RESTRICTEDWORLD TRADE
ORGANIZATIONS/C/W/153
21 June 2000
(00-2509)
Council for Trade in Services Original:  English
COMMUNICATION FROM AUSTRALIA
Termination Services
The attached paper has been received from the delegation of Australia with the request that it
be circulated to Members of the Council for Trade in Services.
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Summary
1. Australia recommends that the Council for Trade in Services (CTS) agree that:
• termination services are traded services that should be subject to GATS trading
principles;
• there is nothing special or unique about te rmination services that justifies different
treatment from other services, including other telecommunication services;
• the competitive safeguards principles outlined in the Reference Paper should apply to
termination services;
• the moratorium on disputes relating to accounting rates should be removed.
Accounting Rates
2. In its report of 15 February 1997, the Group on Basic Telecommunications advised its
understanding that  “...accounting rates would not give rise to action by Members under dispute
settlement under the WTO; and that this understanding will be reviewed not later than the
commencement of the further Round of negotiations on Services Commitments due to begin not later
than 1 January 2000...”.
3. Accounting rates are the rates, set by contract  or other bilateral agreement, that apply to
financial settlements between telecommunication carriers pertaining to the termination by each carrier
of telecommunication traffic originated by the other carrier.  International accounting rates are subject
to GATS disciplines to the extent that individual governments maintain or apply regulatory measures
that determine or substantially affect those rates.
4. The application of the GATS to "measures by Members" is defined broadly in Article XXVIII
as any measure by a Member in the form of a "law, regulation, rule, procedure, decision,
administrative action, or in any other form".S/C/W/153
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Applying GATS Principles to Termination Services
5. Measures that Members apply to the termination of international telecommunications services
or interconnection (that is, ‘termination services’) are covered by the GATS.  Termination services
may be an element of international telephone services, international mobile services,  internationaltelecommunication satellite services, B-ISDN services, packet-switched data transmission services,
etc.
6. In the modern telecommunications environment, there are many methods of settling accounts
other than by the accounting rate method.  Australia considers that there should not be discrimination
between different methods of settling accounts.
7. A telecommunication call or service that originates in one country and terminates in another
country includes a termination service that is an imported service to the call originator, consumed
abroad
1.  Termination services can be imported and exported.  As such, they are traded services and
should be subject to the trading principles of the GATS.
8. In liberalised markets, international termination services may be delivered by different modes
of supply:
• commercial presence :  a carrier that has commercial presence in more than one
country can provide an ‘end-to-end’ termination service that originates in one country
and terminates in another, all within its own network, or it may interconnect to
another domestic network, providing all or part of the termination service in the
destination country.  Under this scenari o, the network node (connection point) in the
destination country should receive national treatment in making interconnection to a
terminating domestic network.
• consumption abroad : in contemporary telecommunications markets, an end user may
have a direct commercial relationship with a carrier that has no commercial presence
in the country where the service is consumed.  Examples may be found in certainforms of satellite-delivered telephony and data services, mobile roaming, and
international callback services, as well as many value-added services. Under this
scenario, the originating carrier should be able to receive most-favoured-nation
treatment at any national network gateway and national treatment beyond the gateway
in providing a termination service.
• crossborder supply :  a carrier can originate a service and hand it over, within the
originating jurisdiction, to an international carriage and termination service provider.
Under this scenario, national treatment shoul d apply to the international carriage and
termination service provider in the country of origin of the traffic.
9. Most countries which committed themselves to the Agreement on Basic Telecommunications
and the Reference Paper have implemented - or are in the process of implementing - a competition-based telecommunications regime that should support all these modes of supplying termination
services.  The application to termination services of  the competitive safeguard principles identified in
the Reference Paper should minimise inappropriate exploitation of market power in termination
services.
                                                     
1 Certain elements of an international call service are also usually provided in the country of origin,
such as the access service.S/C/W/153
Page 3
10. The continuing trend toward competitive, rules-based interconnection markets for exchanging
termination services indicates that any extension of the moratorium on action related to accounting
rates is not justifiable.  Any extension will serve to provide protection for measures that allow or
require GATS-inconsistent discriminatory practices.
11. Australia considers that the circumstances that led to the 1997 implicit moratorium no longer
apply. There is no case for exempting ‘accounting rates’ or the termination services to which they
apply from GATS disciplines. The implicit moratorium on recourse to dispute settlement should
therefore be lifted.
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