The article reviews implications for Australian cultural policy likely to arise from proposals for the development of a binding UNESCO convention on cultural diversity that would allow countries to pursue domestic cultural assistance policies that might otherwise be in conflict with trade liberalisation of cultural goods and services. The proposal, which is supported by a sizeable number of countries, is seen as an alternative to a GATS cultural exception. Recent Australian undertakings in bilateral trade agreements suggest that Australian Cultural Policy favours a GATS cultural exception approach.