RESTRICTED
WORLD TRADE S/NGBT/W/11
11July1995
ORGANIZATION(95-1962)
Original: English Negotiating Group onBasic Telecommunications
COMMUNICATION FROM AUSTRALIA
TRADE INTELECOMMUNICATIONS TERMINATION SERVICES
MEASURES
Thefollowing information iscirculated attherequest ofAustralia toMembers oftheNegotiating
Group onBasic Telecommunications.
_______________S/NGBT/W/11
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TRADE INTELECOMMUNICATIONS TERMINATION SERVICES
MEASURES
Background
1. Thequestion hasarisen astotheapplicability ofGATS rules anddisciplines totheexisting
framework fortrade intelecommunications termination services, particularly accounting rate
arrangements.
2. Australia hashighlighted various GATS articles which seem toberelevant toaccounting rate
arrangements (S/NGBT/W/4). Article I.3(a) setsoutthedefinition of"measures byMembers".
Article IIprovides thatMFN shallbeextended toanymeasure covered bytheagreement. Article III
provides fortransparency ofmeasures andinternational agreements affecting trade inservices.
Article VIIIdirects Members toensure thatmonopoly suppliers behave inanMFN consistent manner.
Article IXprovides thatMembers enterintoconsultations withaviewtoeliminating business practices
which restrain competition andthereby restrict trade inservices.
Definition of"Measures byMembers"
3. Article I.1oftheGATS states thattheAgreement "applies tomeasures byMembers affecting
trade inservices". Initspaper S/NGBT/W/4 andS/NGBT/W/4/Add.1, Australia argued thatthe
agreements between telecommunications operators which regulate trade intermination services meet
thedefinition of"measures byMembers" under Article I.3(a) oftheGATS.
4. ThisArticle provides that"measures byMembers" arethose taken bycentral, regional or
localgovernments andauthorities; andnon-governmental bodies intheexercise ofpowers delegated
bycentral, regional orlocalgovernments orauthorities". Article XXVIII(a) further defines "measures"
as"anymeasure byaMember, whether intheform ofalaw,regulation, rule,procedure, decision,
administrative action, oranyother form".
5. TheGATS definition of"measure" includes allactions taken bygovernments andtheirdelegated
authorities, regardless ofwhether theyareofacommercial nature ornot.
Government Decisions as"Measures"
6. TheITUConstitution requires Members toimpose theobligations oftheITUConstitution,
theITUConvention andtheAdministrative Regulations on"Recognized Operating Agencies (ROAs)".
7. Asaconsequence, trade intermination services isregulated forthemostpartbyoperator to
operatoragreementsinaccordancewithArticle1,paragraph1.5,oftheInternationalTelecommunications
Regulations andother recommendations oftheInternational Telecommunications Union (ITU).
8. Agovernment decision tobecome aParty totheITUConvention andalsoagovernment decision
oradministrative action toauthorize anagency asaRecognized Operating Agency (ROA) areclearly
"measuresbyMembers"asdefinedundertheGATS.Thesedecisionsdeterminehowtradeintermination
services istooccur, thatis,inaccordance withtheITU'sInternational Telecommunications Regulations
andtherecommendationsoftheInternationalTelegraphandTelephoneConsultativeCommittee(CCITT).
MarketaccessagreedtoinoperatortooperatoragreementsunderITURegulationsandrecommendations
maybeonterms inconsistent withtheMFN principle, duetothebilateral nature oftheagreements.S/NGBT/W/11
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Service Provider Agreements asMeasures
9. Inbeing authorized asaRegistered Operating Agency (ROA), theROA gains thedelegated
power orrighttoenter intobilateral agreements fortheprovision ofinternational telecommunication
services under theauspices oftheITU,asthough itwasan"administration" oragovernment Member
oftheITU. Additionally, when anROA alsohasanexclusive monopoly privilege, thepower vested
initbythegovernment toenter intobilateral agreements under theITUtreaties gives theROA the
power tosettheterms oftrade andmarket access tothatcountry. Theagreements made byROAs,
particularly where theagency isamonopoly, aretherefore "measures".
10. When agovernment itself enters intoanoperator tooperator agreement, forexample when
theservice provider isagovernment department orauthority, theagreement would alsobea"measure".
[Note: Article XXVIII(c)(i) additionally defines "measures byMembers affecting trade inservices"
toinclude measures inrespect of"thepurchase, payment oruseofaservice".]
11. Agencies thatarenotdesignated asanROA maystillbeexercising delegated powers of
government depending upon thedegree ofseparation between theagency andthegovernment.
Measures Affecting Trade inServices
12. Wehaveshownhowtheserviceprovideragreementswhichregulatetradeinterminationservices
are"measures". Wemustnowassess towhatextent these are"measures byMembers affecting trade
inservices". Thiswilldepend onwhether theservice providers making suchagreements aredoing
sounder powers delegated bygovernments andonhowthesemeasure areaffecting tradeintermination
services.
13. Thetablebelow shows theelements thatwillinfluence whether operator tooperator agreements
aremeasures affecting trade intermination services. These elements include: ownership/control of
theservice provider; thedomestic market inwhich theservice provider operates; andthetypeof
regulation governing theoperator agreements. Thetableliststhedifferent possibilities foreachwith
various permutations being possible.
Basic Telecommunications Environment
Service Provider Domestic Market Regulation
1.Government administrative
department orauthority
(armofgovernment)(a)Monopoly (i)Agreements made as
government, orneed
government approval
2.Government owned
corporation(b)Duopoly, orlimited
number ofexclusive
suppliers(ii)Operator exercising
power delegated by
government (e.g.asan
ROA)
3.Mixed Government/
Private owned
corporation(c)Competitive market/
multiple suppliers(iii)Government requirement
tobenotified ofcontents
ofagreements.
4.Private (iv)FreemarketS/NGBT/W/11
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14. Given these permutations ofarrangements which maydetermine howgovernments affect the
terms oftradeintelecommunications services, wehavetoassess whether GATS rulesanddisciplines
areapplicable tothem all.Forexample, agreements made byagovernment department (1(a)(i)), by
agovernment approving anagreement (3(b)(i)) orbyaprivate agency exercising delegated powers
(4(b)(ii)) are"measures" (asdefined inArticle I.3(a) oftheGATS). Insuchacasegovernments would
clearly berequired tomeetGATS obligations regarding trade inbasic telecommunications services,
including thetransparency andMFN.
15. Attheother endofthespectrum, itispossible toenvisage asituation where therearemultiple
suppliers inamarket. Suchsuppliers maynotbeexercising delegated powers orberequired tohave
decisions approved bygovernments. Forexample, agreements made byprivate suppliers incompetitive
markets (4(c)(iv)). Inaddition, agreements made under suchconditions maynotactually affect trade
intermination services because there willbecompetition among themultiple suppliers andindividual
suppliers maynotbeabletoinfluence theterms oftrade.
16. Asageneral observation, wecould saythatwhere suppliers oftermination services fallinto
service provider categories 1-3,market position categories a-band/or regulatory conditions i-iii,it
isverylikely that"measures byMembers" areinvolved which affect trade. Itwould alsobelikely
thatmonopolies insuchsituations areacting inamanner inconsistent withobligations under Article II.
17. Onthebasisoftheabove itappears thatinmany Member countries theinternational operator
tooperator agreements thatregulate trade intermination services areclearly measures affecting trade
inservices.
18. Given thevariety ofbasic telecommunications regimes inMember countries andconsequent
varied scope ofapplicability of"measures" totermination services itwillbenecessary totakeapractical
casebycaseapproach toascertain whether government measures affecting tradeinservices areinvolved.
Clearly itwillbeuptoMembers todecide whether theregulatory underpinning ofbasic
telecommunications regimes ingeneral, andtermination services inparticular, aswellasthemarket
situation combine toconstitute "measures affecting tradeinservices (asdefined inArticle I.1andI.3(a))
ornot. Ifsuch"measures" areinplace, Members would beexpected toschedule commitments
accordingly.
Conclusion
19. Australia considers thattheagreements underpinning thecurrent tradeintermination services
asconducted under theITUtreaties constitutes ameasure asdefined intheGATS byvirtue of:
thegovernment decisions involved inbecoming party totheITUtreaties andinauthorizing
aROA; and
thedegree ofgovernment 's(oritsdelegated authority) involvement intheoperator agreement
process itself.
20. Further,Australiaconsidersthatsuchmeasuresaffectthetradeinterminationservicesparticularly
where there isamonopoly, orsmall number ofsuppliers. Thisisbecause theoperator tooperator
agreements inthese situations areabletodetermine theterms oftrade.
21. Asameasure under theGATS, trade intermination services should besubject tothetrade
disciplines oftransparency andMFN, withthepossibility ofscheduling commitments onNational
Treatment andMarket Access.S/NGBT/W/11
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22. There maybesome cases where operator agreements themselves maynotbeameasure intheir
ownrightorameasure affecting trade intermination services. However, thenumber ofsuchcases
arelikely tobeverysmall.