-condential version of the text of the undertakings is available at: http://ec.europa.eu/comm/competition/antitrust/cases/decisions/30566/ip99681_en.pdf. 27 For a general overview, see Geradin, ‘Access to Content by New Media Platforms: A Review of the Competition Law Problems’, 30 European Law Review (2005) 68, and Nikolinakos, ‘EU Competition Law on Access to Premium Content: The Emergence of New Media’, 11 Computer and Telecommunications Law Review (2005) 13. 28 Sporting events are also ‘driver’ content for pay-TV. Since the ‘cultural’ function of sports is often used as a cover for economic protectionism by industry interests, the licensing of broadcasting rights for sports coverage will not form part of the analysis. Commission decisions in the eld will be discussed only when a genuine cultural dimension is discernible. For a comprehensive discussion, see Weatherill, ‘Sport as Culture in EC Law’, in R. Craufurd Smith (ed.), Culture and European Union Law (2004) 113.

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market conditions and impede market entry. The Commission’s stance cannot be said to have changed much over the years. Having initially adopted a rather deferential attitude towards content licensing arrangements, provided that extra safeguards were taken to ensure third party access to attractive content, in recent times, by re-opening the issue, the Commission has sought to prevent excessive content accumulating with any individual operator. Film supply arrangements In 1984, the German ARD broadcasting organisations (ARD) concluded three agreements with Metro-Goldwyn-Mayer/United Artists Entertainment (MGM/UA) on the licensing of audiovisual content. ARD acquired television rights to 1350 lms, to be selected from MGM/UA’s library, covering new releases between 1 January 1984 and 31 December 1998; all cartoons controlled by MGM/UA until 1984; 14 James Bond ( JB) lms and future JB lms to be produced or acquired by MGM/UA within the same time frame. ARD was vested with a two-facet exclusivity: rst, in respect of the US major’s library as a whole, for three years after contract conclusion; secondly, for TV and pay-TV broadcasting of each chosen programme for a fteen year-period, beginning with rst exploitation. The rights purchased related to German-language versions and covered all means of transmission: terrestrial, cable and satellite. The Commission objected, given the great number of lms involved and the duration of the exclusivity.29 ARD then accepted to release the programmes it had not selected, so that licences could be granted to other interested operators. Windows of varying duration were agreed for third parties, during which ARD’s exclusive broadcasting rights for individual lms would be lifted. The products could be broadcast in foreign-language versions throughout the entire contract area, that is, German-speaking Europe, and transmitted in the contract area by operators established elsewhere. ARD needed to provide the licensee, in good time before the beginning of the windows, with copies for direct broadcasting. If a German version was not yet available, it was obliged to contribute 50% of the dubbing costs. On the basis of these modications, the Commission exempted the agreements under Article 81(3) EC.30 Its position was that the agreements, amended,

29 The Commission found that the scope of rights covered by the agreements constituted an appreciable restriction of competition, notwithstanding that the contracts concerned only 4.5% of the total stock of lms available worldwide. This was because the popularity of the programmes (for instance, the James Bond lms) exceeded their numeric quantity. 30 Commission Decision 89/536/EEC of 15 September 1989 relating to a proceeding under Article 85 of the EEC Treaty (IV/31/734—Film purchases by German television stations), OJ L 284, 3/10/1989, p. 36.

cultural mainstreaming in ec anti-trust and merger control 255 while contrasting with previous ARD acquisition practices, improved the distribution of lms in Germany, with a fair share of the resulting benet accruing to consumers. They contributed to an enlarged offer of content; equally they guaranteed third party access to MGM/UA’s output, so enabling an alternate with ARD exploitation of a large proportion of the rights acquired. Arrangements made for dubbing costs, in particular, should enable private operators, especially those in a start-up phase, who usually face considerable nancial difculties, to broadcast highly attractive content. The agreements would thus result in a multiplication of distribution channels, increasing the number of lms shown in German.31 During the 1990s the Commission did not launch, either by its own initiative or in response to specic notications and complaints, any other inquiry into lm supply contracts between European operators and the major Hollywood production studios. In all probability, companies tried to keep in line with the ARD licensing format which, sanctioned by the Commission, provided guidelines for the admissible exercise of the exclusivity granted.32 Concerns in the rights acquisition market were energised by the Vivendi/Canal+/Seagram case, examined under Merger Regulation (EEC) 4064/89.33 The operation related to the acquisition of Seagram, a Canadian-based company that had progressively diversied its activities into the audiovisual sector, by Vivendi, the French telecommunications and media operator. Vivendi owned a 25% equity interest in BSkyB, a British pay-TV operator, which controlled Fox studio; and a 49% shareholding share in Canal+, the entertainment-focused rm present in the licensing of broadcasting rights, the production of pay-TV channels and the creation and distribution of feature lms, audiovisual works and programming bouquets of television channels and services by cable and satellite. Seagram, in turn, exercised control over Universal. As a result, the merged entity would possess the world’s second largest lm library34 and the greatest number of output deals signed with Hollywood studios. The market investigation conducted by the Commission revealed that Canal+/Universal’s bargaining power vis-à-vis the US majors would be

31 The remaining exclusivity, extending to the ban on licences for pay-TV, was justied on the basis that it allowed ARD a fair return from the relevant investments. Simultaneous exploitation in pay-TV and free-to-air broadcasting could affect the value of ARD’s purchased rights. 32 Sage, ‘Series of Film-Licensing Agreements and the Application of Article 81 EC’, 24 European Competition Law Review (2003) 475, at 476. 33 Commission Decision of 13 October 2000 declaring a concentration to be compatible with the common market (Case No. IV/M.2050—Vivendi/Canal+/Seagram) according to Council Regulation (EEC) No. 4064/89, OJ C 311, 31/10/2000, p. 3. The full text of the decision is available at: http://ec.europa.eu/comm/competition/mergers/cases/decisions/ m2050_en.pdf. 34 The Kirch lm library was the largest.

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increased, reinforcing the position held on the ‘rst-window’ premium lms segment. Canal+’s access to premium content, prior to the operation, was already considerable. Due to the structural links between the parties, the conancing lm arrangements set up between Universal and the various US producers, and Universal’s link, rst with Paramount and MGM through UIP, and secondly, with Fox studio via the control exerted by Vivendi in BSkyB, the operation would have a signicant impact on the ability of Canal+ both to renew its existing contracts and enter into new output deals. By leveraging its position on the rights acquisition segment, it could foreclose the pay-TV market in a number of European countries.35 In reaction to the Commission’s remarks, Vivendi agreed not to grant to Canal+ rst-window rights covering more than 50% of Universal productions and co-productions for a ve yearperiod, starting from the expiry of the deals which had already been signed. Additionally, it accepted to divest itself of its entire stake in BSkyB, cutting the link with Fox studio. Plainly, the primary objective of the undertakings imposed was to prevent excessive accumulation of Hollywood lms in a single operator. By avoiding strengthening Canal+’s dominant position, the remedies could also be read as indirectly preventing the cultural assimilation of Canal+’s lm offer, with benecial effects for European producers. Obliging Canal+ to limit fullling its content requirements with Universal, while dismantling the link with BSkyB/Fox Studio, might have provided Canal+ with an incentive to diversify its offering via other source operators. It is not certain whether it was the Vivendi/Canal+/Seagram operation that prompted the Commission to examine in greater detail the exclusive output agreements signed between European-based pay-TV operators and US studios.36 Focusing initially on the output deals concluded between Canal+ and the Hollywood majors,37 at the beginning of 2003, the Commission declared the launch of a broader investigation, implicating all US studios and the most powerful European market players, namely BSkyB, Canal+, Sogecable and Telepiù.38 The Commission was particularly anxious about possible long-term exclusivity agreements. When backed by a ‘most favoured nation’ (MFN) clause, these

35 Post-merger, Canal+’s dominant position would be strengthened on the pay-TV market in France, Spain, Italy, Belgium and the Netherlands. It would also acquire a dominant position in the Nordic countries. 36 See Case COMP/38.427, PO/Pay Television Film Output Agreements. 37 Agence Europe, No. 8426, ‘New parameters in investigation into European pay TV companies and Hollywood studios’, 22/3/2003. 38 Agence Europe, No. 8379, ‘Commission launches investigation into contracts between Hollywood studios and pay-television in Europe’, 16/1/2003.

cultural mainstreaming in ec anti-trust and merger control 257 risked creating signicant entry market barriers.39 Excessive contract duration threatened to block the arrival of new operators on the European pay-TV market. The MFN clause, by requiring pay-TV operators to pay an identical price to all studios from which they obtained lm broadcasting rights, was likely to eliminate competition between the majors. Higher, aligned, articial prices and subsequent increases in pay-TV subscription fees could result. The contractual conditions inherent in the agreements under review could preclude access to the pay-TV market for other lm producers, including European independent operators. Possible collusive behaviour by Hollywood content suppliers could have a lock-in effect for European pay-TV channels. Dependent on the availability of popular premium content for their commercial viability, the latter could be forced to alter their purchasing strategies, acquiring rights not only at increased prices but also in mass quantities. Directing extra resources to American programming could be devastating for European producers. In March 2003, the Commission announced its ex ofcio investigation would be suspended.40 TPS, a European pay-TV operator, competing with Canal+, had succeeded in signing exclusive agreements with Warner and Disney. In the Commission’s view, there was a need to reassess the dossier in light of developments, to determine whether the type of contractual conditions examined truly precluded the entry of new operators on the market. Surprisingly, in January 2004, it was reported that the evaluation was nearly complete, and that the Commission’s decision would be published in due course.41 The formal outcome of the Commission’s assessment was never communicated. Mainly through informal negotiations, changes to licensing practices were made, and some Hollywood producers persuaded to drop the MFN provision.42 Once this clause was deleted, the agreements signed by the rest could not be held, individually or collectively, as restricting competition within the meaning of Article 81(1) EC.43 Assuming this to be the Commission’s ‘last

39

Ibid. Supra n. 37. 41 Agence Europe, No. 8623, ‘Decision imminent on Hollywood studios inquiry’, 15/1/2004. 42 See Press Release IP/04/1314 of 26 October 2004, ‘Commission closes investigation into contracts of six Hollywood studios with European pay-TVs’. The case remains open with respect to Universal and Paramount, who would not accept withdrawal of the MFN clauses from their contracts. 43 In accordance with the case-law of the Court of Justice and, in particular, Case C-234/89, Stergios Delimitis v Henninger Bräu AG ([1991] ECR I-935), the Commission was constrained to examine not only whether the cumulative effect of the agreements under review was to deny market access for competitors, but also the extent to which each one individually contributed to sealing off the market, taking into consideration the market position of the contracting parties, determined by their market share and the number of outlets tied to them, as well as 40

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word’ on the matter, it can only be described as a disappointing result. The Commission preferred to conclude its activities behind closed doors, foregoing an opportunity to state openly the importance of a uid rights market for the protection and promotion of cultural diversity in Europe. Channel supply arrangements Channel provision to pay-TV platform operators, in particular premium content channel supply, is fundamental for the success of the pay-TV business in Europe. The Commission views favourably operators’ plans when it comes to the introduction of new market players and the launch of new services, but exercises caution not to damage competitive market structures by approving agreements with foreclosing effects for third parties. The TPS case is enlightening in this respect.44 In 1996, three French advertising-funded terrestrial television broadcasters (Télévision Française 1 (TF1), the public broadcaster France Télévision (FT) and M6) applied to the Commission, together with France Télécom, the long-standing telecommunications operator in France, and Lyonnaise des Eaux, present inter alia in the communications sector, for negative clearance, alternatively, an exemption under Article 81(3) EC of their agreements creating Télévision par Satellite (TPS). The object of TPS would be to launch and manage a digital platform for the distribution of satellite pay-TV programmes and services in France, as well as in other French-speaking areas of Europe. Since the operation as such was not found to fall within the scope of Article 81(1) EC,45 the Commission investigated a series of individual clauses in the shareholders’ agreements, likely to entail important anti-competitive effects.46 The priority granted to TPS, in respect of all the special-interest channels and television services of its parent companies, was caught by the prohibition of Article 81(1) EC: it appreciably restricted their wholesale supply to the duration of the exclusivity granted. The agreements under review, judged in isolation, did not in themselves raise appreciable anti-competitive concerns. But, examined collectively, they had the cumulative effect of creating market entry barriers. 44 Commission Decision 1999/242/EC of 3 March 1999 relating to a proceeding pursuant to Article 85 of the EC Treaty (Case No. IV/36.237—TPS), OJ L 90, 2/4/1999, p. 6. 45 Ibid., at paras 91–96. 46 A non-competition clause in the shareholders’ agreement, according to which the parties would be bound not to become involved, directly or indirectly, in companies engaged in the distribution and marketing of pay-TV services in digital mode by satellite in French-speaking areas, was regarded as ancillary to the creation of TPS. The new entity would necessitate in its start-up phase the full support of its parties in order to penetrate the French pay-TV market. The clause, limited from 10 to 3 years, was deemed pro-competitive, on grounds that it contributed to the launch of a new entrant to the relevant market. At the Commission’s request, the obligation, on the two cable operators with shares in TPS (France Telecom and Lyonnaise des Eaux) to give preference, on their networks, to programmes and services supplied by TPS, while coordinating their relative offers, was deleted.

cultural mainstreaming in ec anti-trust and merger control 259 other operators. The same applied to the right granted to TPS to distribute the general-interest channels TF1, M6 and FT’s France 2 and France 3 in encrypted, digital form by satellite. Given reception problems with terrestrial broadcasting in certain areas of France, their insertion in TPS’s package could render its programming offer particularly attractive for viewers, excluding third parties’ access to popular content. Examining whether the provisions could benet from an exemption under Article 81(3) EC, the Commission took the position that, if reduced in duration from 10 to 4 years, both were pro-competitive. Helping a new operator to emerge, they essentially served to stimulate the development of the pay-TV market in France, increasing the range of services available and prompting competing operators to offer better pricing conditions to customers.47 Successful launch of TPS would not materialise without preferential access to its members’ special-interest channels and exclusive transmission of TF1, M6, France 2 and France 3. Facing erce competition from the well-established Canal+ Group,48 which possessed a strong subscriber base and considerable access to attractive material, due to its numerous exclusive output deals with major Hollywood producers, TPS needed to create an identity. Holding rights representing only 15% of Hollywood’s total output,49 it would have no chance of posing a genuine alternative to Canal+, unless it could offer a package with considerable consumer appeal. Evidently, the Commission exercises lenience with regard to the exclusive or preferential supply of general-interest and thematic channels to pay-TV operators, if such supply is limited in time, aligned to the start-up phase of the market entrant. The sanctioning of arrangements for the provision of content serves precisely to provide new operators with the time and means necessary for their establishment, so to generate efciencies for inter-brand competition. The Commission favours an increase in the number of channels received by the end-consumer, an approach which could be viewed as supporting the provision of increased cultural output via the multiplication of market operators. Despite lack of express mention of cultural considerations in the Commission’s evaluation, the TPS case reveals that the consumer welfare criterion can coincide with cultural diversity concerns. 47 The Commission asserted that the creation of a new platform would lead automatically to the development of new special-interest channels and services. The rst tangible result of the introduction of competition in the pay-TV market would be special offers and advantageous nancial conditions for subscribers (supra n. 44, at paras 115, 117 and 119). 48 It was estimated that the Canal+ Group accounted for approximately 70% of the French pay-TV market in terms of numbers of subscribers. 49 TPS had signed agreements with ve large American studios for the acquisition of pay-TV and pay-per-view rights, but in three of them, the rights acquired were for second window exploitation.

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chapter five Collective licensing of audiovisual content

The cases reviewed above concentrated on preferential or exclusive content supply contracts entered into by individual TV operators. The Commission encountered possibility of inquiring into the issue of collective purchase of audiovisual rights in the famous EBU/Eurovision case, which concerned the acquisition of rights in sports.50 Sports are not core to the analysis of this book. It is essential, nevertheless, briey to examine the facts of the case, since the outcome of the Commission’s assessment represents one of the few occasions where cultural considerations have been afforded considerable weight in competition evaluation. EBU, a non-prot trade association of radio and television organisations, was created in 1950, with the primary aims of defending the interests of its members, mainly European public service broadcasters, and coordinating programme exchanges by all possible means. On 3 April 1989, it submitted to the Commission the rules governing its Eurovision scheme.51 This was an institutionalised system for the exchange of television programmes via a European network, allowing for the joint negotiation and acquisition of television rights to international sports events, while making arrangements for third parties’ contractual access to such programming. The Commission found that the provisions notied had, as their object and effect, restriction of competition between EBU’s members, since, by joining forces for the acquisition and sharing of rights, parties would stop competing amongst each other. Competition vis-à-vis other operators would be equally distorted. By not participating in the rationalisation and cost-savings achieved by the Eurovision system, third parties would be disadvantaged with regard to the purchase of popular sports rights. Verifying, however, whether the conditions of Article 81(3) EC were fullled, the Commission replied in the afrmative, noting that the benets entailed by the scheme outweighed its restrictive effects. A conditional exemption was thus granted until 25 February 1998, subject to a sub-licensing scheme of EBU rights for third parties.52

50

Commission Decision 93/403/EEC of 11 June 1993 relating to a proceeding pursuant to Article 85 of the EEC Treaty (IV/32.150—EBU/Eurovision System), OJ L 179, 22/7/1993, p. 23. 51 The notied rules related to the joint acquisition of television sports rights, the sharing of jointly acquired television sports rights, exchange of signal for sport events and the access scheme for non-EBU members to Eurovision sports rights. 52 The decision was annulled by the Court of First Instance on the basis of erroneous interpretation of Article 81(3) EC, but without questioning the sound cultural points made by the Commission. See Joined Cases T-528/93, T-542/93, T-543/93 and T-546/93, Metropole Télévision SA and Reti Televisive Italiane SpA and Gestevisiòn Telecinco SA and Antena 3 de Televisiòn v Commission, [1996] ECR II-649. A second exemption decision, issued in 2000, but which was less attentive to the cultural dimension of the Eurovision scheme (Commission Decision

cultural mainstreaming in ec anti-trust and merger control 261 According to the Commission, Eurovision signicantly reduced the transaction costs, associated with a multitude of separate negotiations, and contributed, with the introduction of a pan-European sports programme service, to the creation of a single European broadcasting market.53 By promoting administrative and technical cooperation between the parties, it facilitated the broadcast of a wide range of sports events, ensuring quasi-permanent coverage benecial to domestic audiences. The EBU/Eurovision decision constitutes a ne example of the integration of cultural concerns in competition law analysis. In the Commission’s view, the Eurovision scheme amounted, in essence, to a solidarity system, which ensured ‘a broad ow of sports programmes to all parts of the Eurovision area’54 via ‘an optimal adaptation to different needs of the different members in terms of commentary facilities, selection of events . . ., scheduling and presentation’.55 It enabled the transmission of a variety of sports, ‘including minority sports and sports programmes with educational, cultural or humanitarian content’.56 Without the system, these could not be transmitted by domestic generalist channels due to internal programming and nancial constraints.57 Allowing for the transmission of all events of potential interest beyond national boundaries, Eurovision sustained, in particular, members from smaller countries, who were given the opportunity to provide their audiences with high quality programming, tailored to specic national interests and commented in domestic language.58 The Eurovision decision clearly illustrates the Commission’s interest in the quantity and diversication of programming shown on European TV

2000/400/EC of 10 May 2000 relating to a proceeding pursuant to Article 81 of the EC Treaty (Case IV/32.150—Eurovision), OJ L 151, 24/6/2000, p. 18), was also annulled by the CFI on grounds of manifest error of assessment with regard to the application of Article 81(3) EC. See Joined Cases T-185/00, T-216/00, T-299/00 and T-300/00, Métropole Télévision SA (M6), Antena 3 de Televisión, SA, Gestevisión Telecinco, SA and SIC—Sociedade Independente de Comunicação, SA v Commission, [2002] ECR II-3805. For an overview of the second Eurovision decision, see Galarza, ‘The Commission’s Assessment of the Eurovision System pursuant to Article 81 EC’, Competition Policy Newsletter (2000), No. 2, 28. 53 The Commission stressed that sport is a type of entertainment which transcends cultural boundaries and which therefore is uniquely suitable for cross-border broadcasting. See supra n. 50, at para. 14. 54 Ibid., at para. 32. 55 Ibid., at para. 64. 56 Ibid., at para. 62. 57 The Commission noted that individual purchases of rights would entail that less material was shown, since public mission oriented broadcasters could not concentrate on sports programming but instead, needed to provide a varied broadcast offering even at times when major sports events were taking place (para. 60). It highlighted that the cost-savings entailed by the scheme could be passed on to viewers with the acquisition of supplementary, attractive content (para. 68). 58 Supra n. 50, at para. 68.

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screens. Special consideration was given to minority sports, content formatting conditions designed to meet national linguistic and cultural preferences, and, nally, inherent difculties in the media industries of smaller Member States with regard to a varied audiovisual offering. Admittedly, though, the culturalfriendly Eurovision decision is an isolated instance amongst EC competition decisions in the media sector overall.

5.1.2

Distribution of audiovisual content and platform issues

Audiovisual content, whose rights are purchased, is usually packaged into channels, one or a bundle, and then distributed at retail by free-access or pay-TV operators. Pay-TV currently enjoys rapid growth owing to the introduction of digital technology which enables a higher volume of channels and services to be distributed than analogue technology.59 Delivered via terrestrial transmission, by satellite or by cable, pay-TV services necessitate special technical tools for broadcast encryption and decoding, such as set-top-boxes, conditional access systems (CAS) and electronic programme guides (EPGs).60 In exercising its competences under the EC competition rules, the Commission has not been particularly worried about free-to-air and pay-TV merger operations between companies active in different geographic markets, or with limited activities in neighbouring markets.61 It has been more attentive to 59 It is expected that, in the next few years, analogue format will be entirely superseded by digital TV. 60 Special decoding systems encrypt and subsequently decrypt the television signals for authorised viewing (set-top-boxes). Systems of conditional access comprise, together with the television signal, the transmission of encrypted data, which contain information on the programmes or packages of programmes subscribed to by the authorised viewer. Smart cards, made available to the consumer, decipher the encrypted authorisation data and transfer them to the decoder. Electronic programme guides (EPGs) help navigation through the multitude of digital channels and services on the basis of special software, the so-called application programme interfaces (APIs), which enable screen display. 61 See, in particular, Commission Decision of 6 September 1994 declaring a concentration to be compatible with the common market (Case No. IV/M.489—Bertelsmann/News International/Vox) according to Council Regulation (EEC) No. 4064/89, OJ C 274, 1/10/1994, p. 9, Commission Decision of 2 August 1994 declaring a concentration to be compatible with the common market (Case No. IV/M.410—Kirch/Richemont/Telepiu) according to Council Regulation (EEC) No. 4064/89, OJ C 225, 13/8/1994, p. 3, Commission Decision of 21 December 1994 declaring a concentration to be compatible with the common market (Case No. IV/M.525—VOX (II)) according to Council Regulation (EEC) No. 4064/89, OJ C 57, 7/3/1995, p. 5, Commission Decision of 5 May 1995 declaring a concentration to be compatible with the common market (Case No. IV/M.584—Kirch/Richemont/Multichoice/Telepiu) according to Council Regulation (EEC) No. 4064/89, OJ C 129, 25/5/1995, p. 6, Commission Decision of 17 May 1995 declaring a concentration to be compatible with the common market (Case No IV/M.566—CLT/Disney/Super RTL) according to Council Regulation (EEC) No. 4064/89, OJ C 144, 10/6/1995, p. 23, Commission Decision of

cultural mainstreaming in ec anti-trust and merger control 263 operations between actual competitors or market players active in correlated markets with signicant market power. Its stance during the 1990s reected a strong commitment to knock-down market plans likely to restrain future market developments. Operations whose vertical effects could lead to the leveraging of market power, from the market of technical services required for the operation of pay-TV, into the retail pay-TV market, and vice versa, were not accepted simply for the sake of introducing digital pay-TV in Europe.62 In the late 1990s, the Commission’s position altered. Instead of prohibiting merger strategies on the basis of anti-competitive effects, the Commission consented, provided that parties made behavioural or structural commitments. Most aimed either at preventing excessive accumulation of attractive content

13 November 1995 declaring a concentration to be compatible with the common market (Case No. IV/M.655—Canal+/UFA/MDO) according to Council Regulation (EEC) No. 4064/89, OJ C 15, 20/1/1996, p. 4, Commission Decision of 7 October 1996 declaring a concentration to be compatible with the common market (Case No. IV/M.779—Bertelsmann/CLT) according to Council Regulation (EEC) No. 4064/89, OJ C 364, 4/12/1996, p. 3, Commission Decision of 16 September 1996 declaring a concentration to be compatible with the common market (Case No. IV/M.810—N-TV) according to Council Regulation (EEC) No. 4064/89, OJ C 366, 5/12/1996, p. 19, Commission Decision of 3 August 1999 declaring a concentration to be compatible with the common market (Case No. IV/M.1574—Kirch/ Mediaset) according to Council Regulation (EEC) No. 4064/89, OJ C 25, 8/9/1999, p. 3, Commission Decision of 21 March 2000 declaring a concentration to be compatible with the common market (Case No. IV/M.1889—CLT-UFA/Canal+/VOX) according to Council Regulation (EEC) No. 4064/89, OJ C 134, 13/5/2000, p. 13, Commission Decision of 21 March 2000 declaring a concentration to be compatible with the common market (Case No. IV/M.1889—CLT-UFA/CANAL+/VOX) according to Council Regulation (EEC) No. 4064/89, OJ C 134, 13/5/2000, p. 13, Commission Decision of 29 June 2000 declaring a concentration to be compatible with the common market (Case No. IV/M.1978—Telecom Italia/News Television/Stream) according to Council Regulation (EEC) No. 4064/89, OJ C 66, 15/3/2002, p. 14, Commission Decision of 29 June 2000 declaring a concentration to be compatible with the common market (Case No. IV/M.1958—Bertelsmann/GBL/Pearson TV) according to Council Regulation (EEC) No. 4064/89, OJ C 180, 26/6/2001, p. 14, Commission Decision of 5 November 2002 declaring a concentration to be compatible with the common market (Case No. IV/M.2996—RTL/CNN/Time Warner/N-TV) according to Council Regulation (EEC) No. 4064/89, OJ C 310, 13/12/2002, p. 23, and Commission Decision of 12 March 2004 declaring a concentration to be compatible with the common market (Case No. IV/M.3330—RTL/M6) according to Council Regulation (EEC) No. 4064/89, OJ C 95, 20/4/2004, p. 35. Detailed information on the cases mentioned is available at: http:// ec.europa.eu/comm/competition/antitrust/cases. 62 See, in this respect, Commission Decisions 94/922/EC of 9 November 1994 relating to a proceeding pursuant to Council Regulation (EEC) No. 4064/89 (IV/M.469—MSG Media Service), OJ L 364, 31/12/1994, p. 1, 1999/153/EC of 27 May 1998 relating to a proceeding pursuant to Council Regulation (EEC) No. 4064/89 (Case No. IV/M.993—Bertelsmann/Kirch/Premiere), OJ L 53, 27/2/1999, p. 1, 1999/154/EC of 27 May 1998 relating to a proceeding pursuant to Council Regulation (EEC) No. 4064/89 (Case No. IV/ M.1027—Deutsche Telekom/BetaResearch), OJ L 53, 27/2/1999, p. 31, and 96/177/EC of 19 July 1995 declaring a concentration to be incompatible with the common market and the functioning of the EEA Agreement (Case No. IV/M.490—Nordic Satellite Distribution), OJ L 53, 2/3/1996, p. 20.

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in single operators, others at ensuring access to pay-TV infrastructure for third market players. Indeed, in the BSkyB/KirchPayTV case,63 which concerned the acquisition by BSkyB of 24% in KirchPay-TV, the Commission found that merger would strengthen KirchPay-TV’s dominant position on the German pay-TV market through an inux of nancial resources and BSkyB’s marketing and distribution know-how. Given the strength of the free-TV market in Germany,64 and Kirch’s control over content sources, decoder and encryption technology, the operation would reinforce the existing high entry barriers to the retail pay-TV market.65 In an attempt to save the operation, the parties offered two sets of commitments: bidding conditions for the acquisition of broadcasting rights, and non-discriminatory access for third parties to the technical platform of Kirch. The Commission accepted both. One could argue that the Commission’s practice, founded on use of the instrument of undertakings, encourages broad availability of cultural content, while simultaneously refraining from obstructing the development of payTV services. Cultural diversity analysis was absent in the decision examined. Despite this, remedies against excessive content accumulation, which hampers the emergence or viability of potential and existing competitors, facilitate the provision of a greater volume of programming. In the same spirit, guarantees for access to pay-TV infrastructure, which is essential for the launch of new audiovisual services, indirectly encourage cultural diversity by generating benets for the ultimate consumer in terms of an increase in the audiovisual offering available. Recent sanctioning of transactions ending duopolistic patterns, and giving vent to single-player market structures, provides evidence of negative ramications that operators’ consolidation strategies may have on the breadth of cultural content reaching the European viewer. The Newscorp/Telepiù merger profoundly affected the competitive pay-TV environment in Italy, leading practically to a domestic near-monopoly.66 The operation related to

63 Commission Decision of 21 March 2000 declaring a concentration to be compatible with the common market (Case No. IV/JV.37—BSkyB/KirchPayTV) according to Council Regulation (EEC) No. 4064/89, OJ C 110, 15/4/2000, p. 45. The full text of the decision is available at: http://ec.europa.eu/comm/competition/mergers/cases/decisions/jv37_en.pdf. 64 Free-TV may represent a competitive constraint for pay-TV broadcasters, particularly in those Member States where its offer consists of a wide variety of channels containing commercially attractive content. 65 The Commission was also worried that the operation would lead to the creation of a dominant position in the emerging market for digital interactive TV services since, as a result of its monopoly position on the pay-TV market, KirchPayTV would be the only undertaking in Germany able, in the foreseeable future, to offer pay-TV services in combination with digital interactive TV services. 66 Commission Decision 2004/311/EC of 2 April 2003 declaring a concentration to be compatible with the common market and the EEA Agreement (Case COMP/M.2876—

cultural mainstreaming in ec anti-trust and merger control 265 the acquisition by the Australian media group Newscorp, of the Italian satellite pay-TV operators, Telepiù and Stream. The latter subsequently merged their activities in a combined direct-to home (DTH) satellite pay-TV platform (Sky Italia). The merged entity would have the economic incentives and actual ability to foreclose potential competitors, both on the DTH segment and other means of transmission.67 The Commission’s investigation showed that the combined platform would benet from unparalleled programme resources, hindering third party access to any substantial volume of attractive pay-TV broadcasting rights. The extensive scope68 and long duration of exclusive supply arrangements, combined with the exercise of hold-back and pre-emption rights for second-window movies, would raise important entry barriers, strengthening the bargaining power of the merged entity with regard to independent content providers. Newscorp would also become the ‘gatekeeper’ of the technical tools required for the provision of pay-TV services by any alternative pay-DTH operator. Access to its platform could hence be refused or granted under unfair and discriminatory conditions. Despite such agrant competition constraints, the transaction was given the go-ahead by the Commission. Strict packages of remedies were imposed to guarantee third players’ access to content, infrastructure and technical services associated with pay-TV. The focus was on the terms and length of ongoing and future exclusive supply contracts, the wholesale distribution of acquired content to third parties, and the application of non-discriminatory conditions for access to satellite platform, CAS and EPGs.69 An authorisation to proceed, subject to appropriate remedying conditions, was seen by the Commission as more benecial to consumers than a prohibition decision, which would have rendered the survival of Stream’s loss-making activities highly unlikely.70 Since the emergence of a dominant voice in the Italian market seemed inevitable, the Commission preferred the option of Newscorp/Telepiù), OJ L 110, 16/4/2004, p. 73. The operation dates to 2001, when Group Canal+, the owner of Telepiù, informed the Italian competition authority of a proposed acquisition of Stream (this was subsequently abandoned). The proposed merger, which was again notied in 2002 and given approval, did not materialise. For detailed analysis of the merger, see Pereira, ‘Recent Consolidation in the European Pay-TV Sector’, Competition Policy Newsletter (2003), No. 3, 29. 67 In Italy, TV service provision via cable was not in place, with the exception of a marginal player, e.Biscom, which provided video-on-demand and interactive services to a limited number of subscribers. 68 The exclusive supply arrangements applied not only to satellite but also to other technical platforms (terrestrial, cable etc.). 69 The duration of future exclusive supply agreements was limited to 3 years for lms. For ongoing contracts, a unilateral termination right was granted by the parties to lm producers. In addition, Newscorp agreed to waive its exclusive rights on platforms other than DTH, and Telepiù accepted to withdraw from its digital terrestrial television business. 70 Supra n. 66, at para. 221.

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an operator heavily regulated via the imposition of strict undertakings, to a single unrestrained pay-TV market player, following Stream’s anticipated exit from the market. From a cultural standpoint, the assessment made is far from satisfactory. The sanctioning of a dominant player does not keep pace with the need to preserve and promote a wide range of programming for the European viewer. In the Italian case, a cultural diversity analysis next to the usual competition analysis performed by the Commission would have been useful. According to the Commission, the main thrust, and the underlying objective, of any remedy package is to create the conditions for actual competition to subsist and/or potential competition to emerge, so that the nal consumer may enjoy a wide range of products of better quality and at better prices. Lowering barriers to market entry and creating competitive constraints that operate as a disciplining factor for the dominant player are the means which, in the Commission’s view, ensure an undistorted market environment. Yet, some consideration should also be given to the content of the services an undistorted market will provide. This is imperative in a near-monopoly situation, where the lack of alternative outlets already undermines diversity of output. Remedies, which ensure access to attractive programming for other operators to emerge, do not sufce, as competition is essentially preserved for access to the same content. Pursuant to Article 151(4) EC, undertakings, which prompt the dominant player to diversify its own cultural offering, should also be contemplated.

5.2

The Music Industry

The global music industry is characterised by the presence of a limited number of well-established companies which, on the basis of their complete vertical integration, dominate the production, publishing71 and distribution circuits. On the European scene, ve companies with a large collection of titles in their

71

Music publishing involves, upon remuneration, the exploitation of musical works in the form of administration and collection of the artists’ income. The authors’ revenue derives from various sources, such as mechanical rights, performance royalties, synchronisation fees and print rights. With regard to mechanical rights, the publisher licences the record company for the reproduction of copyrighted music by mechanical means (CDs, tapes etc.). Performance rights require the grant of a licence by the publisher for the performance of copyrighted music to commercial users, such as radio and TV stations, night clubs etc. Synchronisation rights necessitate the provision of licences for the recording of a composition as part of the soundtrack of a lm or for advertisement purposes. Print rights, known as graphic rights, relate to the use of sheet music. Collecting societies are usually entrusted with the administration of mechanical and performance rights. Synchronisation and printing rights are generally licensed and administered directly by the publishers without much involvement of the collecting societies.

cultural mainstreaming in ec anti-trust and merger control 267 catalogues have taken the lead: EMI, Sony Music, Warner Music, Universal Music and Bertelsmann Music Group (BMG). Next to them stand a myriad of independent market players, operating mainly on a national scale, and usually specialising in niche genres and domestic repertoires. A series of merger transactions touching upon the production of recorded musical content with possible spill-over effects for the publishing rights market have been examined by the Commission. Distribution matters have also been given considerable attention, in particular in view of recent developments for online content dissemination. Technological progress has equally prompted the re-appraisal of existing exploitation licensing methods in order to create a legally secure environment for music diffusion via the internet. 5.2.1

Recorded Music Production and Publishing Rights

The outcome of the Commission’s assessment in the most signicant merger operations in the music sector has been inuenced by the high concentration levels in place with respect to control over content sources. The approach taken in response to merger plans has not been static: initially, efforts were deployed to preserve the ve-rm oligopoly, but the Commission has recently received consolidation strategies developed by the majors more positively. To start with, the Thorn EMI/Virgin Music case related to the acquisition by EMI of the entire share capital of Virgin Music, one of the most signicant European independent record labels.72 Here, the Commission found that the transaction would not alter the conditions of competition in the music recording market. It openly observed the industry’s high concentration trends, but estimated that the combined market share of both companies would not lead to creation of a dominant position for the acquiring party. Examining the merger’s vertical effects, the Commission recognised that EMI, as a music publisher, would benet from Virgin’s music recording assets, yet noted that record companies have no special allegiance to their own publishing arms.73 The same conclusion was drawn in the Seagram/Polygram case, which concerned the acquisition by Seagram of sole control in Polygram, to be

72 Commission Decision of 27 April 1992 declaring a concentration to be compatible with the common market (Case No. IV/M.202—Thorn EMI/Virgin Music) according to Council Regulation (EEC) No. 4064/89, OJ C 120, 12/5/1992, p. 30. The text of the decision is available at: http://ec.europa.eu/comm/competition/mergers/cases/decisions/m202_en.pdf. 73 Indeed, Thorn EMI had paid out more than ¾ of its royalty fees to competing publishing companies.

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subsequently merged with Universal, a subsidiary of the purchasing party;74 likewise in relation to the proposed concentration between BMG and the holding companies of the Zomba’s Group music recording and publishing business.75 Permission to proceed was granted on the basis that the existing ve-rm music oligopoly would be maintained, despite the elimination of important independent actors from the EC music recording scene. Conversely, operations between the majors, likely to reduce their number and thus result in extreme concentration levels, were caught by the Commission’s scrutiny. A full investigation was launched into the proposed agreement between Time Warner and EMI, to combine their recorded and music publishing assets.76 The merger, eventually abandoned, would have led to an oligopoly of four rms, controlling 80% of the recorded music market on an EEA basis with foreclosing effects for smaller record companies. It would have created a collective dominant position at the EEA level, as well as in each individual EEA country, and would have rendered coordination amongst the majors feasible on the basis of joint venture distribution agreements and compilation deals.77 Given the extensive content resources owned or administered by the parties, the combined entity would have also effectively controlled by far the largest number of copyrights worldwide.78 The Commission’s evaluation could have been reassuring, had it not subsequently approved merger operations carried out by the majors. In 2004, it gave the green light to the pooling of Sony and BMG’s global recorded music assets (with the exception of Sony’s activities in Japan) into a number

74 Commission Decision of 21 September 1998 declaring a concentration to be compatible with the common market (Case No. IV/M.1219—Seagram/Polygram) according to Council Regulation (EEC) No. 4064/89, OJ C 309, 9/10/1998, p. 8. Combined market shares represented a minus increase of [