|Latin America I 1997
|Facts and Consequences:WTO Agreement on Basic Telecommunications Services
Analysys, Europe’s leading independent telecommunications consultancy, provides a summary of the results of a two-year round of negotiations conducted under the auspices of the World Trade Organisation (WTO) which has culminated in the recent WTO Agreement on Basic Telecommunications Services. Gillian Marcelle gives a quick-reference, country-by-country guide to the Agreement and its consequences.
The Agreement covers all public and private telecommunications services that involve the end-to-end transmission of customer-supplied information (e.g. simply the relay of voice or data from sender to receiver). The signatories also agreed that both basic telecommunications services provided over network infrastructure and those provided through resale (over private leased circuits) would fall within the scope of the Agreement. As a result, the market access commitments cover not only the cross-border supply of telecommunications but also the services provided through the establishment of foreign firms, or commercial presence, including the ability to own and operate independent telecommunication network infrastructure. Telecommunications services covered by this Agreement therefore include voice telephony, data transmission, telex, telegraph, facsimile, private leased circuit services (i.e. the sale or lease of transmission capacity), fixed and mobile satellite systems and services, cellular telephony, mobile data services, paging, and personal communications systems. ‘Value-added services’ such as on-line data processing, on-line database storage and retrieval, electronic data interchange, email or voice mail, were not formally part of these negotiations but were already liberalised in 44 schedules (covering 55 countries) at the end of the Uruguay Round. Summary of Commitments made by Signatories To understand what the agreement means and the level of participation of all the signatories, a comparison is made based upon the following considerations: Ÿ the range of services about which market access commitments were made; Ÿ the timing of liberalisation measures; Ÿ the existence of foreign ownership restrictions; Ÿ Most Favoured Nation (MFN) exemptions; and Ÿ commitment to a common set of regulatory principles as set out in the WTO reference paper. Consequences of the Agreement Open Markets The 69 countries which committed to various levels of market opening, as described in their final offers, must allow suppliers of telecommunications services from other WTO members to provide services (by any of the modes included in their schedule), without evaluating whether or not that member provides a similarly open market. The most significant implication of this will be the requirement to permit telecommunications operators based in other WTO member countries to build network infrastructure and compete in the national market on an MFN basis. Entry can no longer be restricted to those countries that provide reciprocal access or are parties to bilateral agreements. As a result, market structure is likely to move away from monopoly or oligopoly in those markets which are of sufficiently large size (and where there is a high growth potential) to attract foreign entrants. Increased Market Opportunities As a result of the liberalisation of telecommunications services, TOs and service providers will have access to a larger market and will be able to establish new network infrastructure and become a facilities-based carrier providing cross-border services. The services, such as calling card, ‘country direct’ or resale carrier services (often referred to generically as “light carrier” services), enjoy interconnection rights for facilities-based or non-facilities-based services. Opportunities will be available in the markets of any of the countries which scheduled commitments in these specific areas. Changes in Regulatory Structures WTO members will have to change national legislation and regulatory structures to be in line with the General Agreement on Trade in Services (GATS) “general obligations and disciplines”; for example, those concerning the “transparency” of regulatory rules and sector specific commitments. Signatories are moving towards implementing these changes at varying speeds. Domestic Rules Open to Challenge under International Law The dispute settlement mechanism, which forms part of the GATS, fundamentally changes the context in which national regulators will make decisions regarding their telecommunications market structure. It provides a means whereby any WTO member can potentially change the behaviour of other members – it can seek to reduce obstacles to competition by challenging certain aspects of their policies, laws or practices, alleging non-compliance with general GATS provisions, the Telecommunications Annex or scheduled commitments arising from the WTO Agreement on Basic Telecommunications Services. Standardisation of Regulatory Design and Practice Countries making ‘additional commitments’ are bound to adhere to a common set of regulatory principles, covering issues such as licensing, interconnection, competitive safeguards and regulatory independence. Continuous Change or Stability The GATS create a tension between forces – those which will act to bring about stability and those which will drive towards change: Ÿ the institutional arrangements of the WTO ensure that all signatories are bound by legally-enforceable agreements and must compensate other members if they fail to live up to their commitments. This should provide increased stability for the international trade system, as countries will be less likely to unilaterally or arbitrarily renege on commitments. Ÿ at the same time, the WTO provides for “progressive liberalisation”, which means that there will be further rounds of negotiations in future. There is also a tendency towards increasing complexity as the issues which are included in the scope of trade negotiations expand to include regulatory practices and other technical issues. There is little explicit acknowledgement that the ability of different countries to manipulate these institutional arrangements will vary considerably and that richer nations which are well resourced with technical expertise are much more likely to benefit from the contradictions of the system. Moreover, the process of continuous change imposes a heavy informational and technical cost on the regulators and policy makers, particularly in developing countries. Institutional Development Requirements Must be Accelerated To ensure that developing countries have access to the resources in order to fully understand the implications of the levels of commitment to liberalisation (in the form of scheduled agreements etc.) they have adopted, there is an urgent need for institutional development programmes to fund and train regulators and promote partnership among regulators and other regulatory experts.