1 CULTURAL SERVICES IN INTERNATIONAL TRADE: IMPLICATIONS FOR DEVELOPING COUNTRIES Trade Negotiations and Commercial Diplomacy UNCTAD

2 WHAT ARE CULTURAL SERVICES? Under the classification list of the GATS (MNT.GNS/W/120), recreational, cultural sporting and educational services are listed as sectors. Audiovisual services are listed as a subsector. Characteristics of public goods: - Non excludable - Non rivalrous in consumption - Highly susceptible of market failures but it is difficult to make a difference between public and private goods. UNCTAD

3 PROVISIONS UNDER THE GATS CONCERNING CULTURAL SERVICES No general exemption for cultural services The positive list approach gives options to countries for their lists of commitments: MFN, National Treatment, Additional commitments. De facto exemption. Article IV of the GATS allows for screen quotas Article XX (f) of the GATT allows trade restrictive measures to protect national treasures UNCTAD

4 PROVISIONS UNDER THE GATS CONCERNING CULTURAL SERVICES Art. XIV (a) of the GATS and Art. XX (a) of the GATT allows trade restriction measures necessary to protect public moral. Need for clarification and in particular to determine the scope of the coverage of the GATS as far as governmental activities are concerned. ie. Article 1.3 (b) of the GATS defines services as any sector except services supplied in the exercise of governmental authority UNCTAD

5 EDUCATIONAL SERVICES Need for clarification for governmental intervention, i.e. Art. I.3.c of the GATS: « a service supplied neither on a commercial basis nor in competition with one or more service suppliers » The scope of government activity is considered to be limited to basic education, meaning priary and secondary school In the on-going negotiations, the USA is the demandeur in order to reduce the barriers to supply higher education services and adult education (modes 1, 2 and 4) UNCTAD

6 EDUCATIONAL SERVICES Education services are traded predominantly through student mobility across borders (consumption abroad) A more recent form in which education services are traded consists of the setting up of facilities abroad by education providers (commercial presence) Lack of data for cross-border supply and presence of natural persons UNCTAD

7 AUDIOVISUAL SERVICES Three proposals have been presented so far by Brazil, the US and Switzerland UNCTAD

8 PROPOSAL FROM BRAZIL Promote the progressive liberalization of this sectors while ensuring governments’ autonomy to preserve and promote cultural identity and cultural diversity Consideration of subsidization schemes and trade defense mechanisms Take into account Art. IV.1 of the GATS UNCTAD

9 PROPOSAL FROM THE US Summary list: new classification would treat the audiovisual and related service activities as a cluster Technical neutrality: where no specific references to the type of technology used in providing basic telecom services, specific commitments would automatically cover all means of technology E-commerce to be considered in the negotiations UNCTAD

10 PROPOSAL FROM SWITZERLAND Issue of competition policy Role of public services in audiovisual Preserve cultural diversity Safeguard and subsidies issues UNCTAD

11 IMPLICATIONS FOR DEVELOPING COUNTRIES IN THIS SECTOR Determine sectors of competitivity Flexibility to use subventions to promote their social and cultural life, while restricting the subsidies in developed countries Emergency Safeguards Measures Identify barriers to their exports Identify adequate measures UNCTAD