6:56 AM Apr 18, 1996

OPTIMISM, TINGED WITH IFS ON TELECOM PACT

Geneva 18 Apr (Chakravarthi Raghavan) -- Trade diplomats involved in the negotiations on liberalisation of basic telecommunication services at the World Trade Organization seemed generally optimistic that the negotiations could be wrapped up with a deal by the 30 April deadline.

While negotiators gave this assessment Wednesday after a full meeting of the Negotiating Group on Basic Telecommunications, there was still some uncertainty whether in fact a deal would be struck on a multilateral basis.

At the NGBT, it was decided that everyone participating in the talks has to put forward their offers (and schedules indicating clearly the limitations) by 25 April.

Some observers said much would depend on the weekend meeting at Kobe, in Japan, of the Quad countries (Canada, EU, Japan and the United States), both in terms of the liberalisation they would do, how far they would be able to pressure some of the developing countries in Asia and Latin America to 'liberalise' and also whether the Quad themselves would apply their liberalisation to all 'international services' and their connectivity to local monopoly networks, and other hidden or not so hidden measures that would favour their domestic monopolies.

While each of the Quad is pointing to the other, and also trying to collective pressure the other emerging markets in Asia and Latin America, the negotiations are likely to go down to the wire, but might still end up with a multilateral pact, observers felt.

But there are some who think that the big American players, like the AT & T want a liberalisation deal from other countries near-equal to the state of the deregulated US market, particularly on international services and the charges for connectivity levied by telecom administrations for international calls (under bilateral ITU arrangements), so that AT & T and other giants could take advantage and increase their profits in the transactions with developing countries.

However, even those who agree that developing countries need to reduce the costs they charge for international services, in the interest of their own consumers, agree that the changes can't come about as precipitately as the big giant TNCs want.

The posture of the industrial world is that developing countries should just open up their markets, and allow full ownership in telecommunication sectors for outsiders, so that the AT & T, or British Telecom, the French and German alliances, and the Japanese could take over and run things every where, and that the resultant oligopolistic competition would increase efficiency and benefit consumers (on international services).

But this would really result that internally, these companies will increase basic services only to areas where it would be profitable and that for the small users, who use these services within a city or perhaps inside a country, the costs will go up.

Among the Quad countries, Canada is known to be reluctant itself to open up completely. But the Canadians announced Wednesday that their new improved offers would end the monopoly by 1997 and that on domestic satellite services by 2002.

Japan, Hong Kong, the Philippines, Slovakia and Mexico all indicated their improved offers or the direction of further liberalisation they would be taking.

The EU Commission which is trying to focus on the developing country markets, particularly in Asia, and asking the US to join the EU in 'prying open' these markets, in its intervention at the NGBT did not go very much beyond what it has on the table. It merely repeated the offers agreed to by the Council of Ministers at their meeting on 25 March.

The United States indicated that it would be working with a lot of countries bilaterally over the next few days on getting more market openings and all these would have to be studied before it could make an assessment whether the 'critical mass' to which it was looking to was there for it to join an accord.