This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 MADRID 002795 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EUR/WE AND EB/TPP/MTA/IPC; PLEASE PASS TO USTR 
SANFORD; COMMERCE FOR CALVERT 
 
E.O. 12958: N/A 
TAGS: ETRD KIPR ECON KPAO SP
SUBJECT: SPAIN TOYS WITH IDEA OF CULTURAL EXCEPTION 
 
 
¶1. (SBU) SUMMARY: Spain's new Minister of Culture has vowed 
to find ways to help the Spanish film industry.  The press 
has seized on her sometimes over the top remarks and is 
reporting that the GOS is pursuing a policy of cultural 
exception along the lines of the French model.  A high-level 
Ministry of Culture official and contacts in the film 
industry say that press stories are not accurate and that the 
ministry is looking for innovative, but non-discriminatory 
measures to help Spanish film makers.  To this effect, on 
July 9 the Spanish Council of Ministers approved implementing 
legislation that will allow the GOS to collect funds from 
television operators to support the Spanish film industry. 
The Ministry of Culture official in charge of audiovisual 
industry policy has pledged to work with the USG and keep us 
informed of any policies being considered that may impact on 
U.S. industry. END SUMMARY 
 
¶2. (SBU) Since Spain's new socialist (PSOE) government named 
Carmen Calvo as Minister of Culture in May 2004, she has 
shown a knack for breaking new ground and unabashedly 
speaking her mind, usually before consulting within the PSOE 
government or within her own ministry.  In several short 
months she has already had to walk back a number of 
announcements once she discovered that her ministry did not 
have competency to do what she had promised. (One notable 
example was her promise to lower value added tax for CDs and 
DVDs only to discover that the tax levels are determined in 
Brussels.)  Nonetheless, we have watched with special 
interest her pronouncements on her intention to bolster 
Spain's cinematography industry.  At a number of film 
industry events, she has repeatedly said that part of her job 
is to bolster the Spanish film industry and ensure that the 
bigger players in the market (read U.S. film studios) don't 
push the Spanish industry to the brink.  In a trip to Brazil 
earlier this month, she signed an accord pledging to work 
with Brazil, Algeria, Austria, Mali and Mexico to pursue 
special treatment for cultural diversity in the World Trade 
Organization. 
 
¶3. (U) Not surprisingly, since Calvo took office, Spanish 
newspapers have carried numerous articles suggesting that the 
new PSOE administration has decided to pursue a policy of 
cultural exception similar to France.  Some articles cast it 
in terms of a battle to protect the Spanish film industry 
from its U.S. counterpart.  While no one seems to have an 
especially clear idea of what a policy of cultural exception 
consists of, uncertainty has not prevented journalists and 
pundits alike from expounding on a variety of policies they 
believe the government is or should be considering.  One 
potential measure mentioned is expanding the screen quota 
beyond the current permitted ratio in Spain of one European 
film for every three foreign films.  Another idea is a 
dubbing tax which would be charged to theaters for carrying 
dubbed films.  Consumer groups in Spain immediately expressed 
their opposition to this idea as they expect that any tax 
will be passed on to consumers in the form of higher prices 
for foreign films.  Other stories mention dubbing licenses, 
measures that were in place many years ago but removed by a 
previous PSOE administration 8 years ago. 
 
¶4. (U) On July 8 we met with Manuel Perez Estremera, newly 
named Director General for the Institute of Cinematography at 
the Ministry of Culture.  He reports directly to Minister 
Calvo.  We expressed our concern with the current buzz 
suggesting that Spain was looking at following the French 
lead and pursuing a policy of protection for its film 
industry.  Perez lamented the inaccuracy and in some places 
the complete fiction included in recent press stories.  He 
agreed that Calvo is determined to work in the best interests 
of the Spanish film industry, however he brushed aside the 
suggestions of expanded screen quotas or dubbing taxes or 
licenses.  He underscored that these measures have not even 
been discussed in the ministry. 
 
¶5. (U) At present, the Ministry's main objective is to 
provide Spanish film makers with extra funding.  Since 1999, 
a Spanish law transposing the EU Televisions without 
Frontiers Directive has required that Spanish television 
operators pay 5% of earnings into a special fund to finance 
European film makers.  60% of the funds collected are 
supposed to go to the Spanish industry.  Since 1999, the law 
has been applied in a haphazard way.  Television stations 
have paid voluntarily, but it is estimated that they have not 
paid the half of the sum required by law.  Without 
implementing legislation, the GOS has been unable to enforce 
the law.  According to Isabel Hernandez, Deputy Director 
General for Audiovisual Issues at the Ministry of Industry, 
the previous Partido Popular (PP) administration had been 
meeting with stakeholders and discussing how to implement the 
law for four years.  The PSOE administration decided to work 
off the previous administration's foundation and completed 
work on the implementing legislation in three months.  Two 
days after our meeting with Perez, the Council of Ministers 
approved the implementing legislation.  It entered into force 
on July 21.  The GOS will now have an accounting system and 
infrastructure to give them the ability to track and collect 
the funds. 
 
¶6. (U) In our meeting with Perez, he stressed that the 
Spanish are not interested in getting into a fight with the 
U.S. industry.  He said their intention is to study why the 
Spanish industry has not been successful and to look for 
innovative ways to help the industry.  He underscored that 
they will look at measures that are not discriminatory and 
the process will be transparent.  "If we are looking at 
measures that would affect the U.S. industry, we would 
contact you and discuss it with the Embassy and the Motion 
Picture Association." Perez went on to say that there are a 
number of areas where the GOS  and USG have the same 
interests and said he would like to deepen collaboration with 
the United States on piracy. 
 
¶7. (SBU) Comment:  The summertime is a time when the Spanish 
press and government bureaucrats often release trial balloons 
in newspapers in an effort to gauge public reaction to their 
ideas.  This, combined with a minister who has a tendency for 
speaking off the top of her head and without basis, has 
caused the cultural exception idea to flourish, at least in 
the press.  Perez, on the other hand, is not an impulsive man 
and has a reputation for consensus-building.  What is unclear 
is how much power he has and if he will be able to rein in 
the minister if she seizes on a measure that discriminates 
against foreign films.  For the time being, we do not see 
that there is any cause for alarm.  However, we will continue 
to express our interest in this area to our contacts in the 
Ministries of Culture and Industry. 
MANZANARES