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The 1999 Consultation on Audiovisual Services
QUESTIONNAIRE ON AUDIO-VISUAL SERVICES
The negotiations on audio-visual services in the GATS took place within the framework of the Uruguay Round, which began in 1986 and was closed in April 1994. The intrinsic sensitivity of audio-visual services made the negotiations on this dossier particularly difficult and conflictual. The outcome of these negotiations is the following:
- Audio-visual services are covered by the GATS, they are subject to the horizontal disciplines for which commitments have been taken for all sectors. They are also subject to general rules and arrangements related to the WTO structure.
- The Communities and their Member States have not made any commitment on audio-visual services within the GATS. These services are therefore excluded from the disciplines of national treatment and market access, as well as from the application of the rules which only apply when a commitment has been made. The vast majority of WTO trading partners has followed this position.
- In order to grant audio-visual services the room for manoeuvre needed, the Communities and their Member States have added 5 exemptions to the application of the Most Favoured Nation (MFN) clause.
Therefore, the status of audio-visual services in the GATS is the following: the
European Community and its Member States benefit from a room for manoeuvre in the
audio-visual sector, which relates both to policies and measures at national and Community
level. This margin allows both to secure an adequate protection of existing national and
Community measures in the audio-visual sector, and to secure a margin of manoeuvre to
further development of national and community audio-visual
policies and instruments to respond to the evolutions of the sector.
However, in spite of the coverage of the audio-visual services in the GATS Agreement,
there is no commonly agreed definition of such services in the EC offer in the GATS for
the purpose of the implementation of the above mentioned margin for manoeuvre.
This margin for manoeuvre is likely to be called into question during negotiations due to
begin in the year 2000. Primarily, the Article XIX of the GATS contains a built-in agenda
for further liberalisation in the services, with a view to increase the general level of
specific commitments taken by Parties to the Agreement. Moreover, the extension of the
scope of issues dealt with in WTO, i.e. the inclusion of new disciplines such as
investment, may have an impact on services in general, and audio-visual services in
particular. This element will have to be taken into account during the preparatory phase
of the forthcoming Round.
In this respect, this consultation primarily addresses two different aspects: firstly the
need to clarify and define which types of objectives, measures and policies pursued and
carried out by the Member States at national level and undertaken at EC level, do request
this margin for manoeuvre, and for which services (defensive interests).
Secondly, it also deals with the opportunities for the audio-visual industry with relation
to Trading Partners' markets, which require in the first place to identify clearly the
obstacles to trade in these markets (offensive interests).
Although the position of other trading partners is not known at this stage, and without
prejudice to the position that the European Community may adopt at a further stage notably
on the basis of the results of the consultation process, it appears that the Community
acquis in this field might be called into question in different ways. The following part
intends to raise the issues and questions whose answers will help the preparation of
negotiation positions in this field.
On the basis of the latest statements from some representatives of US industry, it would
appear that their objectives may not be quite the same as in the past. Representatives of
the MPA (Motion Picture Association) have suggested with Commission officials that they
accept that their should be no reopening in GATS 2000 of the status of Television Without
Frontier nor of their ealier demand for national treatment in the field of audio-visual
revenue and subsidy. This remains to be confirmed officially. In any cas, the US would
seem certain to challenge our desire to be free to regulate emerging services based on new
technologies. This debate reflects previous developments related to the status of
audio-visual services in the GATS, and in the perspective of the opening of the new round,
it appears that the acquis reached for audio-visual services at the last negotiations is
likely to be challenged. This is likely to arise not only within the next Round
negotiations, but also in other exercises such as the WTO work programme on electronic
commerce, notably through the angle of the scope and classification of electronic
commerce-related services. The following developments intend to shed some light on the
background and the possible direction of discussions on some key issues relevant for the
sector.
I. What room for manoeuvre for the audio-visual sector and for which policies
and measures ?
At EC level, the regulatory instrument of the "Television Without Frontiers"
directive(1), and the financial support mechanisms, i.e. in particular
the MEDIA Programme, are the main existing measures which require protection from the
application of certain GATS disciplines in order to be pursued. At national level, both
types of instrument exist as well, for which the same level of protection is equally
necessary. Preserving cultural diversity is one of the missions assigned by the EC Treaty(2) to the European Community. This key element has to be duly taken into
account for the WTO negotiations.
Technological convergence, amongst other factors, brings about new questions in the field
of audio-visual, which may translate into new measures, policies, frameworks. In this
respect, the room for manoeuvre described above is also a necessary element to secure in
order that any future policies and instruments are able to be set up both at EC and at
national level. This is the likely focus for requests from our trading partners. It is
therefore important to develop the best possible European consensus of the range of future
needs we foresee.
- What are the existing policies and measures we need to protect from the
application of GATS positive rules and disciplines ? What are the public interest
objectives pursued by such policies and measures ?
- What are the future and foreseen policies and measures we may need and in what
respects might they depart from GATS rules and disciplines, so that we would need to
protect them from such requirements ?
- What are the public interest objectives pursued by such policies and measures ?
II. What room for manoeuvre in the audio-visual sector for what services ?
A - Definitions
The Community and its Member States have opted for a broad conception of audio-visual
services. In the context of the Uruguay Round, it appeared clearly that such services,
according to EC views, embraced a vast range of activities related to audio-visual
content, irrespective of the technology used, thus covering both traditional means of
transmission and services based on new technologies. Such an approach is reflected in the
internal EC audio-visual policy.
Sometimes, this conception is not necessarily shared by a majority of trading partners
which have often taken restrictive definitions of audio-visual services, not necessarily
covering the "new" services. The EC approach only appears in the list of MFN
exemptions submitted by the EC and their Member States. The list contains elements of
definitions of audio-visual services which are made only for the purpose of the MFN
exemption. These definitions are made independently from the Central Product
Classification (CPC) and the Services Sectoral Classification List (SSCL, also referred to
as W/120).
The CPC is a list established by and for the United Nations (see Annexe)which
contains services definitions sometimes referred to by countries in their schedules of
commitments. In the audio-visual sector, the CPC definitions are generally
technology-bound ones, i.e. restricted to traditional cinema and broadcasting activities.
Any reference to CPC definitions is therefore problematic if we want to reflect the
Community approach.
The Services Sectoral Classification List) was drawn for the sole purpose of the GATS
Agreement. It consists only in a list of services, without any attached definitions. The
audio-visual services are treated as a sub-sector of communication services (see Annexe).
In practice, the definitions used by the Parties in their schedules of commitments and/or
lists of MFN exemptions find their origin indifferently in the CPC, the SSCL and/or are
self-defined by the countries. There is therefore no single set of definitions for
audio-visual services which is common to all Parties to the Agreement.
The question of definitions of audio-visual services within this trade negotiation
framework mainly stemms from the necessity to establish dividing lines between those
services for which the Community and its Member States wish to formulate offers and
present offensive interests, and those services for which defensive interests dominate.
Thus, two distinct options are to be considered:
- the definition of services other than audio-visual services provides elements of
"definition by default" of audio-visual services (e.g. the distinction between
transport/content laid down in the offer of the Community and its Member States within the
framework of the Agreement on basic Telecommunications). It is crucial to avoid situations
whereby definitions of other categories of services would cover activities related to the
audio-visual sector for which the Community and its Member States may wish to preserve.
- so far, the "positive definition" of audio-visual services has only been
necessary in the context of the exemptions to the Most Favoured Nation clause (MFN) tabled
by the Community and its Member States. Such positive definition would also be necessary
if the Community and its Member States wish to present an offer covering specific
activities of this sector for specific modes of provision of services.
In all cases, the preparation of negotiations must be based upon a clear and precise
identification of activities to be reserved (defensive interests) as well as upon a serie
of concepts which allow to distinguish between these activities and possible related
activities.
On a more general level, the increasing pressure towards more transparency may require the
Community and indeed all Parties to the Agreement to ensure more coherence amongst the
various definitions in use for the purpose of the GATS. Also relevant is the increasing
necessity to gather GATS Parties around commonly agreed definitions. Moreover, our trading
partners are likely to require the EC and their Member States to clarify and determine
precisely what margin for manoeuvre is asked, and which protection is necessary, for which
services. They might intend to isolate some sub-sectors or sub-categories within the
generic terminology of "audio-visual services" for this purpose. The issue of
definitions might appear to be crucial for delimiting the scope of the protection required
by the EC in the GATS.
It is also likely that our trading partners will ask the EC to clearly identify the type
of measures and policies foreseen both at national and EC levels, as well as the rationale
behind such measures and policies, i.e. cultural and identity objectives; linguistic
objectives; industrial policy objectives etc. It is in our interest to have the clearest
picture on these policy orientations.
The existing carve out in the GATS always refers to the "audio-visual sector"
without providing any definition of that sector(3). Some of our trading
partners have already tried to limit the scope of this concept; aiming at excluding, for
example, on-line services and multimedia content. Moreover, the concept of
"audio-visual services" is likely to be challenged in various ways, and notably
be absorbed within new concepts such as "electronic commerce", "information
and entertainment services", "on-line
trading".
The main function of the elaboration of definitions within this specific framework will be
the defense of the interests of the audio-visual sector within the GATS, and only with
reference to the GATS. In this respect, it is important to distinguish this exercise from
another exercise which is currently being developped and concerns the new modes of
regulation of this sector. The latter exercise has a broader function and purpose and its
results and conclusions might not be relevant for the present exercise related to the GATS
framework. Moreover, any definition to be found within and for the purpose of the GATS
will apply to the GATS environment only and should not impact on discussions within Member
States related to the regulatory distinction between services. The present exercise is
therefore limited to the sole purpose of the forthcoming negotiations with respect to the
GATS. Its aim is to support the arguments to be put forward during these negotiations. The
objective is to define services, sectors, sub-sectors if applicable according to their
respective interests and only insofar as such definitions come in support of the defense
of these interests.
In view of the previous developments:
- What is the scope of the audio-visual sector which needs some protection, and
which definition of audio-visual would best reflect such a scope?
- If need be, what kind of criteria could efficiently distinguish between sub-sectors
and/or between audio-visual and neighbouring concepts (e.g. "information content and
services", "electronic commerce", "on-line trading" etc.)?
- Within the audio-visual sector, would you distinguish categories or sub-categories of
services for which interests may differ, i.e. offensive v. defensive interests ? How would
you define these categories if need be ?
The pressure for transparency is likely to concern both the definitions of the services
covered by the provisions of the GATS, both schedules of commitments and lists of MFN
exemptions, as well as the policies and measures themselves in the audio-visual sector,
which can exist and develop in an autonomous manner. In this respect, it can be expected
that the pressure will be put on the need to limit the room for manoeuver to such policies
and measures which already exist and/or which can be
clearly identified.
B - The GATS Disciplines and Horizontal Rules
As underlined in the previous sections, there is a built-in agenda for the extension of
market access and further liberalisation which concerns all services, including
audio-visual services. Even if they recognise the specific nature of audio-visual services
- as reflected in the limited number of WTO members that have tabled commitments in this
sector – some trading partners will insist on obtaining some commitments in this
field.
The acquis reached for audio-visual services at the GATS might be called into question
both in terms of the two main disciplines – market access and national treatment -
and the MFN. In this respect, it could be expected that national treatment be a key
requisite, i.e. for US subsidiaries in Europe. This would imply, inter alia, access to
public support mechanisms. As far as market access is concerned, the pressure could entail
the provision to cover specific sub-sectors (e.g. near-on-demand and on
line type of audio-visual services). Finally, a more targeted MFN is likely to form part
of relevant trading partners’ request at the WTO.
In addition to these elements, there also exists a pressure towards the strengthening of
some disciplines: in the area of subsidies, new rules might be negotiated along the lines
of existing provisions for goods (e.g. total ban on export subsidies).
- What kind of horizontal rules could apply to audio-visual services, which would
not affect the special treatment they have under the GATS, allowing EU policy while
creating greater opportunities for European audio-visual services worldwide?
- What kind of horizontal rules should not apply to audio-visual services ?
III. What are the prospects for audio-visual services with respect to
geographical interests and GATS disciplines and rules ?
In addition to the necessity to preserve cultural diversity and thus secure an effective
room for manoeuvre in the audio-visual sector, there are also offensive interests in the
audio-visual sector, which derive from the development of the sector itself. One of the
main objectives of the audio-visual policy as defined at EC level is to reinforce the
European audio-visual industry, and foster its development as a competitive actor in the
world-wide market. The multilateral negotiations appear to be crucial to
realise this objective.
In order to assess the nature of potential offensive interests of the European
audio-visual services, geographical objectives have to be defined and existing obstacles
to be removed have to be identified.
A – Geographical Objectives: the Trading Partners
- In which geographical areas do audiovisual services currently have the fastest
growth rate ? And which services ?
Eastern Europe
North America, including Mexico
Central and South America
Middle East
Asian countries, including Japan, Korea, India and ASEAN
African countries
Australia, New Zealand
WTO Acceding countries (China, Russia, Saudi Arabia)
- Where would you have the highest commercial expectations for new market
opportunities should the current trade barriers be eliminated?
Eastern Europe
North America, including Mexico
Central and South America
Middle East
Asian countries, including Japan, Korea, India and ASEAN
African countries
Australia, New Zealand
WTO Acceding countries (China, Russia, Saudi Arabia)
- Is the situation of developing countries, for which the general level of
liberalisation in
the GATS is lower than the developed countries, particularly relevant for the audio-visual
sector ?
B – Obstacles to trade
Market Access
The Market Access principle obliges the Members to open their domestic markets to all
service suppliers from all Members. The following questions intend to assess the extent to
which your activities are impeded by the existence of barriers to trade in other WTO
Members.
The following list of possible trade barriers can help you assess the discriminatory and
protectionist treatment encountered:
- discrimination in licensing and qualification requirements
- dominance of local monopoly
- unfair competitive environment
- restriction on movement of persons
- restriction on ownership
- nationality and residency requirements
- limitations on the number of services suppliers and/or on the value of operations
- limitation on the type of the legal form requested to operate
- adverse taxation rules or rates
- discrimination in government procurement
- restrictions to investment
- operating conditions
- export subsidies
- Indicate which, if any, of the trade barriers mentioned above you experience as
the most restrictive.
- Would these principles help you address properly the current most important
problems that you face ?
- Market Access
- National Treatment
- If not, is it so because of the limitations that are listed in the schedules of
specific commitments?
- Are the obstacles/regulatory barriers that your organisation encounters related to
specific forms of trade related to audio-visual services, e. g. electronic commerce ?
Administrative and regulatory measures
Under the GATS, Members are allowed to exercise their regulatory powers. However, their
domestic regulations must comply with the Agreement. In this respect, an important
limitation is set to their right to regulate, but only insofar as specific commitments
have been made in a given sector. In these circumstances, Art. VI requires that all
national measures be applied in a reasonable, objective and impartial manner and covers
measures such as licensing, qualifications, prior approval, technical
standards. Also, recourse to a local impartial tribunal must be offered to all services
suppliers. In addition, legislation that formally respects the GATS but the application of
which leads in practice to discriminations or restrictions contravenes the Agreement.
- Which one is the most restrictive trade barrier that you face ?
- legal measures
- administrative burdens
- commercial practices and /or "unfriendly" environment
- regulation: absence of it, restrictive regulation or contradictory regulations between
different countries
- What are the most appropriate fora to deal with the barriers and obstacles
identified ? (multilateral ? regional ? bilateral ?)
- How should those aspects be handled internationally ? Through regulation ? industry-led
solutions ? self-regulation ?
C – GATS rules and disciplines
Modes of supply
- What is the relative importance of each mode of supply in the sector ?
- Are there some difficulties to distinguish certain modes of supply in practice for
certain services ?
- Are there some specific modes which are more relevant for audio-visual services, for
which European industry would have specific interests ?
- Has there been a shift of the relative importance of certain supply modes which would
justify more emphasis to be put on certain supply modes, e.g. cross-border trade (e.g.
taking into account electronic commerce)?
-If commercial presence is the mode of delivery that you are the most interested
in, what form of establishment would be sufficient to meet your needs?
- joint venture
- wholly-owned subsidiary
- branch
- majority ownership
-Do you face the following restrictions?
- restrictions on ownership
- authorisations and licensing procedures
- restrictions to movement of persons
- others
-Is investment abroad a priority for your business?
The Most Favoured Nation Clause
Under the GATS (Article II), in principle, the most favourable treatment that is granted
to the service suppliers from any foreign country must equally be offered to all foreign
suppliers of this service. This Most-Favoured-Nation provision (M.F.N.) therefore
prohibits discrimination among third countries’ service suppliers.
- Is this Most-Favoured-Nation principle helpful in your business ?
- If so, for which type of trade barriers ?
Dispute Settlement Procedures
The WTO provides for a dispute settlement procedure against illegal trade practices such
as the ones mentioned above in point 3.d (Art. XXII and XXIII). Members may lodge
complaints before the WTO tribunal. Also, there are ways to enforce Members to respect a
WTO judgement requiring the elimination of the illegal measure.
- Are you satisfied with the current Dispute Settlement Mechanisms ?
- Have you identified a need to improve this procedure?
Mutual Recognition of standards
Under certain conditions, the GATS allows groups of Members to conclude agreements in
order to recognise each others domestic standards or criteria for the authorisation,
licensing and certification of services suppliers as equivalents (Article VII). Such
mutual recognition may cover education or experience obtained, requirements met or
licenses and certifications granted.
- Would such mutual recognition offer new liberalisation opportunities in your
area?
- If yes, what would be the object of such mutual recognition?
ANNEX: Classification of audiovisual services for the purposes
of the GATS
Central Product Classification (United Nations) :
Sector 2 – Communication services - sub-sector D – audiovisual services:
a. motion picture and video tape production and distribution services (9611);
b. motion picture projection services (9612);
c. radio and television services (9613);
d. radio and television broadcast transmission services (7524);
e. sound recording (not applicable);
f. other.
GATS Secretariat Services Sectoral Classification List (SSCL):
1. Business
2. Communication
A. Postal services
B. Courier services
C. Telecommunication services
D. Audio-visual services
a. Motion picture and video tape production and distribution services
b. Motion picture projection services
c. Radio and television services
d. Radio and television transmission services
e. Sound recording
f. other
E. Other
3. Construction and Engineering
4. Distribution
5. Education
6. Environment
7. Financial
8. Health
9. Tourism and Travel
10. Recreation, Cultural, and Sporting
11. Transport
12. "Other".
Footnotes:
1) EEC/89/552 Directive as modified by EC/97/36 Directive (OJ
L 202/60 of 30 July 1997).
2) Article 128.1.
3) A first element of definition appeared in the framework of
the basic telecom agreement in which the EC commitment is based on the distinction between
transport (telecom) and content (other services): "Telecommunication services are the
transport of electromagnetic signals – sound, data, image and any combinations
thereof, excluding broadcasting. Therefore commitments in this schedule do not cover the
economic activity consisting of content provision which require telecommunications
services for its transport. The provision of that content transported via a
telecommunications service, is subject to the specific commitments undertaken by the
European Communities and their Member States in other relevant sectors." (for the
purpose of this definition, the term "broadcasting" is defined as the
uninterrupted chain of transmission required for the distribution of TV and radio
programme signals to the general public, but does not cover contribution links between
operators.