Creative Economy: A Feasible Development Option

and continue negotiations on the Agreement on the GlobalSystem of Trade Preferences among Developing Countries inorder to further cut tariffs and non-tariff barriers andexpand trade relationship among developing countries.9.3.3 General Agreement on Tradein ServicesThe General Agreement on Trade in Services (GATS)governs trade in cultural and entertainment services. It hasbuilt-in flexibilities that can be used by both developed anddeveloping countries. Nevertheless, developing countriesneed to ensure that these flexibilities are implemented andoperationalized. These flexibilities may allow for the phasingin of disciplines according with the level of development andare an important tool for strengthening the creative industriesin developing countries. They include the right to regulate;the right to provide due respect for national policyobjectives; the positive list approach to undertaking commitmentson market access and national treatment; the possibilityof attaching limitations and conditions to market accessand national treatment; the possibility of not making commitmentson audiovisual services; and most-favoured-nationexemptions. At the negotiations on domestic regulations,developing countries are trying to ensure a balance betweendisciplines that effectively underpin market access commitmentson the one hand, and maintaining sufficient policyspace and flexibility on the other, with a view to putting inplace the policies that they need in the pursuit of developmentobjectives, including protection of cultural diversity.During 2009, little progress was made in liberalizing tradein services in general and in particular audiovisuals, in theDoha Round of negotiations.There is a perception that audiovisuals deserve specialtreatment as they are inherently cultural products.Proponents of this view contend that countries should retainthe ability to use policy measures to support their domesticcultural industries as a public good. Other countries arguethat audiovisual services as entertainment products should betreated like any other sector, calling for greater commitmentsby members as well as for the discussion of new disciplines.This policy interface has also come up in several regionaltrade agreements such as the Central American–DominicanRepublic Free Trade Agreement (CAFTA), the NorthAmerican Free Trade Agreement (NAFTA) and a large numberof FTAs. As a result, very few countries have made commitmentsregarding cultural services. By and large, developingcountries have taken the position that liberalization ofservices remains the way forward but that progressive liberalizationis the preferred path.Mobility of talents is a crucial element for the exportof creative and cultural services from developing countries toglobal markets. Therefore, Mode 4 on the temporary movementof natural persons (that is, the provider of the servicecrosses the border) is of particular relevance to developingcountries since it would include services provided by theatricalproducers, singer groups, bands and orchestras, authors,composers, sculptors, entertainers, dancers, choreographersand other individual artists in global markets.Under market-access commitments, WTO membersmay inscribe in each mode of supply quantitative restrictionsor numerical quotas restricting the numbers of providers,total value of services transactions or assets, number of servicesoperations, limitation of the total number of naturalpersons that may be employed in a particular service sector,type of legal entity or joint venture to provide a service, andlimitation on the participation of foreign capital.Provisions on services and temporary movement oflabour are now common in many regional trade agreements.Given the nascent state of the services sector in developingcountries, the implications of North-South reciprocal openingof the services market for developing countries need tobe carefully assessed. Adequate pacing and sequencingbetween domestic reform and regional and multilateral liberalizationare important to promote service trade in creativeindustries.The treatment of issues related to the creative industriesincluding audiovisuals is challenging and open endedbecause there is no universal international trade agreementapplied to trade in cultural goods and services that covers allthe issues of the trade agenda. In the absence of such anagreement that explicitly and exclusively deals with culturaltrade and investment per se, there are instead many tradeagreements administered by WTO (GATS in particular) aswell as regional trade agreements that affect the terms bywhich cultural goods and/or services are traded acrossborders (together with other goods and services that are notcultural in nature).9The international dimension of creative-industries policyCREATIVE ECONOMY REPORT 2010239