Office of the United States Trade Representative – National Trade Estimate Report 2010


Audiovisual Services

U.S. industry remains concerned with the added costs associated with exporting movies to Argentina due to measures governing the showing, printing, and dubbing of films, and the practice of charging ad valorem customs duties on U.S. exports based on the estimated value of the potential royalty generated from the film in Argentina rather than on the value of the physical materials being imported.



Under the FTA, existing requirements on Australian local content remain, but the agreement limited or prohibited their extension to newer media or means of transmission. Australia maintains strict domestic content requirements on all free-to-air television programming broadcast between 6:00 a.m. and midnight. Australia’s Broadcasting Services Amendment Act requires subscription television channels with significant drama programming to spend 10 percent of their programming budgets on new Australian drama programs (with the FTA allowing flexibility, under certain circumstances, to increase this up to 20 percent). Australian radio industry quotas require that up to 25 percent of all music broadcast between 6:00 a.m. and midnight be “predominantly” Australian in origin/performance.


Audiovisual Services

Law 10454 of 2002 aims to promote the national film industry through the creation of the National Film Agency (ANCINE) and through various regulatory measures. The law imposes a fixed tax on each foreign film released in theaters, foreign home entertainment products, and foreign programming for broadcast television. Remittances to foreign producers of audiovisual works are subject to a 25 percent income withholding tax. Brazilian distributors of foreign films are subject to a separate levy equal to 11 percent of their withholding taxes. This tax, called the CONDECINE (Contribution to the Development of a National Film Industry), is waived for the Brazilian distributor if the producer of the foreign audiovisual work agrees to invest an amount equal to 70 percent of the income withholding tax on their remittances in co-productions with Brazilian film companies. The CONDECINE tax is also levied on any foreign video and audio advertising. Brazil also requires that 100 percent of all films and television shows be printed locally. Importation of color prints for the theatrical and television markets is prohibited. Domestic film quotas also exist for theatrical screening and home video distribution.


Foreign ownership of cable companies is limited to 49 percent, and the foreign owner must have a headquarters in Brazil and have had a presence in the country for the prior 10 years. Foreign cable and satellite television programmers are subject to an 11 percent remittance tax. The tax, however, can be avoided if the programmer invests 3 percent of its remittances in co-production of Brazilian audiovisual services. National cable and satellite operators are subject to a fixed title levy on foreign content and foreign advertising released on their channels. Law 10610 of 2002 limits foreign ownership in media outlets to 30 percent, including the print and “open broadcast” (non-cable) television sectors. Open broadcast television companies are also subject to a regulation requiring that 80 percent of their programming content be domestic in origin.


Canadian Content in Broadcasting

The Broadcasting Act lists among its objectives, “to safeguard, enrich, and strengthen the cultural, political, social, and economic fabric of Canada.” The federal broadcasting regulator, the CRTC, implements this policy. The CRTC requires that for Canadian conventional, over-the-air broadcasters, Canadian programs must make up 60 percent of television broadcast time overall and 50 percent during evening hours (6 p.m. to midnight). It also requires that 35 percent of popular musical selections broadcast on the radio should qualify as “Canadian” under a Canadian government-determined point system. For cable television and direct to home broadcast services, a preponderance (more than 50 percent) of the channels received by subscribers must be Canadian programming services. The CRTC also requires that the English and French television networks operated by the Canadian Broadcasting Corporation not show popular foreign feature movies between 7 p.m. and 11 p.m. The only non-Canadian films that may be broadcast during that time must have been released in theaters at least two years previously and not be listed in the top 100 of Variety Magazine’s top grossing films for at least the previous 10 years. Non-Canadian channels must be pre-approved (“listed”) by the CRTC. For other services, such as specialty television and satellite radio services, the required percentage of Canadian content varies according to the nature of the service. Canadian licensees may appeal the listing of a non-Canadian service which is thought to compete with a Canadian pay or specialty service. The CRTC will consider removing existing non-Canadian services from the list, or shifting them into a less competitive location on the channel dial, if they change format to compete with a Canadian pay or specialty service. Distributors of theatrical films in Canada must submit their films to six different provincial or regional boards for classification. Most of these boards also classify products intended for home video distribution.


China’s desire to protect the revenues earned by the state-owned audiovisual and print media importers and distributors, as well as concerns about politically sensitive materials, have resulted in continued restrictions on foreign providers of audiovisual and related services. Importation and distribution of books, newspapers, journals, sound recordings, videos, films, and television programs remain highly restricted. Inconsistent and subjective application of censorship regulations further impedes market growth for foreign providers. China’s large black market for foreign DVDs and other home entertainment video products continues to grow, because these market access restrictions create a demand for pirated goods in the absence of legitimately licensed home or theatrical entertainment. At both the central and regional levels, interconnected agencies under the State Administration for Radio, Film, and Television (SARFT) dictate the terms under which films can be produced and distributed. SARFT permits only one film importer and two film distributors (which are both components of the same monopoly managed by SARFT) to operate in China. For theatrical releases, the monopoly importer and distributor dictate the films that will be imported (currently limited by China to 20 revenue sharing films a year, with remaining films imported only under low, fixed price terms), when they will be released in the market, and the box office revenue sharing terms in a master contract agreement imposed unilaterally and uniformly on foreign studios by the Chinese government. In addition, the Chinese government sets strict guidelines with respect to the public screening of foreign films. Under Regulations for the Administration of Films Decree No. 342, Article 44, issued by the State Council in 2001, the total annual screening time for foreign films must not exceed one-third of the total screening time of all films (domestic and foreign).

Television quotas are also highly restrictive. The Administrative Measures on the Import and Broadcast of Extraterritorial Television Programs (No. 42), effective October 23, 2004, restricts foreign television drama and film programming to no more than 25 percent of total airtime, and other foreign programming to no more than 15 percent of total air time. Foreign programming, including animated programs, is banned on prime time between 7:00 P.M. and 10:00 P.M. on terrestrial stations. SARFT’s Interim Regulation on Digital Cable TV Pay Channels (November 14, 2003) restricts foreign programming to a maximum of 30 percent of total airtime on pay television channels.

In addition to censorship reviews by Chinese authorities, which can delay the arrival of imported foreign films on Chinese movie screens, the Chinese government has historically decreed “black-out periods” during which no new revenue sharing blockbuster foreign films may be released in order to prevent competition with Chinese films being released during the same period. Banning the release of new foreign titles or removing popular foreign films during peak seasons not only hurts theatrical revenues but also contributes to increased piracy, as pirates meet immediate consumer demand for foreign titles by offering illegal downloads through the Internet, on pirate optical discs, and pirate video-on-demand channels.

Regulations restricting direct distribution by non-Chinese companies of imported theatrical films, home video, public performance video, and television products remain in force. China Film dictates the contractual terms, play dates, and other aspects of film exhibition. When Chinese entities contract for the rights to distribute titles in various home video formats, the differentiation between video rights and rights for home use or public use is often ignored; home video products are often used for public performance exhibitions in mini-cinemas and by some pay-television operators providing to hotels.

China Film also continues to require that film prints be made in local laboratories. The requirement pertains to theatrical distribution in most cases, and it applies to home video distribution in all cases. Local printing and duplication requirements reduce rights holders’ ability to control the quality of a film copy and may result in increased costs.

For sound recordings, China limits market access opportunities for imported sound recordings in a manner similar to the limitations imposed on films for theatrical release or home viewing. In addition, new barriers have recently been erected. The Ministry of Culture’s Opinion on the Development and Regulation of Network Music bans foreign ownership of firms supplying digital music services, requiring that entities engaging in the online distribution of sound recordings in China be wholly Chinese-owned entities. In late 2007, this regulation was amplified in new rules established jointly by MIIT and SARFT, explicitly restricting audio and video distribution services (including over electronic networks such as the Internet) to state-owned entities.

As discussed above in the section on Trading Rights, the United States initiated a WTO dispute settlement case against China in April 2007 challenging the importation and distribution restrictions applicable to certain copyright-intensive products, including books, newspapers, journals, theatrical films, videos, and sound recordings. The WTO panel that heard the case issued its decision in August 2009, ruling in favor of the United States on all significant issues. China appealed the panel’s decision in September 2009. The WTO’s Appellate Body rejected China’s appeal on all counts in December 2009. The United States will closely monitor China’s implementation of this ruling.

Investment in China’s audiovisual sector is highly restricted. For television production, joint ventures or cooperative firms must have a minimum capital requirement of RMB 2 million ($275,000), and foreign capital is capped at 49 percent. In February 2005, SARFT issued a circular placing further restrictions on foreign partners and requiring two-thirds of the programs of a joint venture or cooperative firm to have Chinese themes.

In August 2005, the State Council issued a directive stating that private capital cannot be used to establish or operate a news agency, newspaper, publishing house, radio station, or television station. The directive also stated that radio and television signal broadcasting and relay station, satellite, and backbone networks are closed to private capital.


Television Broadcasting and Audiovisual Services

December 19, 2009 marked the implementation deadline for the EU Directive on Audiovisual Media Services (AVMS), which amends and extends the scope of the Television without Frontiers Directive (which already covered traditional broadcasting, whether delivered by terrestrial, cable or satellite means) to also cover audiovisual media services provided on-demand, including via the Internet. European content quotas for broadcasting remain in place. On-demand services are subject to somewhat less restrictive provisions than traditional broadcasting under the AVMS Directive, which does not set any strict content quota but still requires Member States to ensure that on-demand services encourage production of, and access to, European works. This could be interpreted to refer to the financial contribution made by such services to the production and rights acquisition of European works or to the prominence of European works in the catalogues of video-on-demand services.

Member State Measures

Several EU Member States maintain measures that hinder the free flow of some programming or film exhibitions. A summary of some of the more significant restrictive national practices follows.

France: France continues to apply the EU Broadcast Directive restrictively. France’s implementing legislation, which was approved by the European Commission in 1992, imposes requirements for European programming (60 percent) and for French programming (40 percent) that exceed the requirements of the Broadcast Directive. Moreover, these quotas apply to both the regular and prime time programming slots, and the definition of prime time differs from network to network. The prime time restrictions pose a significant barrier to U.S. programs in the French market.

In addition, radio broadcast quotas that have been in effect since 1996 specify that 40 percent of songs on almost all French private and public radio stations must be Francophone.

In addition to the broadcasting quotas, cinemas must reserve five weeks per quarter for the exhibition of French feature films and this is reduced to four weeks per quarter for theaters that include a French short-subject film during six weeks of the preceding quarter. Operators of multiplexes may not screen any one film with more than two prints, or through staggered and interlocking projection techniques, in such a way as to account for more than 30 percent of the multiplex’s weekly shows. Theatrically released feature films are not allowed to advertise on television.

Italy: In July 2009, Italy implemented Broadcasting Law article 44, which reserves 50 percent of the monthly programming time for EU works. Ten percent of monthly “prime time” transmissions (20 percent for RAI) must be reserved for EU works produced during the last five years. Within this quota, 20 percent of the time must be reserved for Italian movies. For telecommunications companies that receive revenue from audiovisual content, new investment quotas stipulate that five percent of revenues from audiovisual content must be invested in the production and acquisition of EU works.

Sky Italia, a pay-television subsidiary of the Australian-American company, Newscorp, has complained about the unfair business practices of Italian media companies Mediaset and state-owned RAI, which Sky Italia says are designed to prevent it from gaining market share. Mediaset owns three of the main television channels in Italy and also offers pay television services. Sky Italia also asserts that recent government measures have had the effect of favoring Mediaset and RAI and penalizing Sky Italia. For example, Sky Italia believes that an increase in the VAT for subscription pay TV appears to specifically target its business, as it applies overwhelmingly to Sky Italia’s customer market, and a recent proposal from the government to lower advertising limits for pay-television appears to target Sky Italia business.

A court in Milan recently ruled in Sky Italia’s favor, finding that Mediaset had engaged in anticompetitive practices by refusing to air Sky Italia advertisements on its channels.

Spain: For every three days that a film from a non-EU country is screened – in its original language or dubbed into one of Spain’s languages – one EU film must be shown. This ratio is reduced to four to one if the cinema screens a film in an official language of Spain and keeps showing the film in that language during all sessions of the day. In addition, broadcasters and providers of other audiovisual media services must annually invest five percent of their revenues in the production of European and Spanish films and audiovisual programs.


Audiovisual and Communications Services

Although India has removed most barriers to the import of motion pictures, U.S. companies have continued to experience difficulty in importing film/video publicity materials and are unable to license movie related merchandise due to royalty remittance restrictions. U.S. companies also continue to face difficulties with a “Downlink Policy” issued by India in 2005. The Downlink Policy applies to international content providers that downlink programming from a satellite into India and requires that they establish a registered office in India or designate a local agent. The government reportedly implemented this rule to ensure greater oversight over programming content. However, U.S. companies note that most other countries (including the United States) do not require a license for the downlinking of programming and that India can control content through its licensed entities (such as cable companies or “Direct-to-Home” (DTH) satellite providers). Companies claim that this policy is overly burdensome, results in a taxable presence in India and should be amended to avoid the taxable presence. The United States continues to raise this issue with India’s Ministry of Information and Broadcasting, including most recently at the United States-India ICT Working Group meeting in Washington in November 2009. All pay television content providers are required to make their content available to all cable and satellite television system operators. The Telecom Regulatory Authority of India (TRAI) continues to impose price controls on cable television until it determines that other television platforms (e.g., satellite, Internet) are widely adopted. While TRAI has recently opened a public consultation on the pricing of channels carried by DTH platforms, it is not clear if it will also conduct a similar consultation for cable television.



A September 2009 law provides for screen quotas permitting no more than 60 percent of screen time for foreign films, unspecified import restrictions to achieve that quota, prohibitions against the dubbing of foreign films, and prohibitions against foreign companies distributing or exhibiting films. In December 2009, the Minister of Culture and Tourism announced its intention to re-issue a previously suspended regulation requiring all local and imported movies – both theatrical prints and home video copies – to be duplicated locally with penalties on exhibitors for failing to do so. The United States continues to work with Indonesia to try to address these concerns.


Audiovisual and Communications Services

Only selected private Israeli broadcast television channels are allowed to advertise. These channels received broadcast licenses and the advertising privilege in exchange for certain local investment commitments. Israeli law largely prohibits other broadcast channels, both public and private, from advertising. Foreign channels that air through the country’s cable and satellite networks are permitted a limited amount of advertising aimed at a domestic Israeli audience. Currently, the regulations allow foreign channels no more than 25 percent of their total advertising time to target the Israeli market.


Screen and Broadcast Quotas

Korea maintains a screen quota for films requiring that any movie screen show domestic films at least 73 days per year – a 50 percent cut from the quota of 146 days that existed until July 2006. Korea also maintains a variety of foreign content quotas for terrestrial, cable and satellite television, radio broadcasting, and Internet Protocol television. Overall, foreign programs may not exceed 20 percent of terrestrial television or radio broadcast time or 50 percent of cable or satellite broadcast time on a quarterly basis. Within those overall quotas, Korea maintains annual quotas that further limit broadcast time for foreign films to 75 percent of all films for terrestrial, cable, and satellite broadcasts; foreign animation to 55 percent of all animation content for terrestrial broadcast and 65 percent of all animation content for cable and satellite broadcasts; and popular music to 40 percent of all music content. Another quota, on a quarterly basis, limits content from any one country to 60 percent of the quota available to foreign films, animation, or music.

Restrictions on Voiceovers and Local Advertisements

The Korean Broadcasting Commission’s guidelines for implementation of the Broadcasting Act contain restrictions on voiceovers (dubbing) and local advertising for foreign retransmission channels. These prohibitions continue to be of concern to U.S. industry, as they limit the profitability of such channels in the Korean market.


Audio-Visual and Broadcasting

The Malaysian government maintains broadcast content quotas on both radio and television programming. Eighty percent of television programming is required to originate from local production companies owned by ethnic Malays and 60 percent of radio programming must be of local origin. Foreign investment in terrestrial broadcast networks is prohibited and is limited to a 20 percent equity share in cable and satellite operations. As a condition for obtaining a license to operate, video rental establishments are required to have 30 percent local content in their inventories.


Television and Radio

As in telecommunications, there are concerns that Televisa and TV Azteca, which share a duopoly in the television market, continue to exercise influence over Mexican legislative, policy, and regulatory bodies in order to prevent competition. The Radio and Television Law passed in April 2006 has been criticized by some industry representatives as catering to the interests of the dominant companies by imposing permanent disadvantages on new entrants (e.g., with respect to access to spectrum).


Audiovisual and Media Services

Singapore restricts the use of satellite dishes and has not authorized direct-to-home satellite television services. Singapore’s Media Development Authority (MDA) must license the installation and operation of broadcast receiving equipment, including satellite dishes. Satellite broadcasters that want to operate their own uplink facility must get a special license from MDA. Satellite broadcasters lacking their own facility are restricted to using one of four available uplink facilities. Distribution, importation, or possession of any “offshore” or foreign newspaper must be approved by the government. Singapore has curtailed or banned the circulation of some foreign publications and limited their circulation when it perceives defamation of the Singapore government in the publication.



ICASA maintains local content regulations for satellite, terrestrial, and cable subscription services. Foreign ownership in a broadcaster is capped at a maximum of 20 percent. In July 2009, the South African government embarked on plans to amend the country’s Broadcasting Act (1999). This follows a number of changes in the broadcasting and telecommunications sector since the Broadcasting Act came into effect, such as the migration from analog to digital television broadcasting. The DOC has announced a goal for the completion of digital migration by November 2011. Full migration should free up scarce spectrum (approximately 80-100 megahertz) that could be used to promote new technology and e-government services, since digital signals take up less bandwidth than analog signals.



The government imposes taxes on foreign movies, programs, and commercials to be shown on television, ranging from Rs 25,000 (approximately $220) for an imported English-language movie to Rs 90,000 (approximately $790) per half hour of a foreign language program dubbed in the local language Sinhala. Foreign television commercials are taxed at Rs 500,000 (roughly $4,400) per year. Rates for non-English foreign programming are higher. Government approval is required for all foreign films and programs shown on television.


Audiovisual Services

Switzerland has no limitations on the amount of non-Swiss or non-European origin programming that can be broadcast, but film distributors and cinema companies must maintain, through self-regulatory solutions, an “appropriate diversity” (not currently defined) in the products offered within a region. The government may levy a nominal development tax on movie theater tickets if the Swiss government determines the appropriate geographical diversity is not being met.

Under the supervision of the Federal Institute of Intellectual Property and the Copyright Commission, five separate Swiss collecting societies receive royalties on the sale or reproduction of artworks as well as multimedia devices. Revenues received by the collecting societies increased from SFr. 119 million ($119 million) in 1994 to a current SFr. 209 million ($209 million). A portion of these revenues are used to finance measures that support Swiss culture.


Pay Television Services

The Cable Radio and Television Law restricts foreign investment in pay television services to a total equity share of 20 percent for direct investment, or 60 percent for direct plus indirect investment. In addition, continuing caps on monthly cable television fees are overly restrictive, hamper the Taiwan public’s access to a broader range of programming, and may reduce the cable industry’s incentives to invest in expensive digitalization of Taiwan’s largely analog cable system.


Audiovisual Services

A local content requirement exists for radio and television broadcasting, although it has not been stringently enforced in most cases. In November 2009, Ukrainian customs authorities stated that it had changed its rules for customs valuation for audiovisual products. Rather than assessing duties on the underlying carrier medium, they will assess valuation on projected royalties. To further complicate matters, Ukrainian customs officials stated that this new “ruling” is supposedly retroactive three years with serious penalties applied to those situations where valuation was based on the carrier medium.


Audiovisual Services

Venezuela limits foreign equity participation to less than 50 percent for enterprises engaged in Spanish language media, including television and radio broadcasting. At least half of the television programming must be dedicated to national programming. Additionally, half of both FM and AM radio broadcasting must be dedicated to Venezuelan-produced material. In the case of music, 50 percent of the Venezuelan produced material must be traditional Venezuelan songs. There is also an annual quota regarding the distribution and exhibition of Venezuelan films, as well as a requirement that a percentage of film copying be done in Venezuelan facilities.


Audiovisual Services

Foreigners may invest in cinema construction and operation only through joint ventures with local Vietnamese partners, subject to government approval. Films are subject to censorship before public viewing, a process which is nontransparent and for which the right of appeal of a censor’s decisions is not well established.


In late 2009, Vietnam’s Ministry of Information and Communication circulated draft regulations covering pay televisions that included, among other things, a proposal to establish a government controlled agency as the only authorized entity for the purchase and distribution of pay television programming. This proposal would have had the effect of requiring all foreign programming and all foreign channels to be sold into the Vietnam market through this “single buyer” government entity. The United States and industry representatives have registered serious concerns over this proposal.

The United States will continue to monitor the development of these regulations.


Lynn Gailey. 20 March 2012.

Lynn Gailey was the Music Council's research manager up to 2012.

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