The opening of markets and free trade are two paradigms of globalization in which the United States has been most deeply committed. Between the eighties and nineties the phase of opening was fulfilled, and from then on the challenge is to deepen free trade under favorable conditions for each country.
In 1994, Mexico signed NAFTA with Canada and the United States, creating the second most important free trade area in the world, with 370 million consumers. And in 2002 Chile did the same with the United States. The countries of Central America, Peru and Colombia followed in order.
Among Latin American countries, the great concern is the asymmetry with the U.S. economy. And there is no shortage of reasons. Five of the ten largest audiovisual production companies in the world are North American. And Hollywood, in 2003, exported more than $90 billion. That is, 30 thousand times more than what the giant Mexico exported.
Broadcasting and cable systems were excluded from the NAFTA negotiation, to which they are only applied to guarantee operators access to the networks.
But in terms of television, one of the basic issues has to do with screen share. Mexico negotiated its cultural industries on the principle that its culture is strong and does not require special protection. As a consequence, it accepted that cinema, books and magazines, radio, music, television and content production should be classified as services and not as cultural industries. This means they cannot receive subsidies, incentives or state protection.
The effect of this policy on the production of Mexican films, which fell from an average of 122 a year to just seven, was not long in coming.
In any event, Mexico reserved the right to adopt measures on investment in and provision of broadcasting services, multipoint distribution systems, continuous music, as well as high-definition television. But this reservation does not apply to the production, sale or authorization of rights to radio or television programs.
Chile, for its part, excluded the cultural industry from NAFTA. The broadcasting and cable distribution of radio or television programmes may be intervened in order to ensure operators' access to public telecommunications networks and services.
In terms of screen share, Chile maintained its legislation, which allows it to set a minimum of up to 40% of programs of national production on open television. The screen share in open television in Peru was set at a weekly minimum of 30%, between 5:00 and 24:00 hours.
For its part, Colombia maintained the current screen share. However, in the programming of weekends it is reduced to 50% and from 2009 to 30%. And once digital television is implemented, the screen share will only be applicable to two channels or 25% of the total channels that the operator broadcasts.
Another basic aspect of these FTAs is foreign investment and its conditions. In Peru, for example, only Peruvian natural or legal persons incorporated and domiciled in the country may be holders of broadcasting licenses. In addition, Peru established a 40% ceiling for foreign investment in television operators, and conditioned it on the investor being the owner or shareholder of broadcasting companies in their country of origin.
Chile reserved the right to regulate cross-border trade in digital telecommunications services and one-way satellite transmissions, such as video and audio DTH, and all those intended to be received directly by the general public.
In Colombia, foreign investment for free-to-air television remained at 40% and without limit for subscription television, but the licensee must be a Colombian legal entity.
On the other hand, Colombia released the number of concessions for free-to-air television and subscription television, subject to an economic necessity test. And it was agreed that at the regional level the television service is only provided by State entities.
Pay-TV was freed from the obligation to distribute regional and local channels. But the conditions were maintained to include advertising in Colombian territory. In addition, it was obliged to produce at least one hour of national programming per day and broadcast it between 6:00 p.m. and 24:00 p.m.
With regard to cinema, Colombia may establish an obligation that up to 10 per cent of films broadcast on free-to-air television be national.
And with respect to the transmission of advertising on open television, Colombia reserved the right to demand that up to 20% of it be created and produced in the country.
