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Below are some key quotes excerpted from internal WTO staff memos describing the July and October 2001 GATS negotiations on the audio visual sector. The full text of the memos follows. WTO Staff Comments on the Audiovisual Sector Staff describe Canada and the EC's stated objective of maintaining "their capacity to develop and implement their cultural policies" as a "euphemism to indicate that they intend to stick to their policy of no commitments". A cultural diversity safeguard has been suggested and staff say the "the main question appears to be whether such a debate should take place in the WTO or in another forum." They highlight the fact that a developing country - Brazil - has identified offensive interests in the negotiations on AV services, which very much suits the purposes of the US which was pretty well isolated in making demands in this sector. Staff state say that the US is encouraging developing countries to make demands in the AV sector: "The US clearly aims at encouraging them to participate more fully in these negotiations. This may be seen as part of a strategy to give a 'new dimension' to the audiovisual negotiations, i.e. to pull it out of the 'transatlantic' dimension which has characterized it so far." They state that the US position on the classification of AV services is "unclear." But this lack of clarity may be deliberate. A footnote reveals "It may be interesting to point out that a representative of the Motion Picture Association (MPA) recently told me that the US would be interested in engaging in a classification exercise but was afraid that coming from Washington such a proposal would be rejected outright by some Members." Staff say that the US strategy is to try to get any commitment - regardless of how significant - so as to establish a precedent that AV services are to be bargained away in the GATS negotiations: "The US objective in this sector seems to be less the quality of commitments than fact that some commitments are made, in order to put an end to the line of arguments some Members for whom the audiovisual sector was presented according to the US, as an 'all-or-nothing' game." AUDIOVISUAL SERVICES - 11 July 2001 Main points raised · Presentation of a Communication by Brazil whose main propositions are: (i) Members are invited to undertake specific commitments in audiovisual (AV) services, taking specially into account the interest of developing countries; (ii) a debate should be initiated on subsidy schemes aimed at achieving national policy objectives of promotion and preservation of cultural identity and diversity; (iii) a debate should be initiated on trade defense and/or competition provisions to address unfair trade practices in the sector. · Canada and the EC agree that AV services are included in the negotiations, but state that their objective is to ensure that they will maintain their capacity to develop and implement their cultural policies (an euphemism to indicate that they intend to stick to their policy of no commitments). · While there is a general recognition that Members must be able to promote cultural policies, two different approaches exist as to how this should be achieved under the GATS. Some delegations consider that the GATS is flexible enough to allow Members to implement the policies of their choice (including subsidies) and, thus, that no special treatment is warranted for the AV sector (Hong Kong, China, Argentina, India). Other delegations indicate their interest to consider possible specific rules (US, Switzerland, Japan, Korea, Australia). It should be noted, however, that positions and ambitions in the latter camp may differ significantly. · The main themes proposed for discussion are: · need to reconsider the classification of AV services, in particular to take into account technological developments; · a special subsidy regime (referred to in the submissions by US, Switzerland and Brazil); · the problem of anti-competitive practices (referred to in the submissions by Switzerland and Brazil); · a cultural diversity safeguard (referred in the Swiss proposal). · The main question raised with respect to the second and third points is whether possible rules in this area should be addressed on a sector-specific basis or an horizontal basis. With respect to the last point, the main question appears to be whether such a debate should take place in the WTO or in another forum. · As compared to the Uruguay Round, the coming debate on AV may be different from two points of view: (i) developing countries are likely to be more involved, especially those having offensive interests in the sector; (ii) there is a shared view that the "all-or-nothing" approach to this subject should be overcome. October 2001 AUDIOVISUAL SERVICES Proposal by the United States (S/CSS/W/21), Japan (S/CSS/W/42), Switzerland (S/CSS/W/74), and Brazil(S/CSS/W/99) 1. The proposals presented by the US, Switzerland and Brazil have several common features in their discussion of the AV sector and of which issues should be addressed. The Swiss proposal is, however, more a discussion paper than a negotiating proposal. The Japanese proposal, more modest in scope, focuses on the need for more specific commitments on market access and national treatment. 2. The US, Switzerland and Brazil advocate the need to overcome what they call the "all-or-nothing" debate which prevailed during the Uruguay Round. They recognize that AV products have a cultural and a commercial components[sic]. Progressive liberalization of AV services should be pursued, while allowing Members to implement policies and measures necessary to protect and promote cultural diversity. The question is then how to proceed to reconcile these two objectives. (i) The need to revise classification 3. Both the US and Switzerland suggest that the current classification should be revised because it does not reflect the technological developments (in particular the introduction of digital products) that the sector has undergone since the end of the Uruguay Round. Neither the US nor Switzerland specifies where and when this review should take place. 4. At present, the objective sought by the US with respect to classification is not clear. Does the "review" they propose entail an actual classification exercise, which would mean, for instance, a revision of W/120 as far as audiovisual services are concerned? Or would work focus on a cluster approach? Or both? The purpose of the "summary list" presented in Annex A and its intended use remain unclear as well. The US states that the list is intended to describe "the complex, diverse set of activities that may be considered to form part of today's audiovisual sector, but is not asserting that these services should be classified as audiovisual services in MTN.GNG/W/120". On the other hand, this list appears too limited to be used for a cluster discussion.(1) This list may be intended as an indirect means of triggering a discussion on classification(2). (ii) The need for specific commitments 5. The US, Japan and Brazil clearly advocate the need for Members to undertake more specific commitments in the AV sector. 6. It must be noted that the US proposal adopts a pragmatic approach to a sector which has traditionally been highly sensitive from a political point of view. The US objective in this sector seems to be less the quality of commitments than fact that some commitments are made, in order to put an end to the line of arguments some Members for whom the audiovisual sector was presented according to the US, as an "all-or-nothing" game. Unlike in other sectoral proposals, the US is not asking for full bindings, but seeks "negotiated commitments ... that establish clear, dependable, and predictable trade rules with due account taken of the sector's specific sensitivities". Along the same1. It should be pointed out that the summary list: (i) does not include radio services as a separate category. This would seem, however, to be unintentional; (ii) has abandoned the category "other services"; (iii) introduces a new category entitled "home video entertainment"; (iv) raises certain questions in relation to technological neutrality, and to the distinction between content and transmission. 2. It may be interesting to point out that a representative of the Motion Picture Association (MPA) recently told me that the US would be interested in engaging in a classification exercise but was afraid that coming from Washington. such a proposal would be rejected outright by some Members. line, the US also stresses that the current structure of the GATS - flexibility to make partial commitments or to fund audiovisual services - allows for the "special cultural qualities of the sector" to be taken into account. (iii) Rules on Subsidies 7. The US, Switzerland and Brazil recognize the need for governments to support the production and distribution of cultural products and suggest to examine the possibility of negotiating an understanding in this regard. The key question and likely bone of contention will likely be the scope of "permitted" subsidies. 8. An important question in this regard, which has been raised by several delegations in the Special Session, is whether rules on subsidies for audiovisual products should be examined on their own merits, or whether they should be part of the negotiations under Article XV. None of the proposals is clear on this issue. Another question is whether Members will be at all interested in discussing this issue. Those Members which are generally in favour of reducing the availability of subsidies may fear a precedent. On the other hand, those Members who want to preserve their right to subsidize their audiovisual industry may well consider that, at least pending the introduction of specific disciplines, any specific subsidy disciplines for audiovisual services will not give them more flexibility than the existing situation. (iv) Other regulatory 9. The Swiss proposal raises a range of regulatory issues to be discussed. In addition to subsidies, Switzerland suggests to examine: a cultural diversity safeguard(3), the role of publics [sic] service, protection against illicit content, competition issues, transparency requirements and regulatory aspects of market access and national treatment restrictions. Brazil focuses on "trade defense mechanisms" to be able to take action against unfair practices. Thus, the possible scope for emergency safeguard measures, antidumping disciplines and competition disciplines should be discussed. (v) The role of developing countries 10. The need to pay special attention to the needs of developing countries in the AV negotiations is one of the main themes of the Brazilian proposal. 11. The US clearly aims at encouraging them to participate more fully in these negotiations. This may be seen as part of a strategy to give a "new dimension" to the audiovisual negotiations, i.e. to pull it out of the "transatlantic" dimension which has characterized it so far. The recent seminar held in the WTO, as well as the illustrative list of international services providers engaged in audiovisual related activities serve precisely that purpose: to show that the audiovisual industry is not limited to North America and Europe, but is a truly international business. All countries, including developing countries, should be actively engaged. 3. See in that regard the statement by Canada in S/CSS/W/46: "Canada will also not make any commitment that restricts our ability to achieve our cultural policy objectives until a new international instrument, designed specifically to safeguard the right of countries to promote and preserve their cultural diversity, can be established."
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