Academic journal article
By Springer, Kenneth D.
Law and Policy in International Business , Vol. 24, No. 4
Television. It's all about television. Or is it? The new world order is increasingly shaping up as an arrangement of three regional economic power centers: Europe, Japan, and North America.(1) Under this new order, telecommunications, and television in particular, are playing an increasingly important role in tying the world together.(2) Into this picture comes one of the most controversial new telecommunications technology developments of recent years: high-definition television (HDTV).(3) The story of its development and implementation is shedding a bright light on the prospects for free trade in high technology product markets under the new world order.
The importance attached to HDTV by the world's industrial powers is revealed by a brief look at their actions. The Japanese alone spent approximately $700 million to develop and promote this next-generation technology.(4) They see a worldwide market with a potential value of $1 trillion in HDTV receivers and equipment.(5) Likewise, a European government-industrial consortium invested more than $350 million to develop its own HDTV system.(6) The Europeans see HDTV as a key to protecting domestic industries and to creating a telecommunications infrastructure for uniting the many countries of the European Commonwealth.(7) Meanwhile, in the United States, HDTV has become a hot political issue as a symbol of efforts to reverse the decline of American competitiveness in world markets.(8)
Why has this seemingly innocuous consumer electronic product generated such interest and become a source of controversy? And what lessons can be learned from the HDTV debate and development about the impact of domestic political concerns on the prospects of free trade in high technology markets?
This Note will review the history of trade in television, consumer electronics, and telecommunications. Following a brief description of high definition television and its origins, the Note will review Japanese, European, and American government initiatives to promote its development. Next, the Note will discuss the four major policy goals that have been offered to justify United States government initiatives to promote HDTV. In particular, this Note analyzes arguments for an HDTV industrial policy based on promoting industrial competitiveness. This Note concludes that the internationalization of high technology markets constrains the ability of governments to reap national benefits from market targeting strategies. Finally, this Note concludes that the history of HDTV demonstrates how domestic political considerations sometimes motivate policymakers to take actions that constrain trade by erecting non-tariff barriers to foreign products.
II. A LITTLE HISTORY
Presently, there are three television systems in use throughout the world. Japan and most of the Americas have adopted the National Television Systems Committee (NTSC) standard.(9) In France and the former Soviet Union, the standard is the systeme electronique couleur avec memoire (SECAM).(10) The rest of Europe uses the phase alteration line (PAL) system.(11) Television programs produced in one system are incompatible with the other systems and have to undergo an electronic conversion to be broadcast in another system.(12)
Although the NTSC television standard was developed in the United States, the United States is no longer a major exporter of television sets and, instead, is a large net importer of television sets from Japan and other Asian nations.(13) This is typical of other popular consumer electronic markets. The United States is a large net importer of consumer electronics products with a net trade deficit of more than $12 billion in 1990.(14) This contrasts with a combined net trade surplus of $6 billion in all other electronic products including computers and telecommunications equipment.(15)
Television is only one example in a consumer electronics trade pattern that has seen new product after product successfully sold from foreign manufacturers into the U. …