RESTRICTED
GENERAL AGREEMENT TS/NGBT/W/2
8July1994
ONTRADE INSERVICES
(94-1432)
Negotiating Group onBasic Telecommunications
REVIEW OFOUTSTANDING ISSUES
Note bytheSecretariat
1. Atthemeeting oftheNegotiating Group onBasic Telecommunications of6May1994, the
Secretariat wasasked toprepare abackground notesummarizing points made inprevious discussions
ofissues currently identified asneeding further examination. Theselection ofissues addressed inthis
notewasdrawn fromthose listed inparagraphs 7and8oftheNotebytheSecretariat of10June1994
(TS/NGBT/W/1/Rev.1) andthose suggested byparticipants atthe6Maymeeting (TS/NGBT/1). The
issues areonesupon which there isgeneral agreement thatfurther discussion mayhelpprovide the
necessary technical orconceptual foundations fortheadvancement ofnegotiations.
2. Itwasnoted atthemeeting of6Maythattheissues currently identified asrequiring further
discussion, andwhich arecovered inthisNote, didnotrepresent aclosed listofissues. Participants
havestressed theneedtoremain open tothepossibility ofaddressing anyissues thatmayrequire
discussion orclarification throughout theperiod ofnegotiations onbasic telecommunications.
Issues raised inthedraft model schedule
3. Thedraftmodel schedule indicates thatthereisaneedtodetermine whether anysector-specific
clarifications ofmodes ofsupply arerequired. Theneedforclarification relates particularly tocross-
border supply (mode 1)andconsumption abroad (mode 2).Paragraph (a)ofArticle I:2oftheGATS
defines cross border asthesupply ofaservice "from theterritory ofoneMember intotheterritory
ofanyother Member". Paragraph (b)defines consumption abroad asthesupply ofaservice "inthe
territory ofoneMember totheservice consumer ofanyother Member." Itisalsorelevant tonote
that"supply ofaservice" isdefined inanillustrative manner inArticle XXVIII(b) asincluding "the
production, distribution, marketing, saleanddelivery ofaservice".
4. Participants haveobserved thatarriving atabetter understanding howthese twomodes of
supply apply tobasic telecommunications would improve theclarity ofschedules ofcommitments.
Discussion would needtoreview thetypes ofmeasures andthekinds ofbasic networks orservices
activities which would beofparticular relevance toscheduling limitations ofmarket access andnational
treatment inthesemodes. Afewexamples ofmeasures oractivities havebeensuggested butnotfully
explored. Forexample, calling cardorcountry direct services inwhich thecustomer isoutside the
territory oftheservice supplier were citedaspossible examples ofconsumption abroad. Regarding
cross-border supply, thequestion hasalsobeenraised whether thereareparticular types ofgovernment
measures, suchasarequirement tointerconnect withthepublic telecommunications operator, thatmight
needtobescheduled aslimitations. However, itisgenerally agreed thattounderstand whether these
oranyother networks, services ormeasures might berelevant, andhow, willrequire detailed
examination.
5. Questions havearisen regarding howtodealwithtechnical constraints onnumber ofsuppliers
which areapplied forsome types ofbasic telecommunications. Anexample oftechnical constraints
would belimits onthenumber ofradio frequencies thatcanbemade available forassignment or
allotment. Participants agree thatifsuchmeasures involve discrimination against foreign suppliers theyTS/NGBT/W/2
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would needtobescheduled under national treatment. However, differences ofviewremain onwhether
ornottoschedule non-discriminatory limitations onthenumber ofsuppliers, established strictly for
technical reasons, aslimitations onmarket access. Forsectors where market access commitments are
undertaken, Article XVI:2 liststhetypes ofmeasures which aMember cannot maintain unless specified
ititsschedule. Paragraph (a)ofthatlistspecifies "limitations onthenumber ofservice suppliers whether
intheform ofnumerical quotas, monopolies, exclusive service suppliers ortherequirements ofan
economic needs test".
6. Some participants havesuggested thatwhen thenumber ofsuppliers islimited forstrictly
technical reasons Article XVIshould notapply. They argue thatsuchrestrictions arenotlimitations
onmarket access, butareinstead covered bytheobligations ofArticle VI.Ifthisisthecase,paragraph
4ofArticle VIwould beofparticular relevance, e.g.,themeasures usedtodetermine which suppliers
toselect would needtobebased on"objective andtransparent criteria" and"notmore burdensome
thannecessary toensure thequality oftheservice". Other participants havenoted thattheyremain
unconvinced thatArticle XVIdoesnotapply. They point outthatArticle XVIdoesnotspecify any
special circumstances which would permit participants nottolistlimitations onthenumber ofsuppliers.
7. Thepointwasalsomadethat,astechnologieschange,iftherelatedlimitsonnumberofsuppliers
werenotadjusted accordingly thenumerical limits onsuppliers could represent market access barriers
rather thantechnical limitations. Therulesandprocedures foraddressing suchasituation would differ
substantially, depending onwhether suchmeasures wereconsidered tofallunder Article VIorunder
Article XVI.
8. Themodel schedule alsonotes thatfurther discussion isrequired onwhether certain measures
listed ascandidates foradditional commitments would needtobeaddressed inthecontext ofnegotiations
and,ifso,whether theyareadequately covered byother provisions oftheAgreement orwhether they
needtobeaddressed asadditional commitments. Inthisregard, thedraft model schedule liststhe
following: procedures orrequirements related tolicensing, allotment ofradio frequencies, numbering
andidentificationcodes,typeapprovalandinterconnection;measuresrelatedtopricing(e.g.cost-oriented
pricing); andrights ofwayfortheconstruction ofinfrastructure. Inlightofthefactthattheserepresent
categories ofmeasures, participants generally agree thatfurther discussion ontheneedforadditional
commitments should focus onspecific measures within these categories andthatparticipants should
identify thenature oftheproblems theyhaveassociated withthem.
9. Article XVIII states thatMembers maynegotiate andschedule commitments withrespect to
measures "notsubject toscheduling under Articles XVIorXVII, including thoseregarding qualification,
standards orlicensing matters". TheExplanatory NoteonScheduling ofInitial Commitments inTrade
inServices (MTN.GNS/W/164) explains that"such commitments caninclude, butarenotlimited to,
undertakings withrespect toqualifications, technical standards, licensing requirements orprocedures,
andother domestic regulations thatareconsistent withArticle VI".
10. Ontheonehand, some participants notethatArticle XVIII isopen ended, providing the
opportunitytoseekcommitmentsregardingmeasuresforwhichspecificproblemshavebeenencountered.
Ontheother hand, some participants areoftheview thatmany, ifnotall,suchmeasures maynot
needtobeaddressed within thecontext ofthenegotiations astheymaybeadequately governed by
other provisions oftheGATS. Other relevant provisions might include Article III(Transparency),
ArticleVI(DomesticRegulation),ArticleVIII(MonopoliesandExclusiveServiceSuppliers),ArticleIX
(Business Practices) orprovisions oftheAnnex onTelecommunications. However, proponents of
bothviews haveindicated awillingness todiscuss whether ornotanyspecific measures thatmaybe
identified would beadequately resolved through compliance withother provisions oftheGATS or
bythescheduling ofcommitments under Article XVIII.TS/NGBT/W/2
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11. Finally, thedraft model schedule notes thatthere isaneed forfurther discussion ofthe
applicability oftheAgreement tomeasures related tointernational agreements between operators. The
questions thathavebeenraised focus onwhether anyofthekinds ofterms andconditions thatare
contained insuchagreements might berelevant tothescheduling ofcommitments orwhether differences
insuchagreements might constitute adeparture fromMFN treatment oranyother GATS obligations.
Oneoftheconcerns identified inthisregard istheaccounting ratesaspect ofsuchagreements. Some
participants haveexpressed theviewthatinternational agreements between operators arecommercial
arrangements, rather thangovernment measures, andassuchtheGATS would notapply tothem.
Other participants havesuggested thattheprevalence ofmonopoly suppliers thatmaybeowned, run,
orauthorized bygovernments means thatthere isalikelihood thattheagreements orcertain aspects
ofsuchagreements mayrelate togovernment measures within thescope oftheGATS.
Other issues raised indiscussions
12. There hasbeenuncertainty expressed regarding theobligations ofArticle VIgenerally and
about therelationship between those obligations andthenegotiation ofcommitments withrespect to
certain types ofmeasures applied tobasic telecommunications. Thetypes ofmeasures inquestion
relate particularly, butnotsolely, tolicensing, approval, andstandards-setting procedures orcriteria.
Some participants havenoted thattheirlackofcertainty regarding theobligations ofArticle VImakes
them unsure howtodetermine when aconcern would beadequately addressed bycompliance with
Article VIandwhen itmight besubject toscheduling under Article XVIorArticle XVIII (seealso
discussion onadditional commitments, above).
13. Some points ofpotential relevance tothisissuearepresented inparagraph 5oftheExplanatory
NoteonScheduling ofInitial Commitments inTrade inServices (MTN.GNS/W/164). TheNotecites
examples oflicensing-related criteria thatareoutside thescope ofArticle XVI(e.g.minimum capital
requirements). Itgoesontoexplain that"Ifsuchameasure isnon-discriminatory, itissubject tothe
disciplines ofArticle VI:5. Where suchameasure doesnotconform tothese disciplines, anditcannot
bejustified asanexception, itmust bebrought intoconformity withArticle VI:5 andcannot be
scheduled." Paragraph 5requires Members nottoapply licensing andqualification requirements and
technical standards thatnullify orimpair specific commitments inamanner thatisinconsistent with
thecriteria inparagraph 4andthatcould notreasonably havebeenexpected atthetimeacommitment
wasmade. Thecriteria listed under paragraph 4arethatsuchmeasures are:based onobjective and
transparent criteria; notmore burdensome thannecessary toensure thequality oftheservice; and
inthecaseoflicensing procedures, notinthemselves arestriction onthesupply oftheservice.
14. There isgeneral agreement thatitwould beuseful toobtain greater clarity regarding the
application ofArticle VItomeasures affecting trade inbasic telecommunications. Ithasalsobeen
noted thattheneedforclarity isnotlimited totheprovisions ofparagraphs 4and5;inthisregard,
paragraph 1hasalsobeenmentioned. Itwasalsorecalled thatArticle VI:4directs theCouncil for
Trade inServices towork ontheestablishment of"anynecessary disciplines" relating toqualification
requirements andprocedures, technical standards andlicensing requirements withaviewtoensuring
thatsuchmeasures donotconstitute unnecessary barriers totrade. Such work would beexpected to
begin afterentry intoforce oftheAgreement. Given theunderstanding thatmeasures inconsistent with
Article VIcannot bejustified ormaintained bythescheduling oflimitations, itispossible thatsome
oftheconcerns associated withthese measures might need tobeaddressed inthecontext ofthe
Article VI:4work program.
15. There isgeneral agreement thatcompetitive safeguards might usefully beaddressed within
thecontextofadditionalcommitmentsonbasictelecommunications.Safeguardsagainstanti-competitive
practices aremeasures which would ensure thatmonopolies ordominant suppliers ofbasic
telecommunications maynotexploit theirdominant position todistort market forces andimpede theTS/NGBT/W/2
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ability ofcompetitors tosupply networks orservices forwhich commitments havebeenmade. Ithas
beennoted, however, thatfurther discussion isrequired todetermine whatkinds ofmeasures andwhat
approachtoschedulingsuchsafeguardsmightbemostappropriate.Thequestionhasbeenraisedwhether
thisisanareainwhich some form ofcommon approach might bedeveloped.
16. There alsoappears tobegeneral agreement thatitmaybedesirable toestablish ormaintain
independent regulators inthecontext ofadditional commitments. "Independent" isusually understood
tomean thatregulatory functions havebeenremoved fromthepurview ofthebasictelecommunications
operators andassigned toaseparate body. Further discussions would belikely tofocus onhow any
additional commitment inthisregard might bestbeformulated andwhether acommon approach would
beadvantageous.
17. Ithasbeensuggestedthatsincefacilities-basedprovisionofbasictelecommunicationsisincluded
within thescope ofthenegotiations, there isaneed forfurther discussion ofmeasures which may
affect suppliers 'ability tobuild facilities. Oneoftheissues raised inthiscontext isrights ofwayfor
theconstruction offacilities, which islisted asapossible areaforadditional commitments (seeabove).
Inaddition, some participants areoftheviewthatifacommitment ismade ontheprovision ofbasic
telecommunications onafacilities-basis itisunclear whether ornotitcanbeassumed thatforeign
suppliers maybuild orevenownandoperate facilities. Forexample, would limitations inthisregard
need tobescheduled and,ifnot,howdotheprovisions oftheAgreement apply tothemeasures
concerned.
18. ParticipantshaveraisedquestionsregardingtherelationshipbetweentheAgreementonTechnical
Barriers toTrade andstandards-related measures thatmayaffect trade inbasic telecommunications.
Ithasbeensuggested toinvestigate theextent towhich some problems thatmaybeidentified with
standards arealready covered, andthusmight beresolved, under theAgreement onTechnical Barriers
toTrade.
19. Issues concerning howtodealwith"new" basic telecommunications inthecontext ofthe
negotiations andscheduling havebeenraised. Participants haveexpressed concern thatunless the
implications ofcommitments vis-à-vis newnetworks orservices areclearly understood thescope and
value ofcommitments would beuncertain. Ithasbeenpointed outthattwodifferent scenarios may
ariseregarding thecoverage ofnewnetworks orservices bycommitments. First, anewnetwork or
service could fallwithin thescope ofanexisting sub-sector. Insuchacase,acommitment might already
beundertaken inthesub-sector concerned, butlimitations relating tothenewnetwork orservice could
nothavebeenforeseen andthuslisted atthetime. Second, anewnetwork orservice might fallunder
theheading "other" (item 2.C.(o)) oftheServices Sectoral Classification List(MTN.GNS/W/120).
Inthiscase, aparticipant mayormaynothavemade acommitment onthesub-sector.
20. Some aspects ofthisissue were resolved bytheagreement ofparticipants tousea"positive
list"approach toscheduling ofcommitments (i.e., commitments areonlyextended forthatwhich is
listed inthe"sector orsub-sector" column oftheschedule). Accordingly, some confusion would be
avoided inthataparticipant would determine whether ornotitisabletomake acommitment on"other"
networks orservices, understanding thatitcould apply tonewonesthatarise. Nonetheless, some
participants haveobserved thatitmaybeuseful toengage infurther discussion onways toachieve
greater certainty, inparticular regarding thefirstscenario.
21. Participantshavequestionedhowtoaddress"means"tests,involvingwhataresometimesreferred
toaspublic interest criteria, oftenassociated withgaining access tobasictelecommunications markets.
Under suchtests, suppliers thatdonotmeettherelevant criteria maynotbegranted licences tosupply
therelevant networks orservices. Some participants havesuggested thatcertain aspects of"means"
testsmaybecomparable totheconcept of"economic needs tests" which, under Article XVI, must
belisted inschedules aslimitations onmarket access. However, itwaspointed outthatmuch ofwhatTS/NGBT/W/2
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mayinmany regimes constitute a"means" test,maynotbecaptured bytheeconomic needs test. It
wassuggested thatthisissue represented another example ofaneedtoclarify thedistinction between
theapplicability andobligations Article VIandtherequirements forscheduling ofcommitments in
basic telecommunications.