8:09 AM Oct 9, 1995
BASIC TELECOM NEGOTIATORS STRESS MULTILATERAL ACCORD
Geneva 7 Oct (Chakravarthi Raghavan) -- Senior trade and telecommunications officials from some 43 countries agreed Friday to push ahead to achieve a multilateral trade liberalization agreement in the basic telecommunications sector by the deadline of April 1996. The negotiations on a voluntary basis among WTO members was launched at Marrakesh in April 1994, but is yet to pick up momentum. While only some 27 countries (treating the 12-member European Union as one) of the over 100 strong WTO members are participating in the negotiations, with ten of them having tabled their "offers" for liberalization. But the participating countries account for over 90% of the world revenues in telecommunications. A high-level meeting of the Negotiating Group on Basic Telecommunications of the WTO reviewed Friday the progress made so far and agreed on need to achieve liberalization in this and other remaining post-Uruguay Round negotiations on a most-favoured-nation basis and appealed to all WTO members to join the negotiations as full participants. The group is working towards the April 1996 deadline set at Marrakesh. Besides the normal bilateral negotiations on basis of the offers, and requests that would come up, the negotiating group has some tricky issues to tackle including the issues of what the US calls "pro-competitive rules" to underpin the concessions that might be exchanged and scheduled. Related to this difficult issue of competition policy, which may have some specificities relating to the basic telecommunications sector, but has much larger implications in terms of international competition policies which are not within the province of the WTO, is the one of pricing raised by some like the United States. The United States, as part of the rules in this sector wants to get commitments that national service providers, mostly public sector enterprises or monopoly private operators regulated by the State, should provide access, and interconnectivity, to foreign suppliers at what is described as "cost-based" tariffs, with the cost calculations made transparent and publicly tariffed. This last would enable the US and other such foreign competitors to challenge these costs charged before the WTO. In the process, the ability of countries to cross-subsidize their various facilities, and use earnings from profitable sectors to finance the basic universal service activities to their population at affordable costs would be easily jeopardised. As a result, the developing countries, would find themselves even more with a dualistic economy -- a small, metropolitan based, consumers, mostly the transnational corporations and those tied into them for trading activities having a cheap service, and the vast numbers of people and areas of large countries without any basic telephone and other facilities. It was this cross-subsidization capacity, and the mix of services and goods, as the giant US AT & T (before its forcible split-up in the 1970s, splitting up its local telephone company operations, national and international telephone services, and its equipment divisions) was able to run as a virtual monopoly, that enabled the United States to achieve the state of infrastructure it now has. At the Friday meeting, as it had done before at earlier meetings of the NGBT, Japan appears to have underscored its view that while participants could file "MFN exemptions" in respect of their market access and other commitments, these could only relate to any "existing measures" and not to future measures of liberalization. The Japanese contention is based on the provisions of Art. II.2 of the General Agreement on Trade in Services (GATS) and its Annex on Art II exemptions. Art II of GATS provides for MFN treatment: it requires each GATS member to accord immediately and unconditionally, to service and service suppliers of any other Member, treatment no less favourable than it accords to like service and service suppliers of any other member. Para two of that Article however enables a Member to "maintain a measure inconsistent" with this MFN requirement, provided it is listed in the schedule of commitments of the member and meets the conditions set out in the Annex on exemptions which, in para two of its "scope" seems to suggest that "new exemptions" after WTO entry into force have to be dealt with in terms of Art. IX.3 of the WTO agreement which provides for waivers from obligations. In the Japanese view the use of "maintain a measure" in GATS Art.II implies a measure already in place, and allowing its continuance after the GATS came into force, and that any new measure or agreement for facilities to another service or service supplier would be automatically covered by the MFN requirement, unless this is "waived" through a WTO waiver process. If this be correct, the US which appears to be keeping at the back of its mind the possibility of reaching bilateral accords with countries, providing for reciprocal higher level of benefits of access, would not be able to legitimise them in the WTO without a specific, and time-bound waivers. This makes in effect the US efforts to close any future liberalization of its financial services market to WTO members who do not enter into reciprocal bilateral accords WTO/GATS illegal. The US has made such a stipulation in its financial services schedule to the GATS, making only existing access (to suppliers on its market) on an MFN basis. The issue would remain to be tested through raising a dispute and bringing it up before the WTO and its dispute settlement mechanism.