US-Europe Agreement Splices Out Movie Industry Issue

A REVOLUTIONARY trade liberalization accord that will accelerate the globalization of the world economy was almost certain to be reached by Dec. 15 after the United States and the European Union (EU) hammered out a crucial bilateral agreement.

Amid smiles in announcing their bilateral accord Dec. 14, however, the US and European trade negotiators revealed that no agreement had been reached on the emotional issue of trade in movies and other entertainment products. The audio-visual sector, which returns a $4 billion trade surplus to the US annually, will remain a source of dispute and philosophical confrontation between the US and Europe.

The conclusion of negotiations between the two world trading giants means that the 116-nation Uruguay Round of world trade liberalization - launched by the General Agreement on Tariffs and Trade (GATT) in Punta del Este, Uruguay, in 1986 - should be signed into international law in a ceremony in Marrakech, Morocco, in April.

The Uruguay Round brings such important trade sectors as agriculture, textiles, services, financial investments, and intellectual property such as patents and copyrights, under multilateral international trade rules for the first time.

``The world economy will be $6 trillion wealthier over the next decade for [our] having reduced tariffs and [trade] barriers in this round,'' said Mickey Kantor, chief trade negotiator for the US. The US and EU, which are each other's largest trading partner, achieved overall tariff reductions of 50 percent, he added, bettering the one-third cut originally sought.

Calling the Uruguay Round ``a milestone in the history of world trade,'' EU chief negotiator Sir Leon Brittan summarized the round in three major accomplishments:

* The largest-ever liberalization of trade, through its reduction of trade barriers.

* A new discipline for world trade through the creation of clear rules for global commerce. Such rules should induce growth.

* And endorsement of trade ``multilateralism,'' as opposed to potentially discriminatory bilateral arrangements, through creation of a new Multilateral Trade Organization (MTO) for trade-dispute settlement. The deadline cometh

The agreement between the US and EU, which formerly called itself the European Community, paved the way for a full agreement among the GATT's 115 participants to be reached by a Dec. 15 deadline. GATT Director-General Peter Sutherland had announced Dec. 13 that ``97 percent'' of the round's issues had been agreed on in multilateral negotiations, and added that full agreement hinged on a US-EU accord.

The US and EU trade chiefs acknowledged that progress remained less-than-hoped-for in a few service sectors, including maritime shipping and financial services. For the latter, which includes banking, insurance, and pensions, a plan was agreed on for continuing market-opening negotiations into 1995.

That will allow some breathing space for the Japanese, who had balked at pressure to open up their financial sectors, which have been weakened during the country's current recession.

But after all-night discussions in this Swiss city on entertainment products, which followed earlier marathon talks on the issue in Washington and Brussels, the two parties said they simply ``agreed to disagree.'' The US had sought to break down EU rules that protect European movie producers by maintaining quotas for national and European films on television, and provide subsidies for national productions. The quotas are financed in part by levies on movie tickets or tapes for popular American movies. Disappointment for US

The impasse represents a particularly bitter disappointment for the US, for whom trade in movies, music, and other entertainment products ranks with civil aircraft and agriculture as one of its three largest exports.

Mr. Kantor and Sir Leon painted the dispute in philosophical terms: The US said it was fighting for the right of individuals to view what they want. ``People have an absolute right to view what they want,'' Kantor said, ``and a right to what they have earned,'' he added, alluding to the EU system that denies non-EU film artists and producers any part of the subsidy levies on their works.

``You cannot sustain a democracy if you limit what [people] view,'' he said. ``You cannot.'' The US has argued that under the EU quota system, cable products like the Disney Channel are kept out of Europe's national markets.

In response, Brittan said the EU position was ``about cultural pluralism'' and would assure that ``Europe has access to its own culture.'' He said the EC had been prepared to discuss the issue of its distribution of tape subsidies, but that it was not prepared to stop seeing culture as something that ``transcends normal economic transactions.''

The two negotiators let fly final warning shots that indicated the dispute would not die with the Uruguay Round's conclusion. After suggesting that the EU had been ready to accept some policy limits, Brittan added, ``Now [we] do not have those limits, our hands are totally untied'' to ``develop cultural policies to protect'' the entertainment industry.

Kantor said the US would use ``every tool at our disposal'' to ensure market access.