7:40 AM Mar 25, 1996

TELECOM TALKS MAKE LITTLE HEADWAY

Geneva 23 Mar (Chakravarthi Raghavan) -- Negotiations for liberalisation of basic telecommunications services appeared stalled Friday, with negotiators due to resume another round of bilateral talks from 10 April, culminating in a multilateral meeting of the negotiating group on 15 April.

The deadline for the conclusion of these negotiations is 30 April and at both an informal meeting chaired by WTO Director-General Renato Ruggiero and a informal and formal meeting of the negotiating group, everyone spoke of completing the negotiations by the deadline and not extending the deadline.

Trade diplomats said that the United States was keen to clinch an accord, with a "critical mass" of "offers" by others to open up their markets for competition from US 'giants' through investments.

The US also wants to what it calls disciplines on 'competition' to ensure that domestic monopolies and near-monopolies provide competitive conditions for outsiders.

On the latter there has been a paper, with some square brackets, that has been before the negotiators for some weeks, but its status and negotiations based on that was challenged Friday by India and a few others who are the targets of this.

One effect would be that the current practice of many telecommunications authorities and monopolies of countries to cross-subsidise the profits from earnings on external connections for the expansion of their domestic telecommunication services, particularly its extension to the non-metropolitan centres and rural areas.

The United States, and its private monopoly (Bell Telephones), until its monopoly was broken up by the courts, did such cross-subsidisation, and this is also true of other advanced countries like Britain.

Developing countries generally are reluctant to give this up.

On the market opening, of the 37 participants (51 governments) participating in the talks (the EU's 15 being treated as one), there are draft offers from 24 (or 38 governments), and of these seven have tabled 'revised' offers. Other participants, from Asia and Latin America (these include Argentina, Colombia, Ecuador, Egypt, India, Morocco, Peru, Thailand, Tunisia) have not tabled so far any offers.

There are also some 26 (observers) and none of them have made any offers. These include Brunei, Indonesia and Malaysia (in Asean), Pakistan, South Africa and Uruguay.

Several of those participants who have not tabled offers, or have not revised their original offers, are under pressure from the US, EU and the WTO head to make 'offers' or 'revised offers' to enable the negotiations to be concluded with what the Americans call a 'critical mass'.

The Americans, who have offered to liberalise to outsiders their own domestic markets which have been recently liberalised, are complained that the Europeans are not offering enough, and that some of the major EU States restrict foreign ownership to a minority share only.

The EU Commission's efforts to "improve" these offers have been blocked by the member states who have such restrictions - France, Spain, Belgium, Portugal and Greece.

The EU Council of Ministers, at its meeting next week in Brussels is expected to try to resolve the conflict, but indications are that it is unlikely to be able to do so.

On Friday, the WTO head, Renato Ruggiero spoke at an informal meeting of the negotiating countries that the stakes in the negotiations were high and that, given the strong demand of telecom users that negotiations should succeed, "to let it fail would be simply unacceptable".

There are some negotiators who believe that while the US is upset with what it sees as the inadequate EU offers, at the end of the day, nearer to the 30 April deadline, the US and EU would find a way around their differences, and try to join (as the EC Commission officials have been suggesting in Brussels) to open up the Asian markets. Others are not so sure, and any event it is not so certain a transatlantic alliance will succeed.