Advertising Services

1. Advertising Services Monday February 21, 2005LW 659 Specialised Service Sector Under the GATS Presented by: Ahmed Maabreh Karim Erian MohammedAbdulla Tutor Name: Rohan Kariyawasam

2. Definition of Advertising Services under the Services Sectoral Classification List: • As a sub-category of “Other Business Services”, Advertising Services are defined under the Services Sectoral Classification List document MTN.GNS/W/120 (W/120). The above definition is based on group 871 of the United Nations provisional Central Product Classification (CPC 871). The advertising activities covered under CPC 871 are listed in three sub-categories as follows: • Sale or leasing services of advertising space or time (services provided in soliciting advertising space or time for newspapers, other periodicals, and television stations); • Planning, creating and placement services of advertising (planning, creating and placement services of advertisements to be displayed through the advertising media); and • Other advertising services not elsewhere classified, including outdoor and aerial advertising services and delivery services of samples and other advertising material. • Overlap between CPC 871 and the “promotion or advertising services” categorised as sub-class CPC 96111 of the Audiovisual Services defined under CPC 9611. • Response to this overlap to be found in the draft correspondence tables established by the editors of CPC Rev.1.

3. Importance of Advertising for Electronic Commerce: • Total world advertising expenditure - in measured and non-measured media - accounts for US$1,202 trillion – advertisers in developed countries spend US$300 annually per head of population while US$50 are annually spent per head of population in the developing countries. • Advertising is an important source of consumer information promoting the entry of new firms, enabling the launch of new services and furthering competition. • Advertising is an important source of finance – Significant increase in the number of cross-border television channels in the EC. • The advent of technology - in particular the Internet - provided new marketing structures – In this digital millennium, consumers have an unprecedented access to the global marketplace through the technological innovations such as pay TV, satellite channels, the Internet…etc. • The implication of the Yahoo! Case – Yahoo! reported that: “Most of our revenues are currently derived from agreements with advertisers or sponsorship arrangements.” (Yahoo! Inc. Quarterly Report From 10-Q, filed with the SEC (3/31/00)

4. Trade Measures of Particular Concern for Foreign Advertising Service Providers: • Apart from the relatively few Market Access (GATS Article XVI) and National Treatment (GATS Article XVII) commitments scheduled by WTO Members under Modes of Supply 1 to 3, the particular concern of the advertising industry is directed to trade barriers resulting from the numerous variations in domestic regulations. • Mode of Supply 4 and the horizontal limitations in the EU.

5. Indirect Measures Employed by WTO Member States to Restrict Trade in Advertising Services: • “Restrictions on the importation and broadcast of foreign‑produced television commercials. • Residency requirements for advertising production professionals filming in some countries and/or for employees of the advertising firm. • Requirements for local participation in the production of advertising transmitted through an electronic medium. • Requirements for local‑post production work (e.g. editing, music, sequence editing) if foreign actors are used in television commercials. • Equity limitations on foreign ownership of advertising firms. • Requirements that host‑country nationals hold managerial positions in foreign‑owned advertising firms. • Requirements that program services carried by cable or satellite be “local” in order to carry certain advertising.” (Document Code:S/CSS/W/100 ).

6. Responses of the Advertising Industry to the Varying Domestic Regulatory Environments Faced by Foreign Advertisers in WTO Member Countries: • Creating multiple versions of the same advertisement. • Departing from the preferred advertising strategy. • Relying on the codes of advertising standards issued by the several associations representing the advertising industry such as the International Advertising Association in New York, the World Federation of Advertisers in Brussels and the Canadian Advertising Foundation in Ontario.

7. REFERENCES: • Primary Sources: • General Agreement on Trade in Services. • Yahoo! Inc. Nazi Memorabilia Dispute. TGI Paris, Ordonnance du refere 22 Mai 2000 available at. http://www.juriscom.net/tzt/jurisfr/cti/tgiparis2000522.htm. • Secondary Sources: • - Matsushita, M., Mavroidis, P.C. and Schoenbaum, T.J. (2003) ‘The World Trade Organization: Law, Practice, and Policy’ Oxford University Press. New York. • Trade in Services, Special Session. ‘Communication from the United States - Advertising and Related Services’Document Code:S/CSS/W/100, Date: 10 July 2001, available at the WTO Official Website at http://www.wto.org/english/tratop_e/serv_e/s_ propnewnegs_e.htm #advertising. Access Date: 17 February 2005. • WTO Secretariat (2001) ‘Guide to the GATS: an overview of issues for further liberalization of trade in Services’ Kluwer Law International. London. • - Yahoo! Inc. Quarterly Report From 10-Q, filed with the SEC (3/31/00).

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