Page 155 - Communication Commerce and Power The Political Economy of America and the Direct Broadcast Satellite

Liberalization and the Ascendancy of Trade 145

of services or whether it should be drafted as a narrower sectoral
annotation. On this issue, US negotiators pressed for the negotiations
to be part of the GAIT's overall definition of trade in services.
Through this inclusion, a broad range of telecommunications and
intellectual property issues could be 'de-politicized' in that they
would be treated as issues requiring more or less the same open-
market trade approach already applied to toasters and video cameras.
On the other hand, if telecommunication issues were instead to be
considered the subjects of a separate sub-agreement, questions con-
cerning market access, for example, would require an independent
negotiating process, potentially leading to an agreement accommodat-
ing 'protectionist' interests. Debate also centered on whether or not all
telecommunication services should be covered or whether some ser-
vices should be exempted. This issue involved the possibility of sub-
dividing telecommunications into 'basic' (transmission only) and
'enhanced' or 'value-added' services. USTR negotiators insisted that
this.sub-division not only would shield PTTs from direct competition,
it would also prejudicially advantage non-American corporations in
their ability to take part in both basic and value-added activities in the
American market while US corporations would not be able to engage
in similar activities in other countries.
In July 1990, a preliminary working draft emerged from the Gen-
eral Agreement on Trade in Services (GATS) negotiations concerning
telecommunications. One provision obligated the parties to insure
that domestic entities exercising monopoly or exclusive rights outside
the scope of their domestic mandates would not engage in anti-
competitive practices in relation to entities from other countries. 52
Importantly, at this early stage, a significant concession was made
to LDCs through a provision that would provide countries with the
right to apply for temporary restrictions on the services trade agree-
ment in the event of balance-of-payments difficulties. This provision
also suggested the development of an assistance program through the
International Monetary Fund (IMF) to help remedy such
'difficulties. ' 53
By the end of 1992, a relatively developed draft agreement was
produced, providing the prospective services agreement with an over-
arching Most Favored Nation (MFN) rule. This committed all GATT
members to set tariff rates that would not grant any firm or country
preferential treatment. Important exceptions, however, were made.
Existing regional trading blocs, for example, such as the EC or the
NAFT A would be allowed to continue to provide their members with