Transcript GATT - WTO

GATT - WTO
General Agreement on Tariffs
and Trade
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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
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Ergo: Need to end protectionism
Harry S. Truman, US President
General Agreement on Tariffs
and Trade
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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.
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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
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General Agreement on Tariffs
and Trade
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GATT embodies 1st world rules/
assumptions for economic prosperity:
Standardised production,
 Vast scale of production,
 Endless expansion of markets
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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
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General Agreement on Tariffs
and Trade
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Most-Favoured Nation
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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)
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General Agreement on Tariffs
and Trade
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Reciprocity
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Any country that benefits from another’s 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.
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General Agreement on Tariffs
and Trade
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Exemptions
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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.
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General Agreement on Tariffs
and Trade
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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 world’s
population does 80% of international trade.)
SO - GATT A (BUT NOT THE ONLY) FACTOR BEHIND
GLOBALISATION
General Agreement on Tariffs
and Trade
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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
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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
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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
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GATT slow to recognise this - services
notoriously hard to quantify
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However de-industrialisation in the
1960s and 1970s has left the US the
most indebted nation in the world
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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
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Uruguay Round
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“Cinema used to be side salad in world
commerce - now it’s the beef.”
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Daniel Toscan du Plantier - President of
French Govt. Film Marketing Body
Uruguay Round
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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
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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
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What’s 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)
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1992
1993
1996
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3375
3720
5600
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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
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Despite the inclusion of TIS in the UR,
the major focus from 1986-93 was on
reducing agricultural export subsidies
(e.g. the EU’s CAP).
Deadline for agreement December 15
1993. Farm issue settled December 7.
 Suddenly replaced by dispute over a/v
industries.
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Uruguay Round
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Mickey Kantor
Jack Lang
US Trade RepresentativeFrench Minister for
talks
Culture
at GATT
Uruguay Round
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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.
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In the last week, however, the dispute
became the US versus EU (and mainly
France)
Uruguay Round
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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.
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French position - cultural products are public
as well as private goods with a historical and
national significance which couldn’t 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.”
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Francois Mitterrand
Uruguay Round
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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
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In Ireland concern expressed that the
US, if successful, would demand end of:
Eurimages
 Irish Film Board
 “TV Without Frontiers”directive
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Uruguay Round
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French and US dig in their heels.
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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
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Specifics:
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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
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Uruguay Round
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Therefore Jurassic Park subsidising Germinal.
US sought access to subsidies for US producers
Uruguay Round
3 am December 14 1993
 US still seeking:
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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)
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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
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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
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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
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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
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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 viewer’s rights to
see what they wish…and recognised a
system which denies artists and
producers the right to funds they have
legally earned through royalties” Kantor
rejected any deal.
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Final Outcome - an agreement
to disagree.
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“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.”
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Mickey Kantor Dec 15 1993
Final Outcome - an agreement
to disagree.
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“A great and fine victory for French and
European culture…We got what we
wanted from the start, which is basically
the cultural exception.”
Alain Carignon,
 French Communications Minister
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Who won the Uruguay round?
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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?
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Uruguay round brought economic
imperatives and cultural institutions
head-to-head.
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Under UR - any rule of institution that
might hinder another nation’s goods or
services from entering freely will be
counted as a tariff. Such tariffs must be
reduced.
Who won the Uruguay round?
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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?
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French claim victory over a/v negotiations
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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).
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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?
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Also meant that the a/v industry would
come under the dispute resolution
mechanisms of the WTO
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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
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Actually GATT rules still form basis of WTO’s
operations.
WTO:
Secretariat (of 500 people) based in Geneva. Main
functions to supply technical support to WTO’s
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
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WTO and
media/communications
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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
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The GATS formally consists of:
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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.
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WTO and
media/communications
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GATS principles:
Covers all services
 MFN
 National treatment only applies where
specific commitments are made
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Definition of Services
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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?
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A/V services not directly subject to any
WTO negotiations - yet.
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Telecoms - however…:
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Feb 1997 - Basic Telecoms Agreement
Basic Telecoms Agreement
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GATT sees US push (unsuccessfully) for
inclusion of provision on liberalising
network access.
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Issue pursues through GATT.
Basic Telecoms Agreement
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Origins of the negotiations
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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
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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.
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Actually takes until 1998 to implement
the final agreement
Defining basic
telecommunications
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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
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Overview
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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
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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.
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BUT...
Basic Telecoms Agreement
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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
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In total 70% of the 62 governments were permitting
a degree of competition in public voice service.
Basic Telecoms Agreement
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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).