Page 151 - Communication Commerce and Power The Political Economy of America and the Direct Broadcast Satellite

Liberalization and the Ascendancy of Trade 141

Recognizing that other countries would need to be pulled toward this
reconceptualization of communication issues as trade issues (rather
than being more crudely pushed into it), the Reagan administration,
with Congressional support, instructed the USTR to pursue bilateral
service and intellectual property rights agreements. Through the
establishment of trade precedents with Israel and Canada, and indus-
try-specific deals with Japan and the European Community (EC),
precedents and standards were set for future GATT negotiations.
More importantly, these agreements would compel GATT members
to take part in multilateral negotiations or face potential exclusion
from the US market.
This strategy was supplemented in the Trade and Tariff Act of
1984. Under Title III of the Act, services were provided with the
same legal status as material goods. While the Act recommends the
pursuit of bilaterally and multilaterally negotiated solutions to
foreign barriers, it also empowers the executive branch to take
unilateral retaliatory action against 'unfair' and restrictive trade prac-
tices involving services and other sectors, including restrictions to
foreign direct investment. 37 While the 1974 Trade Act recognized
services for the first time, its Section 301 was amended in the 1984
legislation to provide the President with remarkable retaliatory
authority.
In 1985, the European Community agreed to include services in the
upcoming GATT round negotiations. 38 LDCs, on the other hand,
opted to utilize the United Nations Conference on Trade and Devel-
opment (UNCT AD) to undertake studies and promote their concerns
regarding the impact of such "an agreement on economic development.
The services-as-trade concept thus became a North versus South
rather than a US versus 'the world' issue. However, despite the
mobilization of UNCT AD, LDCs were unable to develop a substant-
ive counter-proposal to free trade. Outside the UN, relatively few
studies were conducted by LDC or Northern analysts. 39 Unlike law-
yers involved in free flow versus prior consent debates, even econom-
ists who were directly engaged in trade in services issues had little
theoretical or even empirical understanding of services issues. As such,
little intellectual grounding existed for a relatively informed debate of
the services trade question to take place. 40 Moreover, LDCs and
sympathetic trade analysts were unable to present a feasible altern-
ative to a free trade in services agreement that would even begin to
satisfy the overarching demands of TNCs as represented both in US
policy and TNC-based lobbying efforts.