City National Bank recently hosted a Trade Policy forum and one of the panelists was Mickey Kantor – former U.S. Trade Representative in the Clinton administration. Mickey told a fascinating story about when he was negotiating the establishment of the World Trade Organization in 1994. Going into the early morning hours in Geneva a host of issues had been debated and resolved, when one final issue was presented as a stumbling block.
France insisted that the U.S. limit the number of American movies shown in France each year and leave movies out of the trade negotiations. Clearly that would be unpopular with the U.S. entertainment industry. Kantor put in a call to President Clinton, who directed him to call Lew Wasserman, a studio executive who was a key player at the time in Hollywood business affairs. Lew's response: “Mickey, let me tell you something. Technology is going to override all of this. Don't worry one thing about the French. Make your deal and give my regards to the president.”
We wanted to see what has happened since Lew's prediction. From a high level, U.S. films have certainly maintained market share in French cinema: During the last 10 years, American films have commanded roughly half the ticket sales in France on average, with French films averaging more like 35 to 45 percent of the French market.
In terms of Lew's prediction about how technology would override negotiated trade agreements, we've certainly seen that play out in all the new entertainment channels that have arisen in recent years. In fact, there was a clash between old and new this yearat the Cannes Film Festival. Netflix wanted to enter some of its titles into the competition but since they do not have French theatrical releases, the Netflix entries were disallowed. This raises questions about the very nature of cinema itself: Is it a shared communal experience, or does it include high-quality content that stands alone, regardless of distribution?
Our View: Clearly Lew Wasserman had the good sense and vision to know that technology was going override any trade agreement, particularly one from the early '90s. The reason Mickey Kantor related the story was to illustrate the need to renegotiate NAFTA in light of how the world has changed as a result of technology since it was signed in 1993.
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