. /.RESTRICTEDWORLD TRADE
ORGANIZATIONS/C/W/82
9 December 1998
(98-4969)
Council for Trade in Services Original:  English
COMMUNICATION FROM THE UNITED STATES
Advertising Services
The following communication received from the delegation of the United States was
circulated informally on 22 July 1998 to the Members of the Council for Trade in Services to assist in
the discussion on Advertising  Services in the context of the Information Exchange Programme.
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I. GROWTH OUTLOOK AND BENEFITS OF LIBERALIZATION
1. The benefits of liberalizing trade in advertising services are similar to the benefits in other
business services.  Liberalization will increase the variety and amount of advertising services
available and help to reduce the costs to business of using these services.  Open advertising markets
also enhance the development of new media, including multimedia.
2. As the Secretariat notes, advertising is a growth industry with significant potential for future
expansion in many countries, especially where per capita income is increasing.  The Secretariat also
has highlighted the special role of advertising serv ices as ancillary business services which promote
demand for other goods and services.  With the increasing globalization of the world economy, more
countries are likely to have an interest in opening or further opening  markets for advertising services.
3. According to official U.S. trade data, cross-border sales of advertising services by U.S.
companies to foreign purchasers grew from $130 million in 1990 to $597 million in 1996.  During the
same period, U.S. imports of advertising services grew from $243 million to $971 million.  Thus,during that time period, exports of advertising to foreign purchasers grew by 400 percent, and imports
by 300 percent.  In addition to these figures, subsidiaries of U.S. advertising companies also sell
advertising to foreign purchasers.  Such sales by subsidiaries of U.S. companies reached $4.9 billion
in 1995, the latest year for which data are available.
II. POSSIBLE AREAS FOR FUTURE DISCUSSION AND WORK
(a) The Secretariat has pointed out that the existing scope of commitments in the
advertising services sector is quite broad, covering over 80 percent of world trade and
without significant limitations on market access or national treatment except in mode
4 (presence of natural persons).  This seems to be an area Members can build on and
possibly move forward to discussion of other issues that may affect access in thesector, including domestic regulation, to improve competitive conditions.
(b) Those WTO Members that have not made  commitments for advertising services
should consider doing so; what concerns have prevented them from making these
commitments?S/C/W/82
Page 2
(c) All WTO Members should strive for maximum transparency in this sector, including
over domestic regulations.
(d) Countries should review the rationale for any remaining barriers in mode 3
(commercial presence), including limitations on investment for the purpose of
establishing a foreign subsidiary to offer advertising services.
(e) The Secretariat paper points to regulatory diversity as an issue that may impede
further growth of the sector.  WTO members should consider the appropriate balance
between Article VI-type disciplines and industry self-regulation and consider whether
existing international guidelines can be adopted by WTO Members or used as the
basis for future WTO discussion.
(f) Given the increasing importance of cross-border supply of advertising services,
including through global electronic commerce, WTO Members should  review therationale for any remaining restrictions in this area.
III. U.S. REGIME
4. In the Uruguay Round the United States made a substantial commitment in advertising,
except in aerial advertising and skywriting.  The United States committed to "None" in both market
access and national treatment, except in mode 4 of market access, where the commitment is"unbound, except as indicated in the horizontal section."
5. The U.S. advertising industry uses a system of voluntary self-regulation for most issues
relating to advertising.  State and Federal government regulation of advertising is limited to false or
misleading advertising and to specific products, primarily tobacco.  The Federal Trade Commission, a
regulatory agency of the Federal Government, has jurisdiction over consumer protection for false ormisleading advertising
IV. REMARKS ON SECRETARIAT PAPER/QUESTIONS FOR DISCUSSION
6. Regarding Box 1 (on page 2): We agree that further thought will have to be given to the
appropriate listing of certain types of advertising se rvices related to audiovisual services to make sure
that they are appropriately classified and reflect the nature of the business activity.
7. Regarding para. 26 (on page 9): Please add the American Association of Advertising
Agencies, 1899 L Street, NW, Suite 700, Washingt on, DC 20036, to the list of industry contacts.
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