Hollywood and Europe in showdown over films: Money talks louder than culture in an artistic dispute, writes Sarah Lambert

YOU HAVE read the book, bought the T-shirt but missed the film. For the depressed fan there is always a solution - tape it. But the European cinema lover's gain is the American actor's loss for he receives no royalties from the sale of blank videotapes.

It is on this issue that the Gatt world trade talks, which for the first time will cover developments in cinema, film and music, yesterday remained skewered. The fight to prise open the audiovisual sector is the last Euro-American battle before the two sides sign a sweeping liberalisation of the rules of international commerce.

The dispute is more about money than culture. Audiovisual exports - principally music videos and films - earned the US pounds 2.5bn (dollars 3.7bn) last year, accounted for half the drama output on European TV and 70 per cent of cinema box office takings.

In Geneva, where the other 103 parties to an eventual Gatt deal were yesterday feverishly negotiating the rest of the trade package, the audiovisual sector had little relevance. 'No one else really has an internationally competitive audiovisual sector. This debate only really involves two players,' said a Gatt negotiator yesterday.

The European Union, through legislation, has imposed a quota of home-grown films on European TV channels to preserve cultural identity within the single market.

Beyond this it wants to use approved exceptions to the Gatt rules to guarantee three principles: preservation of the quota system, the right to subsidise domestic producers and flexibility in applying the rules to future technological developments.

The Americans say they will give way on the first if Europe cedes the rest. This might have been grounds for compromise had Washington not muddied the waters by further demanding a share of the tax levied on blank casettes in some countries, a tax that the European Union wants to extend to blank videotapes. This year France stands to raise some pounds 65m from this tax - money it will plough back into the industry. 'It's a double whammy. They not only want us to cut subsidies but to share what is left,' said a French official.

Compromise is difficult because there is no obvious fallback position. Both sides will have to give up something.