Proposal for a COUNCIL DECISION on the extension of the entitlement to co-productions as provided for in Article 5 of the Protocol on Cultural Cooperation to the Free Trade Agreement between the European Union and its Member States, of the one part, and the Republic of Korea, of the other part
Date: 2017-04-11
Institutions: Directorate-General for Communications Networks, Content and Technology, European Commission
Subjects: South Korea, audiovisual co-production, cultural cooperation, free-trade agreement, protocol to an agreement, revision of an agreement, trade agreement (EU)

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   EUROPEAN COMMISSION  Brussels, 11.4.2017  COM(2017) 182 final 2017/0081 (NLE)   Proposal for a COUNCIL DECISION on the extension of the entitlement to co-productions as provided for in Article 5 of the Protocol on Cultural Cooperation to the Free Trade Agreement between the European Union and its Member States, of the one part, and the Republic of Korea, of the other part  
 
EXPLANATORY MEMORANDUM 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

The  Free  Trade  Agreement  (FTA)  between  the  European  Union  and  its  Member  States  and 
South Korea was signed on 6 October 2010 and has been concluded in 2015 by adopting the 
Council  Decision  2015/2169  on  the  conclusion  of  the  Free  Trade  Agreement  between  the 
European  Union  and  its  Member  States,  of  the  one  part,  and  the  Republic  of  Korea,  of  the 
other  part  ("the  Decision").  The  Protocol  on  Cultural  Cooperation  (hereafter:  the  Protocol), 
concluded by the Parties  within the framework  of the FTA, established a framework within 
which  the  Parties  shall  cooperate  to  facilitate  exchanges  in  cultural  activities,  goods  and 
services, including in the audio-visual sector, and to improve the conditions governing such 
exchanges.  

This entitlement was initially established for a period of three years (from 1 July 2011 until 30 
June  2014).    It  was  renewed  for  another  three  years  until  30  June  2017  by  the  Council 
Implementing Decision 2014/226/EU as regards the extension of the period of entitlement for 
audiovisual  co-productions  as  provided  for  in  Article  5  of  the  Protocol  on  Cultural 
Cooperation  to  the  Free  Trade  Agreement  between  the  European  Union  and  its  Member 
States, of the one part, and the Republic of Korea, of the other part. It is now proposed that 
this entitlement be renewed for another three years. 

• 

Consistency with existing policy provisions in the policy area 

With the Protocol, the Parties, in conformity with their respective legislation, agreed inter alia 
to grant an entitlement for audio-visual co-productions between producers from the EU party 
and  Korea  to  benefit  from  their  respective  schemes  for  the  promotion  of  local/regional 
cultural content according to certain specific conditions.  

Such  co-productions  can  be  considered  European  works  within  the  EU  and  Korean  works 
within Korea, as long as they respect the conditions stipulated in Article 5 of the Protocol (see 
points 8(a) to (c) in particular). 

The  Creative  Europe  MEDIA  sub-programme  supports  the  development  and  distribution  of 
European audiovisual works from participating European countries.  Beneficiaries from third 
countries may participate under certain schemes if certain conditions are met.   

Certain schemes help create an environment conducive to co-productions, notably the Market 
Access  and  Training  schemes  which  fund  markets,  networking  meetings  and  workshops, 
including with Korea. In addition, the International Co-productions scheme helps  European 
and  international  co-production  partners,  including  from  Korea,  to  come  together  and 
provides indirect support for audio-visual works co-produced by international co- production 
funds.  

• 

Consistency with other Union policies 

The Protocol on Cultural Cooperation was concluded by the EU and Korea in 2015 as part of 
the Free Trade Agreement. Specifically, it was seen as an instrument to promote the United 
Nations Educational, Scientific and Cultural Organization (UNESCO) Convention of 2005 on 
the Protection and Promotion of the Diversity of Cultural Expressions. 

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The existing entitlement foresees co-productions supported by groupings of national schemes 
and funds for audio-visual productions.  The entitlement also allows the co-produced works to 
qualify as European works under the definition of European works referred to in Article 1 (n) 
(ii) in the Audio Visual Media Service Directive (AVMSD). 

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

The procedure for renewing the entitlement is provided for in Article 5 of the Protocol. The 
required steps have been taken. 

Article  5(8)  of  the  Protocol  stipulates  that  if  it  is  decided  that  the  entitlement  should  be 
renewed,  it  can  be  extended  for  another  three  year  period  and,  thereafter,  it  will  be 
automatically  renewed  for  further  successive  periods  of  the  same  duration  unless  a  Party 
terminates  the  entitlement  by  giving  notice  in  writing  of  at  least  three  months  before  the 
expiry of the period. Co-productions which predate any such termination can still benefit from 
the respective schemes for the promotion of local/regional cultural content.  

Given the specific circumstances and political sensitivity of the cooperation in this area, it is 
opportune to make a proposal for a Council Decision on the renewal of the entitlement. Such 
proposal should be based on Article 218(6) TFEU as it concerns the extension in time of the 
application of a part of an international agreement. The rules regarding the manner in which 
the  EU  institutions  arrive  at  their  decisions  are  laid  down  in  the  Treaties  and  are  not  at  the 
disposal of the Member States or of the institutions themselves. Council Decisions concluding 
international agreements cannot derogate from the Treaties as regards the procedure to extend 
in time obligations arising from international agreements which are thereby concluded. 

• 

Subsidiarity (for non-exclusive competence)  

A  second  renewal  of  the  entitlement  will  represent  an  opportunity  for  the  European 
audiovisual  industry  to  maintain  its  presence  and  further  gain  market  share,  experience  and 
knowledge in the Korean market, which is growing fast. 

Whilst  some  Member  States  have  successfully  undertaken  audiovisual  co-productions  on  a 
bilateral basis, many others still have not and therefore the entitlement at EU level still has the 
potential to allow for participation by a wider number of countries.   

The  European  Commission  has  limited  competences  regarding  production  of  films  whereas 
this  is  the  role  of  national  film  funds,  including  as  regards  international  co-productions.  
Therefore,  more  engagement  of  the  national  film  funds  will  be  necessary  in  order  to 
implement the protocol in practice. 

• 

Proportionality 

Studies and data from the European Audiovisual Observatory have shown that co-productions 
lead to higher audiences.  Since 2009, EU films in Korea (in cinemas) have achieved 5% of 
market  share  in  terms  of  audiences  and  20%  in  terms  of  releases.    Korean  films  in  the  EU 
have  achieved  1%  in  terms  of  audiences  and  2%  in  terms  of  releases.    Therefore 
implementation of the coproduction entitlement would help build market share at a time when 
the market is growing (total admissions in Korea increased by 41% since 2011). 

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The lack of implementation of the protocol so far seems due to a lack of concrete information 
about  the  incentives  available  for  co-productions  at  national  level.    Therefore      targeted 
measures  should  be  taken  (covering  access  to  funding,  training,  network  building),  both  at 
European and national level. 

Also, the success  of bilateral  co-productions shows there is the capacity  and potential to  do 
more.    In  preliminary  discussions  in  the  Audiovisual  Working  Party,  Member  States  have 
indicated  they    would  be  willing  to  collaborate  at  European  level  in  order  to  promote  co-
productions under the European protocol, drawing on best practices at bilateral level.   

The renewal of the entitlement is necessary to allow these measures to be taken. 

• 

Choice of the instrument 

. Any explicit decision of the entitlement needs a Council Decision, based on Article 218(6) 
TFEU  as  it  concerns  the  extension  in  time  of  the  application  of  a  part  of  an  international 
agreement. 

3. 

• 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Ex-post evaluations/fitness checks of existing legislation 

Not applicable. 

• 

Stakeholder consultations 

The  Protocol  foresaw  that  each  Party  establish  a  Domestic  Advisory  Group  (DAG), 
comprised  of  cultural  and  audio-visual  representatives  active  in  the  fields  covered  by  this 
Protocol. The EU DAG met on 5 September 2016 in Brussels in order to evaluate the results 
of  the  implementation  of  the  entitlement  in  terms  of  enhancement  of  cultural  diversity  and 
mutually beneficial cooperation on co-produced works.  

The  DAG  noted  the  lack  of  EU-Korea  audio-visual  co-productions  under  the  conditions 
mentioned in the Protocol, but agreed that the Protocol has nonetheless the potential of being 
a  useful  tool.  It  was  open  to  the  renewal  of  the  entitlement  for  EU-Korean  co-productions 
although  there  were  some  reservations  about  its  added  value  in  practice,  which  had  to  be 
made clearer to operators.  The Commission has disseminated general information about the 
protocol  but  more  operational  and  detailed  information  for  professionals  is  required.    The 
DAG  also  concluded  that  there  is  a  need  to  promote  the  Protocol  at  industry,  state  and  EU 
level in order to highlight the advantages.   

The entitlement to audio-visual co-productions was discussed with the EU Member States at a 
meeting  of  the  Cultural  Affairs  Committee  of  the  Council  of  the  European  Union  on  3 
October 2016. The Member States signalled their willingness to collaborate more at European 
level to promote co-productions. 

It is following the consultation of the Member States and in light of the opinion of the DAG 
that the Commission is now invited to endorse that the entitlement should be renewed. 

• 

Collection and use of expertise 

Studies and data from the European Audiovisual Observatory regarding co-productions have 
been referred to. 

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• 

Impact assessment 

Not applicable. 

• 

Regulatory fitness and simplification 

Not applicable. 

• 

Fundamental rights 

Not applicable. 

4. 

BUDGETARY IMPLICATIONS 

None. 

5. 

OTHER ELEMENTS 

• 

Implementation plans and monitoring, evaluation and reporting arrangements 

The  Commission  will  continuously  monitor  the  implementation  of  the  audiovisual  co-
production  entitlement,  drawing  on  data  from  the  European  Audiovisual  Observatory  and 
from industry, in particular as regards the animation sector.   

Once  a  year  a  Cultural Cooperation  Committee  will  meet  between  the European  Union  and 
the Member States on one  side and the Republic of Korea  on the other to  monitor progress 
and discuss challenges and opportunities.     

• 

Explanatory documents (for directives) 

Not applicable. 

• 

Detailed explanation of the specific provisions of the proposal 

The entitlement will be extended for another three years, until June 2020. The entitlement is 
set out in Article 5 of the Protocol, as follows. 

For  the  purposes  of  this  Protocol,  a  co-production  means  an  audiovisual  work  produced  by 
producers  of  both  Korea  and  the  EU  Party  into  which  those  producers  have  invested  in 
accordance with the terms of this Protocol. 

The  Parties  shall  encourage  the  negotiation  of  new  and  implementation  of  existing  co-
production  agreements  between  one  or  several  Member  States  of  the  European  Union  and 
Korea.  The  Parties  reaffirm  that  the  Member  States  of  the  European  Union  and  Korea  may 
grant  financial  benefits  to  co-produced  audiovisual  works  as  defined  in  relevant  existing  or 
future  bilateral  co-production  agreements  to  which  one  or  several  Member  States  of  the 
European Union and Korea are parties. 

The  Parties,  in  conformity  with  their  respective  legislation,  shall  facilitate  co-productions 
between  producers  from  the  EU  Party  and  Korea,  including  through  entitlement  for  co- 
productions  to  benefit  from  respective  schemes  for  the  promotion  of  local/regional  cultural 
content. 

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Co-produced  audiovisual  works  shall  be  entitled  to  benefit  from  EU  Party  scheme  for  the 
promotion of local/regional cultural content referred in the form of qualification as European 
works  in  accordance  with  Article  1(n)(i)  of  Directive  89/552/EEC  as  amended  by  Directive 
2007/65/EC,  or  by  its  subsequent  amendments  for  the  purposes  of  the  requirements  for  the 
promotion  of  audiovisual  works  as  provided  for  by  Articles  4.1  and  3i.1  of  Directive 
89/552/EEC as amended by Directive 2007/65/EC, or by its subsequent amendments. 

Co-produced  audiovisual  works  shall  be  entitled  to  benefit  from  Korean  schemes  for  the 
promotion  of  local/regional  cultural  content  referred  to  in  paragraph  3  in  the  form  of 
qualification  as  Korean  works  for  the  purposes  of  Article  40  of  the  Promotion  of  Motion 
Pictures  and  Video  Products  Act  (Act  No.  9676,  May  21,  2009),  or  its  subsequent 
amendments and of Article 71 of the Broadcasting Act (Act No. 9280, Dec. 31, 2008), or its 
subsequent  amendments  and  Notice  on  Programming  Ratio  (Korea  Communications 
Commission Notice No. 2008-135, Dec. 31, 2008), or its subsequent amendments. 

The entitlement for co-productions to benefit from the respective schemes for the promotion 
of local/regional cultural content shall be granted on the following conditions: 

(a)  The  co-produced  audiovisual  works  are  realised  between  undertakings  which  are  owned 
and continue to be owned, whether directly or by majority participation, by a Member State of 
the  European  Union  or  Korea  respectively  and/or  by  nationals  of  a  Member  State  of  the 
European Union or nationals of Korea respectively; 

(b)  The  representative  director(s)  or  manager(s)  of  the  co-  producing  undertakings  have  the 
nationality  of  a  Member  State  of  the  European  Union  and  Korea  respectively  and  can 
demonstrate their domicile therein; 

(c)  Participation  of  producers  from  two  Member  States  of  the  European  Union  will  be 
necessary for each co-produced audiovisual work, other than animation works.  With respect 
to  animation  works  participation  of  producers  from  three  Member  States  of  the  European 
Union will be necessary. The proportion of financial contribution of a producer or producers 
of each Member State of the European Union shall be no less than 10 percent; 

(d) The minimum respective financial contributions to a co-produced audiovisual work other 
than animation works, of the producers of the EU Party (taken together) and the producers of 
Korea  (taken  together)  may  not  be  less  than  30  percent  of  the  total  production  cost  of  the 
audiovisual work. With respect to animation works this contribution may not be less than 35 
percent of the total production cost; 

(e)  The  contribution  of  each  Party’s  producers  (taken  together)  includes  effective  technical 
and artistic participation and a balance is ensured between the two Parties’ contributions. In 
particular,  in  co-produced  audiovisual  works  other  than  animation  works  the  technical  and 
artistic contribution of each Party’s producers (taken together) shall not vary by more than 20 
percentage  points  compared  to  their  financial  contribution  and  cannot  in  any  case  represent 
more  than  70  percent  of  the  overall  contribution.  With  respect  to  animation  works  the 
technical and artistic contribution of each Party’s producers (taken together) shall not vary by 
more  than  10  percentage  points  compared  to  their  financial  contribution  and  cannot  in  any 
case represent more than 65 percent of the overall contribution; 

(f) Participation of producers from third countries that have ratified the UNESCO Convention 
in a co-produced audiovisual work is accepted to a maximum of 20 percent, where possible, 

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of  the  total production costs and/or  the technical  and  artistic  contribution  to  the  audiovisual 
work. 

These  conditions  aim  to  ensure  the  European  character  of  the  co-productions,  by  having  at 
least  two  Member  States,  and  to  ensure  a  fair  balance  in  the  costs  and  benefits  of  the  co-
production for the parties.  Therefore there is a minimum financial contribution for the parties 
whilst  the  technical  and  artistic  contribution,  which  consists  of  professional  inputs  and 
therefore  represents  employment  opportunities,  should  not  be  10%  more  than  the  financial 
contribution.  The requirements for animation  works are higher due to the sensitivity of the 
sector, which requires more technical inputs and where cost differentials between the EU and 
Kore could be more significant. 

The Parties reaffirm that the entitlement for co- productions to benefit from their respective 
schemes for the promotion of local/regional cultural content ensures reciprocal benefits, and 
that the co-productions fulfilling the criteria are awarded the status of European/Korean works 
respectively without any additional conditions. 

The entitlement for co-productions to benefit from the respective schemes for the promotion 
of local/regional cultural content is established for a period of three years 

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2017/0081 (NLE) 

Proposal for a 

COUNCIL DECISION 

on the extension of the entitlement to co-productions as provided for in Article 5 of the 
Protocol on Cultural Cooperation to the Free Trade Agreement between the European 
Union and its Member States, of the one part, and the Republic of Korea, of the other 
part 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 167 (3) in conjunction with Article 218 (6) thereof, 

Having regard to the proposal from the European Commission, 

Having regard to the consent of the European Parliament 

Whereas: 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

(7) 

On 1 October 2015 the Council adopted the Decision 2015/2169 on the conclusion of 
the Free Trade Agreement between the European Union and its Member States, of the 
one part, and the Republic of Korea, of the other part ("the Decision").  

The  Agreement  contains  a  Protocol  on  Cultural  Cooperation  ("the  Protocol")  which, 
according  to  Article  1  thereof,  sets  up  the  framework  within  which  the  Parties 
cooperate  for  facilitating  exchanges  regarding  cultural  activities,  goods  and  services, 
including inter alia, in the audio-visual sector. Pursuant to Article 5(4) of the Protocol, 
the Parties of the Protocol shall facilitate co-productions between producers from the 
EU Party and Korea, including through entitlement for co- productions to benefit from 
respective  schemes  for  the  promotion  of  local/regional  cultural  content  ("the 
entitlement"). 

Pursuant to Article 5(8)(b) of the Protocol, following the initial period of three years 
the entitlement will to be renewed for a duration of three years and shall thereafter be 
automatically  renewed  for  further  successive  periods  of  the  same  duration,  unless  a 
Party  terminates  the  entitlement  by  giving  notice  in  writing  at  least  three  months 
before the expiry of the initial or any subsequent period. .  

It seems opportune to propose an explicit decision to renew the entitlement  taking into 
account  the  specific  circumstances  and  political sensitivity  of  the  cooperation  in  this 
area.  

The Domestic Advisory Group provided for in Article 3(5) of the Protocol has given a 
favorable  opinion  on  the  extension  of  the  period  of  entitlement,  as  provided  for  in 
Article 5(8) of the Protocol.  

The Commission is of favourable opinion to renew the entitlement. 

This  Decision  should  not  affect  the  respective  competences  of  the  Union  and  the 
Member States. 

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HAS ADOPTED THIS DECISION:  

Article 1 

The renewal of the entitlement for audio-visual co-productions to benefit from the respective 
schemes of the Parties for the promotion of local/regional cultural content, as provided for in 
Article 5 of the Protocol, is hereby approved for a duration of three years, from 1 July 2017 to 
30 June 2020. 

Article 2 

The President of the Council shall designate the person empowered to proceed, on behalf of 
the European Union, to inform the Republic of Korea as provided for in Article 5(8)(b) of the 
Protocol, in order to express the consent of the European Union to renew the entitlement for 
audio-visual  co-productions  to  benefit  from  the  respective  schemes  of  the  Parties  for  the 
promotion of local/regional cultural content, as provided for in Article 5 of the Protocol, for a 
duration of three years, from 1 July 2017 to 30 June 2020. 

This Decision shall enter into force on the date of its adoption. 

Done at Brussels, 

Article 3 

For the Council 
The President 

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