1:47 PM Nov 15, 1996

GROUP ON BASIC TELECOMMUNICATIONS (GBT) NEGOTIATING AN AGREEMENT

Mr. Neil McMillan, an official of the UK Trade and Industry Department who is steering the talks, told the media that the "new offers" by the United States and the European Union, as well as new and revised offers and/or prospects of this promised by six other countries provided encouragement for a successful conclusion.

"But I am not going to stake any money at this stage on getting a deal," the British official said.

"But this is the last chance for an accord in this century, and if we miss this it will be a long time before we can get one," McMillan said, adding "it is foolish to pass it up."

This appeared to be aimed at the US which has been insisting, as a price for an accord, on others, particularly the developing countries of Asia and Latin America, to open up their domestic markets and match the deregulated and liberalised telecom market in the US.

The EC, while joining the US in trying to pressure others, particularly the ASEAN and other Asian countries, to open their markets to foreign suppliers to provide the profitable, value-added services, through investments, however appears to have taken the view that most of the targets would not go very much beyond what they have done so far.

This is an appreciation that the threat of licensing and closing off of US markets will not deter these countries -- since none of them have the ambition, capacity or hope to compete in the markets of advanced countries, and see any liberalisation of their markets in terms of what they need.

McMillan said that the "encouraging" prospect was also due to a statement by the United States that in their own "internal talks", they had found a potential way of dealing with a problem in international services (where US providers would face a monopoly or a dominant supplier in another market, and thus lose out on revenue).

Washington apparently believes that it could tackle the problem of "unfair competition" by a monopoly or dominant enterprise at one end of the international service, through licensing conditions applicable to all licensees, and thus on an MFN basis.

The US previous position on this question, as well as on satellite services had prevented an agreement being clinched in the talks (sanctioned at Marrakesh among interested countries) that ended in failure in April.

Neither McMillan nor EC negotiator, Mr. Falkenberg who also referred to the US statement (at a separate briefing), could say what exactly the US would be doing.

But Falkenberg said that in respect of this problem, which related to payments between operators at either side (governed by ITU and bilateral agreements among PTT administrations), the US had the intention of establishing "benchmark settlement" payments for outward traffic of US operators and the U(S would expect these operators to bring their effective international settlement rates in line with bench-mark levels over a given period of time.

His remarks though implied that the EC at the moment was accepting these assurances, but that would make its final judgement on seeing things on paper. Every participant, he noted, would have the right to continue to regulate services in their markets, but in a non-discriminatory way. The WTO provided enough remedies to deal with any problems that would arise, he added.

According to McMillan, South Africa (which has made no offer so far), he said, had now said that it would make an offer, while revised offers are expected from Singapore, South Korea, Mexico, Poland and India. Slovakia put forward also a revised offer. Canada and Brazil expect to improve their offers by January.

Japan, according to McMillan, made some "helpful comments" and said that its "offers" already provided for full liberalisation of services and networks, though these have investment restrictions. Japan will not be able now to make any substantial revised offer, but their entire policy was under review within the country and as soon as this is completed, they will look carefully into their position.

Malaysia and Indonesia, two of the "targets" of US and EC focus for "liberalisation" offers have however shown no inclination to move in the matter, he added.

He would not comment on whether the new or revised offers and promises would be sufficient to provide the "critical mass" that the US is "looking for" for concluding an agreement.

"Like beauty, 'critical mass' is in the eye of the beholder," he said.

The US negotiators also told the GBT that the US Supreme Court's refusal to intervene and overturn a lower Appeals Court decision (that the Federal Communications Commission had no jurisdiction to regulate regional and state-level telephone enterprises) would not come in the way of the US undertaking obligations and providing for inter-connectivity within the domestic telephone systems.

Falkenberg said that while like everyone else they would have to wait and see the actual US scheduling, they accepted the US statement now that no MFN derogation would be needed -- thus removing a major obstacle to an agreement.

"We could all now concentrate on getting others to put in offers or improve them so that we could have a good package," he said.