7:33 AM Feb 28, 1996

ON-COURSE, AND NOW OR NEVER, IN BASIC TELCOMS

Geneva 27 Feb (Chakravarthi Raghavan) -- The talks at the World Trade Organization (WTO) for an agreement on basic telecom services were described Tuesday as being on track to conclude a deal by end April and also as the last chance for an accord.

This somewhat contradictory message was given Tuesday by the Chairman of the WTO's Negotiating Group on Basic Telecommunications Services (NGBT), Mr. Neil McMillan from the UK, who was briefing newsmen on the eve of a Wednesday 'take-stock' senior-official level meeting of the negotiating group. Some 35 countries, counting the European Union as one, are participating in the talks which have about 6-7 weeks to go, involving not merely the hard bilateral bargaining on offers and requests, but some regulatory and competition issues that could lock in the signatories into global rules, not merely in this sector, but in their entire economies because of the fast evolving nature of the information and communication technologies that everywhere are creating two non-intersecting societies.

The rules to ensure common regulatory standards and accounting procedures (now governed by the bilateral revenue-sharing accords of the International Telecommunication Union) and how to ensure fair competition -- areas where there is a general agreement on need, but could prove difficult when writing down details -- could in fact take time, and has induced some delegates to suggest that the talks could be extended beyond the 30 April deadline.

But others warn against it pointing to the US elections.

But others note that this effect is already under way for some time, and perhaps the Buchanan factor -- the underlying protectionist forces in the United States polity and the genuine fears and concerns everywhere in the world over the socalled globalization and liberalization process seen as benefiting the giant corporations to the detriment of workers and the marginalised -- would not go away whoever wins in the US.

The US this week offered to open up for foreign competition all elements of its domestic telecom market, that have been liberalized by US Congress just recently, but conditional on a 'critical mass' of liberalization offers from other participants.

Though not specifically identified, trade diplomats and WTO officials, say that the US target is Japan, as well as the major Asian and Latin American countries.

Trade officials say that while they don't envisage any problems or difficulties as between Europe and the US, the US, and even more the US companies and operators, are demanding more in the way of offers in what they see as their potential markets: Canada, Asean and other Asians as well as the major Latin American countries.

Japan and Canada are seen as 'offering' much less than a liberalised access. The same complaint is also voiced, for example, against Singapore. These three as well as Australia, Brazil, Chile, Hong Kong, Israel, Korea, Mexico, the Philippines and Venezuela have tabled offers or improved their already tabled ones.

Thirteen developing countries, full participants in the negotiations, are yet to table offers (though some of them are expected to do so before the end of this week's round of further talks, or indicate what they would be doing by the next meeting). These countries who have indicated they would make offers, but have not yet done so, include Argentina, Colombia, Ecuador, India, Egypt, Morocco and Tunisia.

The 19 observers at the talks, but are not participating in the negotiations, include such big emerging markets as Indonesia, Malaysia, Pakistan, Thailand, and South Africa.

Most developing countries have realized that at a time of fast changing technology and the capacity of the big operators to ignore national boundaries (the much used, or abused, US-based call-back services, enabling customers in other countries to bypass the high international telephone call rates of their national telecom companies in calling overseas telephones and services), they need to liberalize for the benefit of other sectors of their economies.

But it is one thing for them to liberalize unilaterally, at whatever measured pace they want to and offer market access in this area, and quite another to argue that they can get the benefits of modern telecommunications and information technology only by locking themselves into a WTO agreement which can't assure them either the investments needed or the technology.

The costs of international communications, thanks to these advances of technology, have down so drastically that it 'costs' as much to call a telephone locally anywhere as to call a telephone around the world.

The major telecom companies in the leading countries are increasingly resistant to continue with the equal share in revenues of the bilateral agreements that developing countries have used to finance their domestic telecom infrastructures.

But to argue that international calls cost just the same as locals, is however to ignore the costs of the vast local infrastructures (telecom systems, and in most developing countries even the power and other infrastructures taken for granted in the advanced countries) needed to initiate or participate in international telecom facilities.

How to square this circle is the difficult political problem facing negotiators in this area, but even more in the entire trade area, and exhortations from international trade officials offer no solutions.

The US telecom industry is making a big pitch for much bigger liberalisation offers from others before the US domestic market is thrown open to foreign competition on a multilateral basis.

In a sense it is the same argument that the US financial service providers used to squelch full US participation, on an MFN basis, in the financial services agreement.

But the threat of withholding access to the US market for foreign service suppliers will cut much less ice with developing countries in the telecom sector than even in the financial services sector.

The group meets again in the third week of March, and is scheduling two more meetings in April by when the offers and schedules of countries have to be finalised for an agreement to be signed by the deadline.