RESTRICTED
WORLD TRADE S/NGBT/9
31October 1995
ORGANIZATION(95-3393)
Negotiating Group onBasic Telecommunications
REPORT ONTHE HIGH-LEVEL MEETING OF6OCTOBER 1995
1. TheNegotiating Group onBasic Telecommunications helditsninth meeting on6October 1995.
Themeeting wasattended byhigh-level officials ofparticipating governments. Theagenda forthe
high-level meeting wascontained inairgram WTO/AIR/164 of25September 1995. TheChairman
welcomed Ministers andother senior officials tothemeeting andnoted thattheir attendance provided
aclear signal oftheimportance that governments attach tothenegotiations.
2. Thefirstagenda item wasastatus report bytheSecretariat onthework conducted bytheof
theGroup since itsinception inMay 1994. Thestatus report hasbeen reproduced asaNote bythe
Secretariat (S/NGBT/W/15).
3. TheChairman invited participants topresent their views onprogress andparticipation inthe
negotiation, theobjectives thatthey hope thisnegotiation would accomplish, andonhow toremove
anypossible obstacles tothesuccessful conclusion ofthenegotiations bytheagreed deadline of
April 1996.
4. Therepresentative ofJapan saidthatthebasic telecommunications sector together withfinancial
services provided anessential base fortheglobal system oftrade inservices. Hesaidhehoped that
other observers would beabletojointhese collective efforts assoon aspossible andrequested participants
stillconsidering submission ofoffers tosubmit them intime forthenext meeting oftheNegotiating
Group inNovember. Hestressed thatMFN treatment wasthemost important principle oftheWTO.
MFN meant treating every Member equally andthatnoMember would betreated inadiscriminatory,
reciprocal orunilateral manner. Henoted thatsome Members hadbeen tempted todepart from MFN
inthepast. However, thiswasthevery principle which hadmade theexisting GATT framework
successful.HestatedthatunderrelevantprovisionsoftheGATS,MFNexemptionsshouldbeexceptional,
temporary andspecific. Inaddition, since measures inconsistent with MFN could beonly "maintained"
under theGATS, members may only exempt "existing", andnotfuture, MFN-inconsistent measures.
Another official representing Japan noted that thecurrent environment forthedevelopment of
telecommunicationsdifferedveryconsiderablyamongnations.Giventhisdiversity,wefacedaformidable
challenge inattempting tosetupmultilateral trade rules fortelecommunications. Indescribing the
objectives ofNegotiating Group, hesaid that, first, theNegotiating Group must include asmany
participants aspossible inthenegotiations. Itwasessential forfullparticipation tobewidened sothat
truly global telecommunications markets could bediscussed. Only inthisway would itbepossible
toestablish trade principles andframeworks suitable forevery country. Second, itwasessential that
thetremendous benefits ofnewtelecommunications technology bedistributed equitably among nations.
Oneoftheprime objectives oftheNegotiating Group must betoensure thatthegoalofbalanced rights
andobligations wasachieved. However, atthesame time wemust notallow thestronger industries
ofcountries with more liberalized markets todamage theefforts ofother countries toachieve the
development oftelecommunications. Third, itwas imperative torespect each country 'sstage of
development intelecommunications. What each country must do,inacontext ofamultiplicity of
regimes, wastodevelop aprogramme tointroduce liberalization progressively within settime frames.
Fourth, thediversity ofregulatory frameworks wasoneofthegreatest obstacles tofreetrade. Ifwe
couldnotatleastagreetocommonprinciplesinregulatoryframeworks,simplydeclaringthatthemarketsS/NGBT/9
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were 100percentopen forforeign capital would bemeaningless. Itwastherefore absolutely essential
thattheNegotiatingGroupfocusonachievingtheagreementofprincipleson,forexample,interconnection
andcompetitive safeguards.
5. Therepresentative ofHong Kong noted thatalleconomies, whether developed ordeveloping,
stood tobenefit enormously ifthenegotiations were tosucceed inachieving significant liberalization.
Hedescribed discussion intheNegotiating Group sofarasencouraging. Hesaidthattheinitial offers
already tabled were auseful starting point, butthatinorder toachieve ourcommon goal theinitial
offers should beupgraded; Hong Kong would consider doing so.Important players who hadnotyet
come forward withoffers should dosoassoon aspossible. Restrictions onforeign ownership represented
animportant gauge oftherealopenness ofamarket. Thequality ofthecommitments made toliberalize
anytelecommunications regime would beundermined iffullparticipation offoreign nationals inthe
provision ofsuch services were denied. Heurged others toremove anyexisting restrictions inorder
toliberalize further their telecommunications regimes andimprove thequality oftheir offers. Hesaid
there might bereasons tosupport adifferential paceofdevelopment among telecommunications regimes,
which could result indifferent time-tables forliberalization. Heencouraged Members who were not
yetfullparticipants oftheNegotiating Group tojoin. Another official representing Hong Kong said
thatHong Kong hadstarted liberalizing themobile communications market, radio paging andcellular
telephone services over adecade agoandthatthelocal wireline telephone market hadrecently been
liberalized. Competition hadserved Hong Kong well indeveloping thetelecommunications industry
andmeeting telecommunications policy objectives. However, intheliberalization process oneofthe
inevitable challenges wasinterconnection. HesaidthattheNegotiating Group should spend more time
onthisissue aswellasthemany other practical issues, ifliberalization wastobeeffectively implemented.
6. Therepresentative ofAustralia saidthatitwanted toseealarge, comprehensive, meaningful
andtimely package ofresults from thisnegotiation. While, atthistime, none ofthese keymilestones
wasyetassured, Australia would work individually andcollectively toachieve such apackage. Australia
hadsubmitted what itconsidered tobeagood offer, which itwould stand byandseektofurther improve
inabalanced way with other participants. Hesaidthatefficient, available andcompetitively priced
telecommunications were important toallparticipants 'economies, andvital forfuture growth and
development. Ithadbeen Australia 'sexperience thatgovernments could bring about cheaper andmore
efficient telecommunications. TheNegotiating Group provided arealopportunity forgovernments
toaccomplish thisgoalcollectively. However, there wasalimit tohowfarandhowfasteach participant
could move -asinother industry sectors -butthese negotiations offered theopportunity tomove in
ways that would benefit each participant 'snational interests. Forexample, telecommunications
liberalization would increase competitiveness andproductivity, foreign access would provide investment
andnewtechnologies, andgrowth andopenness intelecommunications would spurinnovation andcreate
markets fornewplayers. Hesaidthattheelements ofkeyimportance tothese negotiations were the
need toexpand participation, tomaintain thenegotiating timetable, toobtain improvements inoffers,
andtoproduce anoutcome thathadMFN asitscentral foundation.
7. Therepresentative ofSwitzerland saidthataccomplishing thisboth necessary andinevitable
objective ofopening markets wasthereason thatparticipants were gathered together today under the
auspices oftheWTO. Hestressed theimportance ofthetelecommunications sector fortrade inservices
andconfirmed thatSwitzerland wasprepared tocontribute toasuccessful outcome ofthese negotiations.
Another official representing Switzerland described agovernment proposal foranamended
telecommunicationslaw,whichwasunderpublicconsultationuntilDecember1995.Theessentialfeatures
oftheBillincluded: thesetting upanduseofallkinds ofinfrastructure could takeplace freely; an
unlimited number oftelecom service licences would beissued, solong asthere were notechnical
constraints with regard tofrequencies. Inthiscase, public tender procedures were foreseen. ThelawS/NGBT/9
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should come intoforce atlatest onJanuary 1st1998. IntheSwiss offer which hadbeen presented
totheNegotiating Group, theliberalization ofvoice traffic within closed usergroups initiated thispast
Julywasreflected.HesaidthatthenegotiationscouldonlysucceedwhenasufficientnumberofMembers
hadactively joined theprocess andpresented offers.
8. Therepresentative oftheEuropean Communities andtheir Member States saidthatwith respect
tothemultilateral liberalization oftrade inservices, theEuropean Union wasfully committed toMFN
treatment, whether applied tofinancial services, basic telecommunications ormaritime transport, as
thecorner stone ofthemultilateral trading system. TheEuropean Union offer reflected theinternal
process whereby, asof1January 1998 inthemajority ofMember States andasof1January 2003
atthelatest inallMember States, there would beliberalization ofallbasic telecommunications services
andinfrastructure. Henoted thatthere wasroom toimprove theoffer, notably inrelation torestrictions
onforeign ownership, butsubject tothewillingness ofother trading partners todolikewise. AnMFN-
based conclusion tonegotiations would require farmore Members tosubmit initial offers. TheEuropean
Union continued tobelieve thatitwasneither necessary nordesirable thatinthecontext oftheWTO
weattempttonegotiatedetailedcommitmentsonthetechnicalitiesofregulationofthetelecommunications
sector. Thefocus wasandwould remain onachieving market access andnational treatment forservices
andservice suppliers. There wasmerit insome type ofadditional commitment beyond market access
andnational treatment ontelecommunications-specific questions ofparticular importance, such as
licensing, interconnection, competition safeguards, theseparation ofregulatory andoperational functions
anduniversal-service-related obligations. Themost crucial question forthisgroup wasprobably less
theidentification ofthese issues thanagreement onthelevel ofdetail inwhich theyshould beaddressed.
Anagreement ongeneral principles seemed within reach, butanymore than thatlooked problematic.
Another official representing theEuropean Union saidthattheir offer proposed toopen theinternal
market intelecommunications, upon itscompletion, toallMembers ofGATS under thecondition that
negotiations guarantee comparable andeffective market access inthird countries. Theagenda consisted
ofproposals toliberalize cable TVnetworks, mobile communications services andnetworks, all
infrastructure, including so-called alternative networks, andlastbutnotleast, voice telephony. Inthis
context, thequality, terms andcostofinterconnection would bethemajor commercial issue fornational
regulators. Theproposal foranInterconnection Directive onaccess tonetworks supported theprocess
ofcommercial negotiation andprovided safeguards forfaircompetition aswellasgiving acentral role
tonational regulators inresolving interconnection disputes.
9. TherepresentativeoftheUnitedStatessaidthattherehadbeenprogressinexchanginginformation
andinexpanding theparticipation inthese talks. Butultimately thequantity andquality ofoffers tabled
bytheparticipants were theyardsticks bywhich wewould measure progress. Hesaiditwastime for
allthenations which hadmade commitments onvalue-added services totakethesecond step andopen
markets inbasic telecommunication services. Many more offers were needed toform thecritical mass
forasuccessful negotiation. Several more steps were necessary toobtain offers ofsufficient quality
toobtain acritical mass ofmarket-opening commitments. Allnations which hadnotyettabled offers
should dosobased ontheir current regimes orbased oncurrent timetables toopen their markets further
private investment andcompetition. TheUnited States sought equal openness toforeign investment
andcompetition from OECD Member countries. These andother countries which hadembarked on
liberalization needed tomake offers which fully represented theextent ofliberalization already planned
orputinplace. TheUnited States aimed toagree bynextApril toareasonable phase-in period following
theconclusion ofthese talks. Thenext taskwould betoensure thevalue ofthese commitments in
apractical sense byestablishing pro-competitive regulatory principles forallscheduled services. He
noted thatthere wasaconsensus among thenegotiators thatsuch commitments were essential. The
United States wanted towork toestablish flexible uniform principles which could ensure realmarket
access multilaterally. Hesaidthatparticipation inthese negotiations wasinevery nation 'sinterest.S/NGBT/9
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Thefirstreason, wastoassure theinclusion ofthisvital sector inthemultilateral trade framework of
theGATS. Thesecond reason, wastotakepartinwhat could bethehistoric formulation ofenforceable
competition principles forthetelecommunications services industry. Thethird reason, wasthatthese
talks, ifsuccessful, would give atremendous boost todemand fortelephone equipment atalllevels
oftechnical sophistication. Thefourth reason wastoallow greater reliance onprivate investment and
competition tobenefit national competitiveness andstandards ofliving foreconomies atalllevels of
development.
10. The representative ofBrazil described thecurrent stage ofthemodernization process for
telecommunications inBrazil. HesaidthatBrazil wasdeveloping astructural reform planforthesector
whose major goal wasthecreation ofavigorous andcompetitive economy. There were three essential
problemstobesolved:therestructuringoftariffs;endowingthemonopolywithcommercialmanagement
conditions andsplitting thefunctions oftheregulator from thecontrolling shareholder 'srepresentative;
anddeveloping anappropriate regulatory framework. Hesaidthatthereform would have suchobjectives
asuniversal service, anincrease inthequantity, quality anddiversity ofservices, guarantees offair
competition andobtaining competitive prices. Thespecific needs ofBrazil were toexpand basic services,
increase quality levels, modernize thesystem, provide advanced services toraise thecompetitiveness
ofBrazilian businesses, andimprove thecompetitiveness oftheoperating companies. Theplan aimed
notonly atrestructuring thetelecommunications sector, butalso atstimulating anincrease inthe
international competitiveness oftheBrazilian economy andthesocial development ofthecountry. Brazil
was confident that theplan would beadequately defined intime tomake anoffer onbasic
telecommunications bytheconclusion ofthenegotiations inApril 1996.
11. Therepresentative oftheRepublic ofKorea saidthatsince July1990 theKorean Government
hadreformed themarket structure ofitstelecommunication sector, exposing ittogreater market forces.
Korea 'srecent policy blueprint, announced inJuly, made itclear thatthere would benolimitations
onthenumber ofservice providers inthebasic telecommunications sector andthatpro-competitive
regulatory safeguards would bestrengthened. Ifthenegotiations were tosucceed, four points must be
taken intoconsideration. First theagreement should bebased onthemost-favoured-nation principle.
Holding outforreciprocity orseeking exemptions from MFN would fundamentally undermine thebasis
ofastable world trading system. Second, itwould beunreasonable toexpect complete liberalization
atonce. The reality wasthatmany countries were stillintheearly stages ofmoving towards a
competitive regime after along andingrained history ofmonopoly. Their difficulties should begiven
dueattention. Third, theagreement should provide apredictable business environment, particularly
regarding disputable Article VI-type measures such aspublic interest tests. Itwould beregrettable if
thenegotiations could notprovide amaximum level oftransparency andpredictability. Fourth, active
participation from developing countries should beencouraged foramore meaningful andeffective
multilateral regime.
12. Therepresentative ofCanada observed thatcountries were atvarying stages ofliberalization
inthetelecommunications sector. Allgovernments were faced with developing telecommunications
policies thatbalanced thebenefits ofcompetitive markets with concerns regarding national objectives
andsovereignty. Henoted thattheGATS recognized theprinciple ofprogressive liberalization. For
thisreason,asuccessfuloutcomewasachievable,whilerespectinginternationaldiversityandamultiplicity
ofregimes. Based ondiscussions todate intheNegotiating Group andthemany bilaterals thathad
been held, there were fairprospects foranagreement, with some give andtakeonallsides. Canada
expected substantial market access commitments from allparticipants. Commitments should mean real
competition intheprovision ofvoice anddata services within domestic markets andinternationally.
This could take theform offacilities-based competition orofunhindered resale ofbasic
telecommunications transport services. Hesaidthatadditional commitments intheareaofregulatoryS/NGBT/9
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safeguards would provide certainty thattheaccess commitments were workable andofactual value.
There must beatransparent regulatory regime with clear rules oninterconnection between competitors.
Finally, attheendofthese negotiations MFN must apply tobasic telecommunications.
13. Therepresentative ofNew Zealand noted thatifwewere tocreate amore liberal international
trade andinvestment environment, itwasessential thatbasic telecommunications bebrought within
thatmultilateral framework andthatthere berapid andefficient development oftelecommunications
infrastructure andservices. Shesaidthatitwasimportant thatthese negotiations enjoy thebroadest
possible participation. Itwasalsovital thatmore countries move quickly totable their draft offers.
New Zealand hadsubmitted anoffer onbasic telecommunications which would bind itsvery open and
liberal regime. Shenoted thattransparency wasanessential factor in,forexample, licensing criteria,
technical standards, thedevelopment ofpolicy andregulatory decisions, theallocation ofradio spectrum
andnumbering. Such processes should alsobetimely andnon-discriminatory. Also, regulatory functions
needed tobeexercised byabody which wasseparate andindependent from telecommunications operators
andremoved from anycommercial interest inthose operators. Itwasfundamental thatinterconnection
bepermitted assetforth intheAnnex onTelecommunications. There hadbeen considerable discussion
onthedegree ofregulation required toensure thatsuch interconnection occurs. Shestressed thatin
addition toawide range ofcommitments liberalizing market access, anyaccord onassociated matters
ofprinciple should besufficiently flexible toaccommodate arange ofregulatory approaches.
14. Therepresentative ofthePhilippines saidthatithadoneofthemost liberalized andcompetitive
telecommunication environments intheworld today. Shenoted thatPhilippine carriers andnewentrants,
with their international partners, were moving towards theessential andbasic goalofuniversal service.
This transition however could beprecarious ifcompetition were notallowed toflourish. Shesaidthat
itmust beensured thatrestrictive business practices, once removed bytheGovernment, were not
resurrected byprivate action. Themultilateral process ofliberalization nourished andvindicated the
efforts ofmany developing countries toopen uptheir economies tocompetition. Thetaskofthese
negotiations wastostand guardian over these successful reforms. However, there were costs arising
frommultilateralliberalizationoftrade.Thesenegotiationsmustthereforeupholdprogressiveliberalization
bydeveloping countries. Ontheother hand, countries which were positioned tocapture asignificant
share ofthebenefits offreer trade must assume greater responsibilities. ShesaidthatthePhilippines
wasactively reviewing itsstatus inthenegotiations andhoped thatvery soon adecision onfull
participation could bereached.
15. Therepresentative ofSingapore recognized thevital roleplayed bytelecommunications inthe
modernization andglobalization oftheeconomy andconsequently theimportance ofthese negotiations
being successfully concluded. Another official representing Singapore saidthathewashopeful that
afairandbalanced framework forboth developed anddeveloping countries could bereached byApril
1996. Competition principles such ascompetitive safeguards andaregulatory framework toensure
alevel playing field were integral elements inthefinal agreement. However, itwasnecessary totake
intoaccount thedifferent stages oftelecommunications development currently existing ineach country.
Itwasalsonecessary torecognize thatimplementation mechanisms andmethodologies toachieve the
endorsed principles may differ because ofvalid national circumstances. Consensus should besought
onafinal framework thatwasbroad andflexible enough tocapture thedifferences, butachieve the
substantive objectives oftheNegotiating Group. Hesaidthatthewidest possible participation inthe
negotiations would help tosecure abalanced outcome onanMFN basis forboth industrialized and
developing countries, soWTO Members who hadnotyetjoined should dosoassoon aspossible.S/NGBT/9
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16. Therepresentative ofNorway saidthatstrong multilateral trade rules andtheir enforcement
provided thebestbasis forlong term prosperity andeconomic security. Theaimofthemultilateral
negotiations wastoachieve abalanced setofcommitments inallservices sectors along with the
establishment ofinternational trading rules. Intheremaining deliberations onbasic telecommunications
andmaritime transport services, weshould ensure thattheprinciples ofnon-discrimination andMFN
were observed. Alinkage between various sectors wasinlinewith previous negotiations intheGATT
andgave anindication ofthewaytofollow intheon-going negotiations ontrade inservices. Norway
attachedparticularimportancetothestrongermoretransparentlegalframeworkoftheWTO.Concerning
telecommunications, heunderlined theimportance ofestablishing alegal framework thatensured both
theprovision ofuniversal services andthefunctioning ofacompetitive market. Norway intended to
submit itsoffer shortly andbefore thenext meeting oftheNegotiating Group.
17. Therepresentative ofIndia saidthatsince telecommunications wasakeysector foreconomic
growth anddevelopment, India attached considerable importance tothese negotiations. India gave high
priority tothedevelopment ofuniversally available telecommunications services within thecountry.
HesaidthatIndia alsoaimed atstimulating domestic andforeign investment inthesector. Amajor
exercise inliberalizing both basic andvalue-added telecommunications services hadbeen taken on,
opening uptelecommunications services todomestic andforeign private sector investment. Asaresult
ofamassive exercise inissuing licenses, private companies were already providing cellular services
infour major cities andradio-paging services in23major cities. Thesizeofthemarket opened up
toforeign investment wasvery large andtheinterest ofdomestic andforeign private firms intheopened
markets had been massive. Herecalled that, inline with theMinisterial Decision onbasic
telecommunications,thesenegotiationsandtheresultingcommitmentswouldbeundertakenonavoluntary
basis, thatprogressive liberalization meant thatthere would bedifferentiated responsibilities withregard
toliberalizing between developed anddeveloping country participants, andthatthenegotiations must
take place within theframework oftheGATS. Itwaswith thisunderstanding thatIndia decided to
participate. India hadyettotake aview astothenature andextent ofcommitments thatshould be
undertaken. Regarding theissue ofbalance intheresults ofnegotiations, itwasnotyetclear howIndia
would benefit. Hestressed thatliberalization oftelecommunications must encompass allmodes ofsupply
because India attached tremendous importance tothefourth mode -movement ofnatural persons -as
anareawhere itpossessed competitive strength. Finally, since these negotiations would beconducted
within theframework oftheGATS, itwasdifficult toseehowtheycould begoverned byanydisciplines
beyond those already envisaged.
18. Therepresentative oftheCzech Republic informed theGroup thatithadrecently submitted
aresponse tothequestionnaire onbasic telecommunications andalsorequested tobegranted thestatus
ofafullparticipant inthenegotiations. Hesaiditwashisgovernment 'sfirm belief thatthewidest
possible participation innegotiations onbasic telecommunications would bring benefit toall.Hesaid
thattheoffer ofcommitments inbasic telecommunications services oftheCzech Republic would be
given totheSecretariat inthenear future.
19. The representative oftheSlovak Republic said that hisgovernment fully supported this
liberalization process forthetelecommunications sector anditspositive impact onincreasing fair
competition andamore intensive inflow offoreign direct investment. Moreover, general improvement
oftelecommunicationsserviceswouldsubstantiallycontributetofurtherrecoveryoftheSlovakeconomy.
Henoted thattheextent ofliberalization inhisgovernment 'sdraft offer reflected thecurrent status
oftransformation inthesector. Thegradual opening oftheSlovak market wasunder consideration.
Hehoped thatmore participants would become involved inthenegotiations andthatbalanced results
would beachieved tocreate realliberalization inamultilateral environment fortelecommunications
services.S/NGBT/9
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20. Therepresentative ofPakistan, noting thatitwascurrently anobserver saidthatitsgovernment
wasopening uptoprivate investment. Aliberalization process intelecommunications hadbegun in
1989. Licences forprivate cellular telephone operators andpaging services hadalready been issued.
Also, facsimile equipment, telex equipment, terminal equipment andPABX were deregulated. Licences
hadbeen issued tomany companies tooperate datacommunication services, trunk radio services and
electronic mail. The private sector also had been invited tooperate asatellite system for
telecommunications inPakistan. Further restructuring wasbeing undertaken which would permit further
liberalization andprivatization oftelecommunications services. Anewtelecommunications ordinance
would beenacted bytheParliament shortly. Thefourelements ofthenew lawwere theestablishment
ofanindependent regulatory body, theformation ofafrequency allocation board, theincorporatization
ofthetelecommunications corporation asaprivate limited company, andtheestablishment ofanational
telecommunication corporation forgovernment telephone services. Asaresult ofthese policies, Pakistan
hoped toseerapid expansion ofgood quality, reasonably priced anduniversally available telephone
lines. Hesaidthere were nolimits ontheproportion offoreign investment; aforeign investor could
own 100percentofatelecommunications company operating inPakistan. Thus, since Pakistan was
implementing anagenda based onfreetrade andinvestment, hisgovernment would beclosely observing
theprogress ofthenegotiations.
21. The representative ofPoland said that thePolish economy isinthemidst ofprofound
transformation inallsectors, including telecommunications. Theobjective ofliberalization inthissector
istohasten thepace ofitsdevelopment andtofulfil theconditions ofadherence totheEuropean Union.
With thisinview, hesaidthatPoland wasconsidering changing itsstatus inthenegotiations from that
ofanobserver tothatofafullparticipant andwould consider presenting anoffer consistent with the
stage ofreform andthelevel ofdevelopment ofitstelecommunications sector.
22. Asthere were nomatters raised under other business, theChairman thanked Ministers andsenior
officials fortheir participation inthismeeting. Hereminded participants thatthenext meeting ofthe
Group would beheld on17November 1995. Hesaidthathelooked forward tothesubmission of
many more draft offers andtotheprospect ofeven more WTO Members finding themselves inaposition
toparticipate fully inthenegotiation bythattime.
23. TheChairman informed theGroup thatastatement about themeeting wasbeing issued bythe
Director General, onhisownresponsibility, andwasbeing made immediately available toallparticipants.