GATT - WTO

General Agreement on Tariffs and Trade

Context: Pre-war depression cured by WWII - unlikely to be a regular economic policy option.

Depression caused by protectionism. Depressions causes political instability. Political instability causes war

Ergo: Need to end protectionism

Harry S. Truman, US President

General Agreement on Tariffs and Trade

Thus - US leads campaign for postwar trade regime based upon: Classic (economic) liberal principle of comparative advantage. In effect: Tariffs would be lowered Each country to specialise in production of those goods it produced best (trading with other countries as appropriate). In theory all countries would be better off as a result.

General Agreement on Tariffs and Trade

1947: Originally US vision for postwar trade regime to be encapsulated in creation of International Trade Organisation. Met domestic opposition. GATT - established as temporary agreement to provide basis for trade negotiation underway in Geneva.

General Agreement on Tariffs and Trade

In consequence US effectively dominated GATT. For example: The eight trade rounds that constituted GATT for example, were typically initiated by grants of negotiating authority from the US congress to the US President

General Agreement on Tariffs and Trade

GATT embodies 1st world rules/ assumptions for economic prosperity:

Standardised production, Vast scale of production, Endless expansion of markets

combine to create the engine for global economic growth

General Agreement on Tariffs and Trade

GATT based on four norms: Most-Favoured Nation Reciprocity Exemptions Development Norm

General Agreement on Tariffs and Trade

Most-Favoured Nation
All members agree to extend unconditional MFN status to one another - no country receives preferential treatment not accorded to all other MFN countries. Any benefits acquired by one country are automatically extended to all MFN partners Only exceptions to this rule are customs unions (e.g. EU, NAFTA)

General Agreement on Tariffs and Trade

Reciprocity
Any country that benefits from anothers tariff reduction should reciprocate to an equivalent extent. In theory then, fair and equitable tariff reductions by all countries are ensured. Taken with the MFN principle, reciprocity is intended to create a downward spiral of tariffs.

General Agreement on Tariffs and Trade

Exemptions
Regarded as acceptable if:
temporary imposed for short-term balance-ofpayments reasons country experiencing severe market disruptions due to increased imports

General Agreement on Tariffs and Trade

Development Norm added (from 1965 onwards) allowing: 1. Unilateral/unreciprocated tariff reductions by developed countries on imports from developing countries 2. Export subsidies by developing countries.

General Agreement on Tariffs and Trade

GATT until the 1980s focused (very successfully) on reducing manufacturing tariffs:
1948 - 1993 Reduction in official tariffs on manufacturing from 40% to 5% Global trade increases by factor of four (mainly benefiting 1st world - by 1990s 20% of the worlds population does 80% of international trade.)
SO - GATT A (BUT NOT THE ONLY) FACTOR BEHIND

GLOBALISATION

General Agreement on Tariffs and Trade

GATT and film: 1947 - Preparatory meeting in Geneva. US delegation worked vigorously to secure agreement for inclusion of provision under GATT under which all film restrictions would be removed except quotas on playing time for domestically produced motion pictures. MPEA Paris Rep, worked closely with the US delegation throughout.

GATT Article IV - SPECIAL PROVISIONS RELATING TO CINEMATOGRAPH FILMS

Quantitative regulations relating to films limited to screen quotas - governments could require the exhibition of cinematograph films of national origin during a specified minimum proportion of the total screen time actually utilized, over a specified period of not less than one year. The quotas were to be subject to negotiation for their limitation, liberalization or elimination.

GATT - From Geneva to Ururguay

Despite Article 4, GATT manufacturing focused until 1980s.

By 1990s, however, services sector outstrips value of manufacturing: 70% of 1st world GDP 50% of 3rd world GDP

GATT slow to recognise this - services notoriously hard to quantify

However de-industrialisation in the 1960s and 1970s has left the US the most indebted nation in the world
As of 1993 - the US recorded international trade surpluses from the aerospace and audiovisual industries and nowhere else.

Uruguay Round
Hence - September 1986 Punta del Este Declaration placed Trade in Services (TIS) at centre of GATT debates. Driven by US pressure (in turn influenced by American Express, Citibank and IBM lobbyists) TIS included: film, TV and broadcast advertising production and distribution

Uruguay Round

Cinema used to be side salad in world commerce - now its the beef.
Daniel Toscan du Plantier - President of French Govt. Film Marketing Body

Uruguay Round

US objected to the the following barriers to trade in audiovisual products: Local media content quotas Restrictions on foreign ownership of the press Subsidies to screen industries Subvention and diplomacy designed to assist a/v industries in exporting their product

Uruguay Round

The US makes these objections in the following context: The US government endorses trust-like behaviour overseas whilst prohibiting it domestically. The US government has a long history of aiding its own film industry through: tax-credit schemes, film commission assistance, State and Commerce Department Representation, The Informational Media Guaranty Programme

Uruguay Round

Whats more the Justice Department is authorised to classify all imported films which it can ban as political propaganda.

Uruguay Round
EU A/V Deficit 1992 - 1996 (in $000,000s) 1992 1993 1996 3375 3720 5600

To put this in context: in 1992 the EU imported $3.7bn in a/v material from the US whilst the US imported just over $300m (less than 10% of exports to EU) of Euro a/v material.

Uruguay Round

Despite the inclusion of TIS in the UR, the major focus from 1986-93 was on reducing agricultural export subsidies (e.g. the EUs CAP).

Deadline for agreement December 15 1993. Farm issue settled December 7. Suddenly replaced by dispute over a/v industries.

Uruguay Round

Mickey Kantor US Trade Representative at GATT talks

Jack Lang French Minister for Culture

Uruguay Round

From the outset of the UR US attempts to remove support for a/v industries almost universally opposed, esp. by India, Canada, Japan, Australia, Europe and the Third World - in the name of cultural sovereignty.
In the last week, however, the dispute became the US versus EU (and mainly France)

Uruguay Round

US Position - Sought end to all EU subsidies and quotas arguing from the precepts of neoclassical economics for untrammelled play of comparative advantage inside laws of supply and demand.
French position - cultural products are public as well as private goods with a historical and national significance which couldnt be captured within economic formulas

Culture is synonymous with the soul of a nation and the memory of its people, not a good to be bought and sold.

Francois Mitterrand

Uruguay Round

Reason for prolongation of dispute - use of differing premises: US - justified monopolistic competition on the grounds of the sovereign consumer French - justified state support on the ground of the sovereign citizen The consumer was a fully formed subject making a rational choice in favour of entertainment and distraction the citizen was an insufficiently knowing subject in need of education in civics

Uruguay Round

In Ireland concern expressed that the US, if successful, would demand end of:

Eurimages Irish Film Board TV Without Frontiersdirective

Uruguay Round

French and US dig in their heels.

Dec 12 - US accepts continuation of state subvention of cultural production in Europe (and elsewhere) but pushed issue of levies on cinema/video tickets/rentals.

Uruguay Round

Specifics:
French subsidy system levied an 11% tax on cinema tickets - used to fund some 150 films per annum Mickey Kantor pointed out that the majority of tickets sold in France were for US films

Uruguay Round

Therefore Jurassic Park subsidising Germinal. US sought access to subsidies for US producers

Uruguay Round
3 am December 14 1993 US still seeking:

EU free to continue reserving 51% of local TV programming for European production but thus should apply to 24 hour day as a whole (e.g. France was entirely banning US material from primetime) For satellite, cable (new techs) - Us willing to allow EU to reserve 50-70% of all channels but opposed application of EU must carry 51% Euro content rules to every channel (potential source of difficulty for Comedy Channel, Nickelodeon, Discovery - indeed Sky)

Uruguay Round

US artists/producers entitled to fair share of levies raised from blank audio and video tapes but would commit to investing the funds raised in Europe. Film and television industries
Pay-per-view and video-on-demand channels should not be restricted since consumers could make a free choice to watch one film rather than another and pay for that choice.

Uruguay Round

EU offered:

Standstill on existing legislation No more than 51% of programming would be reserved Commitment to begin negotiations on how the a/v sector should be handled multilaterally

SO WHAT HAPPENS?

Final Outcome - an agreement to disagree.

Mickey Kantor: Rather than accepting that EU proposal which would have enshrined the principle of limiting viewers rights to see what they wishand recognised a system which denies artists and producers the right to funds they have legally earned through royalties Kantor rejected any deal.

Final Outcome - an agreement to disagree.

We can best advance the interests of our artists, performers and producers and the free flow of information around the world - be reserving all our legal rights to respond to policies that discriminate in these areas.
Mickey Kantor Dec 15 1993

Final Outcome - an agreement to disagree.

A great and fine victory for French and European cultureWe got what we wanted from the start, which is basically the cultural exception.
Alain Carignon, French Communications Minister

Who won the Uruguay round?

Everybody a winner? Success by contrast might add $270 billion to world income by 2002 (GATT, OECD & World Bank estimates). Much of the discussion re: the Uruguay round stressed the dire consequences of failure. Arguably the only clear winners from the freeing of world trade under GATT rules may be those 500 or so companies which control two-thirds of that trade. Barrie Axford, The Global System

Who won the Uruguay round?

Uruguay round brought economic imperatives and cultural institutions head-to-head.

Under UR - any rule of institution that might hinder another nations goods or services from entering freely will be counted as a tariff. Such tariffs must be reduced.

Who won the Uruguay round?

However in some cases these hindrances are not rules but ways of life or means of supporting cultural diversity: Hence French defence of film subsidies but also US negotiators considered as restraint of trade the Japanese practice - hokoosha tengoku - of encouraging small shops in pedestrian streets since it interfered with thew prospects of US traders for establishing large out-of-town shopping facilities in Japan.

Who won the Uruguay round?

French claim victory over a/v negotiations

Yet despite the absence of any specific commitments on a/v industry, the sector was still included within the general framework of the Uruguay Round of trade negotiations under GATT (specifically the GATS - General Agreement on Trade in Services). Thus it would be subject to the rules laid down for international trade generally, particularly in connection with transparence and settlement of trade conflicts at GATT level.

Who won the Uruguay round?

Also meant that the a/v industry would come under the dispute resolution mechanisms of the WTO
WTO designed as successor to GATT responsible for ensuring growth and liberalisation of world trade, policing observance of Uruguay Round rules and settling trade conflicts

GATT is dead, Long live WTO

Actually GATT rules still form basis of WTOs operations. WTO: Secretariat (of 500 people) based in Geneva. Main functions to supply technical support to WTOs various councils, committees and ministerial conferences.

WTO Structure
Ministerial Conference
General Council
Goods Council Services Council Intellectual Property Council

WTO operation
Ministerial Council meets every two years. Sets general aims of WTO. Council membership made up of 130 countries, representing 90%+ of world trade

WTO and media/communications

WTO treats these industries in the context of the GATS

The GATS formally consists of: 29 articles, 8 annexes, and 130 schedules of commitments (each WTO Member must submit a schedule) on specific services or service sectors. The articles of the GATS lay out the scope of the Agreement and the general obligations and disciplines to be observed.

WTO and media/communications

The GATS formally consists of:

They also define the specific commitments to be inscribed in schedules and how to go about negotiating them. Finally, there are provisions for dispute settlement and the establishment of the Council for Trade in Services.

WTO and media/communications

GATS principles:

Covers all services MFN National treatment only applies where specific commitments are made

Definition of Services

Ways of providing international services defined as: Services supplied from one country to another (e.g. telecoms) Consumers/firms making use of service in another country (e.g. tourism) Foreign company setting up subsidiary in another country Individuals travelling from home to supply services in another country

What has WTO done for us?

A/V services not directly subject to any WTO negotiations - yet.

Telecoms - however:

Feb 1997 - Basic Telecoms Agreement

Basic Telecoms Agreement

GATT sees US push (unsuccessfully) for inclusion of provision on liberalising network access.
Issue pursues through GATT.

Basic Telecoms Agreement

Origins of the negotiations

Marrakesh Ministerial Meeting closed the Uruguay Round in April 1994. Meeting extends negotiations on trade in basic telecommunications beyond the Uruguay Round.

Basic Telecoms Agreement

Negotiations begin May 1994, (with 33 WTO Member govts), under the auspices of the Negotiating Group on Basic Telecommunications (NGBT). Negotiations to conclude by 30 April 1996.
Actually takes until 1998 to implement the final agreement

Defining basic telecommunications

Examples of the services under negotiation were voice telephony, data transmission, telex, telegraph, facsimile, private leased circuit services (i.e. the sale or lease of transmission capacity), fixed and mobile satellite systems and services, cellular telephony, mobile data services, paging, and personal communications systems.

Basic Telecoms Agreement

Overview
The February 1997 deadline for the negotiations on basic telecoms resulted in the tabling of 55 offers, covering 69 governments (counting individually the EU Member States)

Basic Telecoms Agreement

Only the schedules themselves provide authoritative and complete information on the telecoms services included, the scope of the commitments, and the degree (i.e. full or partial) of market access permitted.
BUT...

Basic Telecoms Agreement

On voice telephone service, 63 govts committed to competitive supply (permitting two or more suppliers). These commitments permit competition the supply of public voice services, (either immediate or phased-in) on local service, domestic long distance, and international service and resale of public voice telephone
In total 70% of the 62 governments were permitting a degree of competition in public voice service.

Basic Telecoms Agreement

Commitments on other services:

65 govts - data transmission services; 62 govts - access to cellular/ mobile telephone markets 56 govts - competition in leased circuit services (the supply of transmission capacity) 62 govts - mobile services (PCS, mobile data or paging). 53 govts - mobile satellite services/transport capacity 52 govts - fixed satellite services/transport capacity. 10 govts - value-added telecoms services (e.g. e-

mail, on-line data processing or data base retrieval).