8:13 AM Jan 29, 1996

SOME PROGRESS ON TELECOM REGULATIONS ISSUE

Geneva 27 Jan (Chakravarthi Raghavan) -- Negotiators engaged at the World Trade Organization in talks on liberalising the telecommunications services appeared to have made some progress on questions relating to a competitive regulatory framework in markets where there is a monopoly or a dominant supplier of basic services.

The tentative accord on competitive regulatory framework -- to ensure that outside suppliers of various services in this sector, who have to make use of inter-connectivity provided by a domestic supplier of the essential facilities are not put at a disadvantage in competition -- is only one aspect of basic understandings needed.

The negotiations are to conclude by 30 April and the trickiest part - exchange of concessions - is still to get seriously under way.

At Marrakesh in 1994, while concluding the Uruguay Round and signing the WTO agreement and its annexed accords, when the Ministers agreed to continue the telecom negotiations, there were some 19 (the EU and its members being counted as one) participants, all of them from the industrial world.

Since then, a number of developing countries have joined the negotiations and as of December last year some 22 offers on the table. All participants have been asked to table their formal country schedules by 4 March.

An uncertain element in the negotiation is whether the United States will participate in a multilateral process or as in the earlier financial services deal try to take the bilateral route and pry open other markets for its suppliers on a reciprocal basis.

In the financial services negotiations, egged on by its financial service suppliers, the US at the last moment pulled out of the multilateral approach and took an MFN exemption on all future liberalisations of its market -- either for new commercial presence or extending the scope of activities of existing operators from abroad.

At that time, the EU persuaded others to do a MFN deal without the US, and providing for this to be revisited later to see whether a multilateral accord could be signed or whether participants would go back and take a similar approach to the US.

Even in the financial services negotiations, the US was seen as overplaying its hand on 'reciprocity' -- since most developing countries had no great interest in entering and competing in the US (or other industrial country markets). Though US negotiators recognized it, their enterprises pushed them into reciprocity.

In the telecom negotiations, the Third World would have even less of an incentive to yield to the US on telecommunication through reciprocity approach. But the US bilateral reciprocity push while perhaps more related to Europe and Japan, is also related to ensure control of Third World markets for its TNC giants.

Europeans though don't believe they could take the same route as in the financial services sector and try to clinch an accord, without the US.

The regulatory understanding of sorts, in a reference paper that has been tentatively agreed to, would provide for inter-connection to the main telecoms network "under terms, conditions and rates and of a quality no less favourable" than those that an 'essential services supplier' of the country provides to its own telecom services.

It would also have safeguards to prevent the essential services supplier cross-subsidizing the profitable and non-profitable segments to compete unfairly or use information provided by an outside supplier seeking inter-connectivity to compete unfairly with its own similar services.

There are also to be provisions for transparency in licensing and other agreements.

One of the issues yet to be decided is whether these regulatory framework understanding would be part of a general sectoral accord or to be incorporated in country-schedules which would give individual countries, particularly developing countries, greater leeway.