Motion Picture Association (MPA) – Written Evidence (JTN0026)

The MPA supports the shared UK and Japanese commitment to ensuring a UK-Japan free trade agreement (FTA) is “as ambitious, high standard and mutually beneficial” [1] as the EU-Japan Economic Partnership Agreement (EPA). We welcome in particular the UK’s desire to build on that EPA, securing additional benefits for UK businesses trading with Japan[2]. With this in mind, MPA is pleased to provide input to the IASC’s inquiry regarding possible areas of additionality that reflect this ambitious and comprehensive approach to the UK’s future trade relationship with Japan. Noting the IASC’s priorities, our submission will focus on three aspects of the negotiations: trade in audiovisual (AV) services, intellectual property (IP) and digital commerce.

About the MPA

1.    On behalf of our member companies - Walt Disney Studios Motion Pictures, Netflix Studios, LLC, Paramount Pictures Corporation, Sony Pictures Entertainment Inc., Universal City Studios LLC, and Warner Bros. Entertainment Inc. - the MPA works globally to advance policies that support creators, protect content and foster a thriving creative economy. The MPA regularly engages on policy advocacy in the Asia-Pacific region, including Japan.

2.    As a major part of the AV sector in the UK, the MPA represents companies that produce and distribute some of the highest quality and most popular creative content. Technological innovation lies at the heart of film and high-end television production, from set to screen. The UK boasts some of the world’s most advanced facilities and expertise for digital production and post-production, as well as world-class digital distribution services, from cinemas to a growing wealth of online services, including those of MPA members.

3.    MPA member companies are keen to work with the UK Government to maintain this country’s status as a world-leading hub for film and television[3] beyond the UK’s exit from the EU and the EU’s single market in broadcasting. The UK’s success has been achieved to date partly through access to this single market, but also through a highly supportive domestic environment for content production and AV services that combines access to high quality technical skills, targeted fiscal incentives, an open market, and a robust copyright framework. 

4.    These last two elements - a robust copyright framework and open market - are especially critical in creating an environment conducive to investment and growth and particularly relevant to trade policy consultations. The proliferation of illegal and infringing content, particularly that which is available online via the internet, has a significant negative impact on our industry and on UK consumers. Its prevention must therefore be considered as part of every FTA negotiation. Further, the UK should seek from its trading partners reciprocity in market access across the life-cycle of film and television content.

AV services: an opportunity

5.    The UK Government’s strategic approach[4] to the UK-Japan FTA, published on 13 May 2020, sets out its ambitions for trade in services negotiations with Japan, highlighting the need to (i) secure ambitious commitments on market access; (ii) secure best-in-class rules for all services sectors; and (iii) ensure certainty for UK services exporters. The MPA supports this approach, noting that Japan is an important market for the AV sector. According to the BFI’s 2019 Statistical Report, Japan was one place ahead of the UK as the world’s third largest filmed entertainment market in 2018 ($7.9 billion), behind the US and China, and is set to remain so in 2023[5].

6.    Furthermore, Japan has taken some AV services commitments in the World Trade Organisation (WTO), specifically film production and distribution services, reflecting its export interests, and has taken robust commitments for AV services and investment in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

7.    In contrast, Chapter 8 (Trade in Services) of the EPA does not include AV services in its scope. However, international trade in AV services represents a significant growth opportunity for the UK creative sectors. A 2018 study by independent economists Oliver & Ohlbaum Associates[6] found that while the UK domestic market is maturing, fast rising international sales could more than double the sector’s overall rate of GVA growth, hitting as much as 8 per cent a year by 2025, with employment growing at similar levels. The UK should therefore pursue an ambitious, export-oriented trade policy for AV services in any future trade agreement with Japan that not only builds on, but improves the current EPA. This will help ensure the UK’s continued access to this, and other, growing and diverse markets.

8.    There are particular features of both the UK and Japanese media landscapes that each side will normally seek to confirm or clarify as being consistent with any FTA.  This includes, for the UK, the public service broadcasting (PSB) model. MPA members benefit from the UK’s existing, open UK AV sector ecosystem and consider the role of UK PSB within that ecosystem to be vitally important[7]. Indeed, MPA members work in close partnership with UK public service broadcasters.

9.    The UK Government has made clear in its strategic approach to a UK-Japan FTA that it aims to “protect the right to regulate public services, including…public service broadcasters”.  MPA strongly supports that objective. The appropriate way to confirm this and also advance the UK’s global offensive interests in securing market access for its film and television sector and advancing export-oriented trade is through the use of so-called “non-conforming measures” (NCMs). 

10.                        In such a scenario, we would expect that the UK and Japan would both wish to schedule NCMs for certain sensitive aspects of AV services and investment regulation in order to clarify the consistency of their respective policies with the agreement, or where they foresee additional regulation. The MPA would support appropriately worded NCMs to accommodate distinct UK and Japanese government policies related to the AV sector, including the UK PSB model.

11.                        Notably, during the Trans-Pacific Partnership (TPP) negotiations Japan did reserve the right to discriminate in new services not technically feasible when the TPP entered into force. This measure was carried forward into the CPTPP and undercuts one of the fundamental benefits of the NCM or “negative list” structure by creating uncertainty about the application of trade rules to new business models. The UK should resist such a measure in any future UK-Japan agreement.

12.                        In addition, Japan’s WTO commitments do not reflect the importance of Japan’s pay-television or OTT markets. A UK-Japan agreement that secures obligations across the life-cycle of film and television content would also create a meaningful opportunity for the UK creative industries.

Intellectual property (IP)

13.                        Whilst noted that Japan is already party to all of the major IP-related agreements administered by WIPO and, through the EPA, is committed to promoting IP awareness, we believe that any future UK-Japan FTA should include commitments reflecting the UK’s own high standards of copyright protection and enforcement, in particular where these would enhance the EPA.

14.                        The most important of these standards today include the following:

• provisions that account for technological changes, including full implementation of the WIPO Copyright Treaty and the WIPO Performances and Phonogram Treaty (jointly referred to as the "Internet Treaties"[8]), which set out international norms that aim to prevent unauthorised access to, and use of, creative works on the Internet or other digital networks.     
• provisions that reflect the global consensus on minimum standards of protection, including, for example, provisions setting out the duration of protection;
• provisions that enshrine the concept that limitations and exceptions to copyright are confined to those that are consistent with the longstanding “3-step test”; 
• provisions affording effective legal protection of technological measures elected to be used by copyright owners to control access to and copying of their works (TPMs), such as, for example,  the technological measures used to control access to direct-to-consumer services operated by MPA members or licensees;
• comprehensive obligations regarding copyright enforcement with meaningful criminal penalties and civil remedies (including, for example, statutory damages, “secondary infringement” liability, criminal liability for aiding and abetting, criminal remedies for illegal recording of films in theatres, and criminal remedies addressing pay-TV piracy and signal theft);
• enforcement measures addressing online infringement that mandate deterrent civil and criminal remedies; provide legal incentives for online service providers to cooperate with right holders; and ensure stay-down of pirated content in full respect of relevant rights and the rule of law.

15.                        The spread of internet-based film and television piracy in Japan, including rampant piracy of Japanese anime and manga content, harms both the UK and Japanese audiovisual sectors’ alike. Primarily infringing websites have proliferated in Japan over the years with few effective remedies in place.  The study released on 30 October 2019 by Photonic System Solutions (PSS), entitled Study Benchmarking and Tracking Online Film & TV Piracy in Japan[9], is a sobering reminder that growth in fragile creative and IP industries cannot be taken for granted or assumed.  It must be nurtured and protected. The PSS study finds that:

-          at its height in March 2018, there were 640 million monthly visits to 624 piracy sites in Japan and that, today, there are still 340 million monthly visits

-          users today are infringing copyright at a rate of 40 million hours every month and that the time spent per user is increasing.

16.                        This piracy study demonstrates that government will and rule of law are powerful forces in Japan. The demise of three popular piracy anime and manga sites in April 2018 can be said to be the result of coordinated Japanese government and industry action. However, there are rogue website and online operators – most of whom are outside of Japan – that are still robbing Japanese and UK creators of their livelihoods and there are few tools in Japan’s current toolbox to address this. The continuation and increase in time spent per user infringing tells us that there is more to be done.

17.                        Siteblocking, a particular form of no-fault injunctive relief successfully used in the UK and multiple UK trading partners, to reduce online copyright infringement, is an extremely effective tool for dealing with this problem. In fact, it has become a common practice in the UK for rightholders to use Section 97A of the Copyright Design and Patents Act to secure court orders requiring internet intermediaries to withdraw services from structurally infringing sites.

18.                        Historically, some Japanese commentators and government agencies have taken the view that siteblocking violates the Telecommunications Business Act and the Japanese Constitution guarantee of secrecy of communications. This view is now evolving based on the latest scholarship and data showing that siteblocking is effective and need not impinge on privacy rights.

19.                        In this regard, the Japanese government took the significant step on 5 June 2020 of enacting legislation to Revise Part of the “Copyright Law” and the “Law Concerning Special Provisions on the Registration of Program Works”. The law clarifies liability against link sites, as well as prohibiting the unauthorised downloading of still images, with the former entering into force 1 October 2020 and the latter on 1 January 2021. Other remedies, such as the voluntary establishment of an “infringing website list” (IWL) to choke digital advertising revenues, have had some ameliorative effect. It is clear that these are not  substitutes for more stringent measures to deal with largely foreign-based and operated piracy sites harming the industry in Japan.

Digital Commerce

20.                        The UK film and television industry has fully embraced all means of digital technology to produce and distribute its content. The industry has helped drive a technological revolution through the development and commercialisation of digital production, editing, and distribution; digital 3-D and IMAX formats; digital cinema; and Blu-ray DVD technology. Digital motion picture technology and products enable creators to produce special-effects and cinematic experiences impossible just a decade ago, while making the content more secure, and lowering the costs of replication and distribution, especially for smaller independent film makers.

21.                        Consumers around the world are able to access a vast array of legitimate movies and television programming through an increasing number of licensed digital services.  There are more than 450 legitimate online services around the world providing high-quality video on-demand content to consumers. It is this high-quality content that drives the success of these digital platforms and drives further technological developments to respond to this demand. 

22.                        As a result, the UK’s film and television industry depends on strong rules and practices for digital trade and the UK will find the Government of Japan a strong partner in this regard as Japan is a leader in global digital trade discussions.

23.                        Establishing disciplines that recognise the integral role of content in the online ecosystem, as discussed in the above IP and services sections, is critically important to facilitating legitimate digital trade. Also important are provisions to ensure the free flow of data between markets and to prevent localisation barriers. Any exceptions to the digital trade provisions, including data flows, should be narrowly tailored and consistent with GATS Article 14.  Finally, a UK-Japan agreement should ensure non-discrimination of digital products and prohibit the assessment of duties on digital products delivered by electronic commerce.

Goods

24.                        MPA Members also export a range of goods, in the form of filmed entertainment products, from the UK for exhibition in theatres and sale and rental at retail establishments. We therefore welcome agreements that provide for zero tariffs, taxes, and fees on digital cinema packs, the hard drives used to distribute films to theatres, and DVDs and other content storage devices. In the event that tariffs or other charges can be applied to AV media, agreements should stipulate that they must be calculated on the basis of the value of physical carrier media. Under no circumstances should royalties figure in the calculation of duties.

7 September 2020