Proposal for a COUNCIL DECISION on the extension of the entitlement for 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: 2020-03-05
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, 5.3.2020  COM(2020) 92 final 2020/0039 (NLE)  Proposal for a COUNCIL DECISION on  the extension of the entitlement for 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 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. 

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).  

This entitlement was established for a period of three years (from 1 July 2011 until 30 June 2014) 
and it was renewed twice for another three years. The first renewal ran until 30 June 2017, while 
the current entitlement runs until 30 June 2020.  It  is now proposed that  the Council makes a 
statement on the entitlement’s renewal  for another three years.  

• 

Consistency with existing policy provisions in the policy area 

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, 
including co-productions with Korea under certain conditions.  

• 

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) (iii) 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.  

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  statement  of  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    for  making  a  statement  of  the  extension  in  time  obligations  arising 
from international agreements which are thereby concluded. 

• 

Subsidiarity (for non-exclusive competence)  

The  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.    In  2017  European  films  in  Korea  make  up  17%  of  the  films  on 
release,  but  only  5%  of  cinema  admissions.  The  gap  between  the  cinema  releases  and  the 
admissions shows that there is a big unexploited potential and better collaboration could help 
tap into this potential. The co-production entitlement could create more opportunities for the 
European audiovisual industry in  terms  of export and promotion  to  Korea and a  gateway to 
Asia.  Therefore  implementation  of  the  coproduction  entitlement  would  help  build  market 

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share at a time when the market is growing (the general box office trend in Korea increased 
by 23% between 2013 and 2017).  However, the presence of Korean films in the EU is quite 
limited (the figures for 2014-2018 show that the share of films on release is  0,4% while the 
share of admissions is 0,1%).  

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  their  willingness  to  collaborate  at  Union  level  in  order  to  promote  co-productions 
under the  Protocol, drawing on best practices at bilateral level.   

• 

Choice of the instrument 

The  appropriate  instrument  for  any    explicit  statement  of  renewal  of  the  entitlement  is  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 foresees that each Party shall 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 17 October 2019 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. Stakeholders also contributed to the 
consultation by sending their written comments.   

Overall, stakeholders  noted the lack of EU-Korea audio-visual co-productions under the 
conditions mentioned in the Protocol andthat the Protocol has nonetheless the potential of 
being a useful tool. They were open to the renewal of the entitlement for EU-Korean co-
productions althouh there were some reservations about its added value in practice, which had 
to be clarified. Stakeholders also concluded that there is a need to promote the Protocol at 
industry, state and EU level in order to highlight the advantages.  

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 have shown that co-productions 
lead to higher audiences.  

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Compared  to  other  export  markets,  in  2017  European  films  in  Korea  make  up  17%  of  the 
films on release, but only 5% of cinema admissions. The gap between the cinema releases and 
the admissions shows that there is a big unexploited potential and better collaboration could 
help tap into this potential. The co-production entitlement could create more opportunities for 
the European audiovisual industry in terms of export and promotion to Korea and a gateway 
to  Asia. Therefore implementation of the coproduction entitlement would help  build market 
share at a time when the market is growing (the general box office trend in Korea increased 
by 23% between 2013 and 2017).  However, the presence of Korean films in the EU is quite 
limited (the figures for 2014-2018 show that the share of films on release is  0,4% while the 
share of admissions is 0,1%).  

• 

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 2023. The entitlement is 
set out in Article 5 of the Protocol, as follows: 

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“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. 

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  amendments1  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  amendments2.  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; 

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The  most  recent  amendment  was  Directive  2018/1808/EU  amending  Directive  2010/13/EU  on  the 
coordination  of  certain  provisions  laid  down  by  law,  regulation  or  administrative  action  in  Member 
States concerning the provision of audiovisual media services (Audiovisual Media Services Directive) 
in view of changing market realities, OJ L 303, 28.11.2018 
Idem 1; the revised AVMSD strengthens the promotion of European works by requiring in Article 13.1 
that video on demand secure at least 30% of European works in their catalogue and ensure prominence 
of those works. 

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

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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2020/0039 (NLE) 

Proposal for a 

COUNCIL DECISION 

on  the extension of the entitlement for 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) On 1 October 2015 the Council adopted the Decision of 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. 

(2)  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. 

 (3) Pursuant to Article 5(8)(b) of the Protocol, following the initial period of three years the 
entitlement will be 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.  

(6)  The  Domestic  Advisory  Group  provided  for  in  Article  3(5)  of  the  Protocol  has  been 
consulted on the extension of the period of entitlement, as provided for in Article 5(8) of the 
Protocol. 

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

HAS ADOPTED THIS DECISION:  

Article 1 

The  Council  states  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, for a duration of three years, from 1 July 2020 to 
30 June 2023. 

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Article 2 

This Decision shall enter into force on  1 April 2020.  

Done at Brussels, 

For the Council 
The President 

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