RESTRICTED
WORLD TRADE S/NGBT/6
23May1995
ORGANIZATION(95-1379)
Negotiating Group onBasic Telecommunications
REPORT OFTHE MEETING OF26APRIL 1995
1. TheNegotiating Group onBasic Telecommunications helditssixthmeeting on26April 1995.
Theagenda forthemeeting wascontained inairgram WTO/AIR/64 of10April 1995. TheChairman
noted thataninformal session focusing ontechnical andoutstanding issues would beheldon27April,
andindicated thathewould report ontheinformal meeting atthenextNGBT meeting.
2. TheGroup approved requests forobserver status fromBulgaria andLatvia. Asaresult ofthis
decision, thenumber ofparticipants withobserver status intheGroup nowstands at331,while the
number offullparticipants inthenegotiations remains unchanged at24.2TheChairman welcomed
thetwonewobservers andencouraged governments participating asobservers tojointhenegotiations
asfullparticipants.
3. TheChairmaninviteddelegationstocommentonanybilateraldiscussionsheldsofar.Anumber
ofdelegations indicated thattheyhadengaged inbilateral discussions. While some delegations had
putforward specific requests, others provided indicative requests. Several delegations described issues
ofinterest inrelation toliberalization andmarket access. These included interconnection (equipment
interconnectability),competitivesafeguards,transparency,facilities-basedservices,resale-basedservices,
cross-bordertelecommunicationstraffic,investmentregimes,internationalanddomesticresale,technical
standards, andindependent regulatory authorities. Various delegations emphasized theimportance of
adherence totheMFN principle inthenegotiations, andofcomplying withthe"standstill provision"
inParagraph 7oftheMinisterial Decision onNegotiations onBasic Telecommunications. Finally,
participants encouraged observers tobecome more closely involved inthework oftheNGBT and
expressed thehopethattheobservers would change theirstatus tothatoffullparticipants.
4. Under theagenda itemcalling fordiscussion ofwork ontechnical andconceptual issues, the
Chairman invited delegations whohadsubmitted newpapers tointroduce them. Therepresentative
ofCanada introduced aNon-Paper onBasic Telecommunications Regulatory Issues, which focused
oncompetition safeguards andinterconnection. Theapproach followed inCanada 'spaper wastoidentify
provisions inGATS andtheTelecommunications Annex relevant totheseissues, andtoindicate where
theprovisions maybeinadequate. Regarding interconnection, Canada wasoftheviewthatwhile the
TelecommunicationsAnnexdealtwithaccesstoanduseofpublictelecommunicationstransportnetworks
andservices, itdidnotspecifically address interconnection between competing service providers. Issues
which Canada believed mustbeaddressed inthisregard included: equal access onanon-discriminatory
basis,transparency,standardsandtheindependenceofregulators.Accesstoservicesshouldbeunbundled
1Bulgaria,Brazil,BruneiDarussalam,China,ChineseTaipei,Colombia,CostaRica,Czech Republic,Ecuador,
ElSalvador,Guatemala,Honduras,Iceland,Indonesia,Israel,Jamaica,Latvia,Madagascar,Malaysia,Nicaragua,
Pakistan,Panama, Philippines,Poland,Romania,RussianFederation,Singapore,Slovenia,SouthAfrica,Thailand,
Trinidad &Tobago, Uruguay, andVenezuela.
2Argentina,Australia,Canada,Chile,Cuba,Cyprus,DominicanRepublic,Egypt,theEuropeanCommunities
andtheir Member States (Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy,
Luxembourg, Netherlands, Portugal, Spain, Sweden, United Kingdom), Hong Kong, Hungary, India, Japan,
Korea, Mauritius, Mexico, Morocco, NewZealand, Norway, Slovak Republic, Switzerland, Tunisia, Turkey,
andtheUnited States.S/NGBT/6
Page2
onafunctional basis andpriced onacost-oriented basis. Onthequestion ofcompetition safeguards,
Canada believed thatMembers should putinplace measures proscribing anti-competitive business
conduct, together withappropriate enforcement andremedy provisions.
5. InreactiontoCanada'spaper,somedelegationsagreedonthedesirabilityofunbundlingnetwork
functionalitiesandontheneedfortransparentnon-discriminatorydomesticinterconnectionarrangements.
Onedelegation remarked thatthepaper didnotaddress theuniversal service objective, which wasan
important issue, especially fordeveloping countries. Inlightofthisobjective, itwasnotobvious that
adominant supplier would always haveanadvantage overnewentrants.
6. Therepresentative oftheEuropean Communities presented theEC'spaper onGATS Coverage
ofTelecom Regulatory Issues (S/NGBT/W/6). Theapproach adopted wastorelate theissues outlined
intheSecretariat 'sNote(TS/NGBT/W/2) toexisting disciplines, inorder toestablish whether thelatter
were adequate. Among theissues identified asimportant intheECpaper were: licensing,
interconnection, competitive safeguards, anduniversal service obligations. Ingeneral, theEC
representative wasoftheviewthatmany oftheissues under discussion wereadequately covered by
existing disciplines inGATS andtheTelecommunications Annex. Inrelation tolicensing, theEC
representative noted thatcertain restrictions ofadiscretionary nature, such as"public interest"
restrictions, might needclarification interms ofArticle VIprovisions. Thequestion ofinterconnection
between twofacilities-based operators maybecovered bytheTelecommunications Annex, but
clarification wasneeded. Therelevance ofprovisions onmonopolies andexclusive service suppliers
tointerconnection should alsobeexamined. Regarding transparency requirements, existing provisions
wereadequate, anditshould benoted thatlimitations ontransparency alsoexisted intheframework
agreement (Article IIIbis). With respect totariffs andcostissues, nothing intheGATS dealtwith
theregulation byMembers oftariffs andcosts intelecommunications.
7. Some delegations were oftheopinion thattheGroup should address discriminatory pricing
practicesandseektoachievemoretransparencyininternationalaccountingrates.TheU.S.representative
wasoftheview thatanyattempt byregulators toactively promote apro-competitive market would
beatransitional phenomenon, relevant onlyonaccount ofthepresence ofdominant network operators.
TheECrepresentative stated thatanyattempt tonegotiate tariffs multilaterally forspecific services
would bearisky undertaking. Theobjective should betocreate amore competitive environment in
themarketplace. Inaddition, henoted thatthenotion ofdominant supplier washardtodefine. The
Chairman remarked thattheseissues wereunder discussion intheITU,andthatinregard toaccounting
rates, progress hadbeenmade toward establishing theprinciple thatcostorientation should bethenorm.
Onthequestion oftransparency limitations under Article III(bis), onedelegation expressed theview
thatitwasimportant toestablish whether anyconflict existed between Paragraph 4oftheAnnex and
Article III(bis), asonlythenwould thehierarchy oftheprovisions become relevant.
8. The representative ofAustralia introduced apaper onTermination Services
(S/NGBT/W/4/Add.1), which sought toclarify further some points made inaprevious communication
onthesamesubject (S/NGBT/W/4). Itwasargued thatexisting accounting andsettlement ratesystems
forpayment oftermination services ledtothearbitrary setting ofcharges above costs andto
discrimination. Theessence oftheAustralian proposal wasthatbasictradedisciplines should beapplied
tothissector, inparticular transparency andMFN. Theobjective wasnottodevelop newdisciplines
inGATS orintheTelecommunications Annex, butrather tostress theneedtoexamine howexisting
disciplines apply totermination services. Australia subscribed totheviewthatitwasnotwithin the
competence oftheNGBT tofixprices andcosts. Moreover, itwould belegitimate fordeveloping
countries toraise taxes from telecommunications traffic fordevelopmental purposes. Finally, the
Australian representative recognized thatnothing intheGATS questioned theexistence ofmonopolies.
Theissue wasthatmonopoly, quasi-monopolies anddominant carriers should notabuse theirmarket
position.S/NGBT/6
Page3
9. TheChairman invited comments orclarifications regarding theinformal notebytheSecretariat
ontheRevision oftheDraft Model Schedule dated 12April 1995. Onedelegation suggested thatthe
subdivision for"Other Services" mayneedtobefurther broken down toinclude other basic services.
Furthermore,certaintelecommunication-relatedservicesinCPCsection754werenotnecessarilycaptured
intheformat oftheDraft Model Schedule, including, forexample, telecommunication equipment rental
services, connection services, consulting services, andcommunications equipment maintenance. Other
telecommunications services, including billing andconstruction ofcommunications facilities, should
alsobecovered totheextent thattheyhadnotbeencaptured elsewhere. TheChairman requested the
Secretariat toreview theschedules ofcommitments under theUruguay Round andidentify otherrelevant
basic services.
10. Under theagenda itemonthereview ofparticipants 'responses tothequestionnaire onbasic
telecommunications, theChairman announced thatArgentina (S/NGBT/W/3/Add.6/Supp.1) andNew
Zealand (S/NGBT/W/3/Add.2/Supp.1) hadsubmitted supplements containing follow-up replies to
questions raised atthelastmeeting. TheEuropean Communities hadsubmitted arevised reply tothe
questionnaire(S/NGBT/W/3/Add.15/Rev.1).TheGroupreviewedthequestionnaireresponsessubmitted
byCuba(S/NGBT/W/3/Add.23, S/NGBT/W/3/Add.23/Rev.1), South Africa (S/NGBT/W/3/Add.24),
andMauritius(S/NGBT/W/3/Add.25).TheChairmanthankeddelegationsfortheinformationprovided,
andexpressed thehope thatalldelegations would continue tokeep theGroup informed ofnew
developments, bothinthemeetings oftheGroup aswellasinwritten submissions. Inaddition, he
encouraged observers tosubmit responses tothequestionnaires andreminded themthatparticipation
inthisexercise wasnotbinding inanyway.TheChairman alsonoted thatoneortwoobservers were
thinking ofsubmitting replies tothequestionnaire andwelcomed thisdevelopment.
11. TheGroup agreed thatitsnextmeeting would be12-13 July, withaninformal meeting on
12Julyandaformal session onthe13July. Bilateral consultations would alsobeheldduring that
week. TheChairman noted thatattheformal session hewould report onthediscussions thatwould
takeplace intheinformal meeting ontheprevious day.Afurther meeting oftheGroup wastentatively
scheduled for20-21 September. There wasalsoabriefdiscussion about thepossibility ofholding another
meeting around thetimeofTELECOM 95(3-11 October, 1995), which would beattended bysenior
officials. Final decisions onthese meetings would betaken attheJulysession.
12. TheGroup hadagreed atitsFebruary meeting thatparticipants would begin tosubmit offers
fromthebeginning ofJuly. TheGroup agreed atthepresent meeting toadeadline of31Julyforthe
submission ofoffers, ontheunderstanding thatparticipants unable tomeetthisdeadline would submit
their offers assoon aspossible thereafter. TheChairman emphasized theimportance ofmaking
submissions atanearly stage intheprocess, inorder toleave adequate timefornegotiations.
13. Noadditional matters were raised under other business. TheSecretariat wasrequested to
produce: (i)afactual background noteonthenegotiating history ofArticle III(bis)andparagraph 4
oftheTelecommunicationAnnex;and(ii)adescriptivetabulationofthepositionsadoptedbydelegations
onissues taken upinsubmissions byparticipants andintheSecretariat 'snoteonoutstanding technical
andconceptual issues (TS/NGBT/W/2).