|Issue:||Latin America I 1998|
|Topic:||The WTO Agreement: Regulatory Challenges for Caribbean States|
|Organisation:||Caribbean Telecommunications Union|
Telecommunications in the Caribbean reveals an interesting perspective on their ownership structure as well as the fragility of viable telecommunications in the region. Here, Roderick Sanatan of the CTU discusses the regulatory challenges in light of the WTG Agreement on Basic Telecommunications Services. He also discusses the offers from the Caribbean and their raison d’etre, some particulars of the General Agreement on Trade in Services (GATS) which will be important for negotiations, and offers further reflection on provisions of the WTG which require creative use.
The 13 Caribbean countries comprising the Caribbean Telecommunications Union (CTU) have broached the issue of trade in telecommunications services through consultations on the WTO Basic Telecommunications Services Agreement. We are committed not only to the remit and scope of the Agreement and the Reference Paper but also to the wider principles and operations of the General Agreement on Trade in Services (GATS) and its annexes. In particular, we are struck by the major contents of the GATS in the following clauses: · Article II – Most Favoured Nation (MFN); · Article III – transparency; · Article VII – monopolies and exclusive service providers, and · Article XVI – market access. The monopoly issue can be tested by new entrants which feel that exclusive provisions are hindering competition. Market access conditions are tied to transitional issues and to the means for increasing the participation of developing countries in the global liberalisation process. For the Caribbean, the WTO Agreement offers: · the choice of bringing services and increasing variety to consumers; · providing investor confidence; · the opportunity for negotiating leverage through regional co-ordination, and · the opportunity for policy framework planning in anticipation of regulatory changes. Strategy for Change The ownership structure of Caribbean telecommunications reveals a monopoly (foreign) provider of telecommunications services (see Figure 1). This is a conscious role for the State, which owns little of the sector, and the fragility of viable telecommunications in the Caribbean given the impact of new technologies and the forthcoming decline of the traditional telecommunications correspondents/ operators. For any Caribbean strategy to be part of the competitive, modem economy requires opportunity windows to reduce the impact of exclusive operator interests, to finance long-term licences and to accelerate the growth of the telecommunications sector. The strategy was therefore both gradual and enabling, first identifying easily competitive areas outside the existing ‘licences’, then establishing negotiable dates for liberalisation of services, and opening up new services areas (e.g. new satellite services). In the first batch of offers from CTU countries (Figure 2), there is strong support for liberalisation of value-added and satellite services, and wide acceptance of the Reference Paper. We anticipate that regulatory changes will be developed in 1998 through awareness – i.e. building, concerns about fair trading practices and the need to renegotiate licences in an era of competition. We further anticipate modified legislation and new capability exercises for independent regulators. Some WTO Challenges The recent US Federal Communications Commission (FCC) Flexibility Order related to the WTO Agreement offers, paradoxically, negotiating space to Caribbean telecommunications carriers, with its open door for consultations policy for countries signing the Agreement. Pro-competitive status is clearly an insufficient cause, but an active ingredient to negotiate space and time against the FCC’s recent ‘hardline’ approach to benchmarks. The ‘progressive’ liberalisation approach underscored in a proper interpretation of the GATS creates room for developing countries to negotiate their incorporation into the global trade system. Specifically, we should take advantage of the following key Articles of the GATS: · Article XIX – gives room to consider the pace of opening of the markets of developing countries in negotiating specific commitments; · Article IV – caters for facilitating transition steps under the ‘increasing participation’ approach; · Article XXV – points to a regime of technical assistance, which is further underscored in Paragraph 6 of the Annex on Telecommunications, indicating technical co-operation for developing countries through international and regional organisations; and · Article XII – recognises the problems of transition (e.g. safeguarding the balance of payments, etc.) under ‘restrictions’. There is the further challenge of access to networks. This was a key issue of the midpoint review of the Uruguay Round of the GATS (in 1990, in Montreal). Still unclear, but obviously an area for distillation, is how to determine access to networks. This issue is going to be very important for developing countries in future discussions – in part because of the FCC decision at the recent UN Geneva Assembly regarding ‘a right to communicate’ in the context of universal access to basic communication and information services, and in part because of the impetus given to policies for interconnection in the WTO Reference Paper on Regulatory Principles, and also in part because of the build-up to the WTO 2000 round of negotiations on information technology. Another challenge is regional agreements. Article V of the GATS speaks of economic integration and describes coverage under ‘national treatment’, but as ‘substantial sectoral coverage’; that is to say, we can include ‘coverage’ for regional agreements depending on the number of sectors, the volume of trade affected and the modes of supply. For the Caribbean, pursuing trade agreements in the hemisphere of the Americas, it is a moot point that there is ‘coverage’ of protection under the GATS for the Free Trade Area of the Americas. Guidelines on Value Added Services Finally, Caribbean countries, within the telecommunications trade regime being shaped for the Americas, can use the GATS principles to develop their point of leverage in implementing the CITEL Guidelines on Value Added Services. · Operators or providers of value added services should be accorded non-discriminatory, transparent treatment, equal commercial opportunities with treatment no less favourable than that each Member State accords to its national operators or providers of value added services. · Administrative procedures for value added services should be administered on a non-discriminatory transparent and expeditious basis and be based on reasonable and objective criteria. · Member States should adopt principles to promote non-discriminatory, transparent and reasonable and equitable costs for interconnection services to the public network in a manner that establishes equal opportunities and conditions for everyone, including the network operators and their affiliates. Provisions for Enhancement In the telecommunications industry, three areas arise for concern where there will have to be action in order to create provisions for enhancement. Customer Protection: There is no reference in the GATS to any form of particular protection which should be given to customers to prevent unfair (discriminatory) behaviour; Dispute Settlement: Article XXIII creates Rights enforceability and duties between Member Countries. In other words, telecom entrants in the market place have no direct call on the Agreement to complain, except through their government, and Trade and Competition Policy: This provision was established in the Singapore Declaration in December 1996, the call for a working group to examine the interaction between trade and competition policy. The development dimension of this provision underscored this, since it points to co-operation with the work of the United Nations Conference on Trade and Development (UNCTAD) and since it declares as unfinished business ‘explicit consensus decision’ for future negotiations regarding multilateral disciplines in trade and investment. Developing Independent Regulation In the cases of Trinidad and Tobago, and Jamaica there are some moves towards instruments for independent regulation. In the stepping up of the pace to implement this WTO discipline, the following three perspectives may be important: · . The role of government, in setting up an independent authority to establish a regime of administrative practice with an environment of certainty, transparency and interoperability. · . The goals and objectives of independent regulation should hold as their essence the management of the transition from monopoly to market, a long-term responsibility to competition, and developing ways to cater for the cultivation of a sensitive private sector as a major beneficiary of regulation. · . Flexibility and best practice of the regulatory system as the country adapts to the evolving market. This requires an effective national level system with specific instruments for interconnection, tariffs, dispute settlement among operators, rule-making, technical standards, etc. It will also be critical to design the transition steps, within telecommunications reform policy. Conclusion In designing the process of enablement for the new WTO regime, governments must act as the protectors of the public interest. The private sector should also accept and promote the role of trade and competition, developing a stream of competitive services that lead to the expansion of the national economy. Training systems will be required for some time to build up skills within the independent regulator. At a wider level, there is clearly the need for sharing of experience between incipient regulatory bodies within the embrace of the CTU and among wider hemispheric fora.