The tv programming quota issue has reared its ugly head again in Washington. While some European execs had thought U.S. anger over European quotas limiting American tv imports had subsided, latest government actions to monitor countries that implement them show that the problem is high on the political agenda of the Bush administration.

U.S. Trade Representative Carla Hills placed the 12 European Community countries and Australia on a “priority watch list” April 26 to encourage them to modify or scrap altogether limits on U.S. programming in their territories.

Jack Valenti, head of the Motion Picture Export Assn. of America, told VARIETY that the tv quota problem will not just go away, adding that he will be discussing modifications to the EC-wide quotas during the Cannes film festival.

“Hills’ action puts our government on record as saying it’ll not stand for these kinds of restrictions to fair trade,” Valenti said. “In time, these quotas will bite, wound or bleed those that adopt them.”

Hills’ action is part of a broader U.S. effort to notify countries that trade barriers of any kind, violations of copyright and outright piracy will not be tolerated by the Bush administration.

Valenti admitted that he’d have his work cut out for him in convincing Europeans that their quotas, now enshrined in an EC-wide directive, should be ditched. But he said he was certain “there were more than a few relevant people in Europe who find such quotas unsuitable.”

Valenti pointed to the fact that Britain, which has for many years applied an informal 14% quota for non-EC programming, would begin allowing some 35% to 40% of total airtime to be supplied by non-EC sources. That doesn’t go far enough, Valenti said, but it’s a move in the right direction.

Valenti accused the French of having a particularly artificial, counterproductive set of quotas. Some 60% of primetime programming must be of EC origin, and most co-productions must be shot in French.

Although the time frame is unclear, the U.S. government reserves the right to take more determined action against countries on the watch list if things don’t improve. Retaliatory measures could lead, sources say, to a tit-for-tat quota, or even a ban on foreign-produced shows in the U.S. Valenti refused to speculate on what those measures might be.

The EC directive effectively limits U.S. programming to not more than 50% of airtime in member countries. Australia currently requires that 40% of its tv programming be locally produced, and that percentage will rise to 50% next year.

An EC official who declined to be identified last week called the watch list “a step backwards. The EC directive, in our opinion, is not detrimental to American trade or interests. There is no reason to put us on a watch list. We’ll try to arrange consultations with her [Hills] to explain this, yet again.”

Another source, Thames TV Intl. head Mike Phillips, said he thought Hills’ pronouncements on the issue have little impact in Europe. “The balance of trade is so overwhelmingly in favor of the U.S. that it seems farfetched to imagine any retaliation.”

Roughly 20% to 40% of Euro schedules is filled with U.S. programming, whereas EC programming, almost exclusively British, makes up a small percentage of shows on U.S. tv.

“As far as most of us can see, the quotas have no effect on sales of U.S. programming over here. Were the Americans to slap a quota on foreign shows in the U.S., that too would have no effect – there are so few to begin with,” adds Phillips.

Says Vivien Wallace of Granada TV Intl.: “In my view it’s extremely difficult to evaluate what an American company would lose because of quotas.”

She suggests that any slowdown in acquisition of U.S. product might have more to do with the fact that the Europeans are providing their own audiences with more relevant material than because they are hamstrung by the directive.

At the MIP TV Market two weeks ago in Cannes, many Americans were struck by the fact that the Europeans do seem to be getting their own programming act together. They don’t seem to be so enamored of U.S. programming anymore, and co-production has replaced imports as the main center of activity. (Co-productions are, by and large, not subject to quota restrictions.)

While many Europeans say they are opposed in principle to protectionist quotas, they consider that the leeway the directive still gives U.S. sellers in getting their shows on air in Europe is liberal.

Foreign sales of U.S. tv and film product bring in some $3.5 billion each year to the U.S. industry, per the MPEA.

Europeans often retort that the U.S. operates its own unspoken, uncodified quota against foreign-made shows. Were these to be banned in America, it would in effect only hurt Britain, which supplies probably 90% of all foreign-produced shows in the States.

Americans respond that its market forces, not regulations, keep out foreign-produced shows.

“The import of foreign, mainly British shows, has fueled the growth of basic cable in this country and is the mainstay of several of PBS’ most popular strands. Were it ever to come to a ban on foreign imports here, they’d be the only ones hurt,” says Ron Devillier, head of Devillier Donegan distribbery. Company reps the U.K.’s Channel 4 and ABC Australia programming in the U.S.

Bruce Alderman in Paris contributed to this report

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