Trade in telecommunication services: Doha and beyond

Journal of World Trade

Volumn 41, Issue 2, 2007, Pages 293-317

  Peng, Shin Yi ^a  

^a NATIONAL TSING HUA UNIVERSITY   (Taiwan)

Author keywords

[No Author keywords available]

Indexed keywords

GENERAL AGREEMENT ON TRADE IN SERVICES; TELECOMMUNICATION;

ASIA; DOHA; EURASIA; MIDDLE EAST; QATAR;

EID: 34447250833     PISSN: 10116702     EISSN: None     Source Type: Journal    
DOI: 10.54648/trad2007012     Document Type: Article

References (86)

1. Note by the Secretariat, Document MTN.GNS/W/120, 10 July 1991. For the purposes of the Uruguay Round negotiations, the WTO Secretariat developed the GATS Services Sectoral Classification List ("the W/ 120"), to enhance the consistency of the commitments undertaken by Members. The W/120 breaks down the telecoms sector into 14 sub-sectors and an "other" category. Although optional, most Members follow the W/120 classification system, whose 160 sub-sectors are defined as aggregates of the more detailed categories contained in the United Nations provisional Central Product Classification (CPC). Thus CPC categories help clarify the scope of the commitments actually undertaken under the GATS, and most Members list the corresponding CPC numbers when scheduling their GATS commitments.
2. See section I.A. below.
3. Appellate Body Report, United States - Measures Affecting the Cross-Border Supply of Gambling and Betting Services, WT/DS285/AB/R (7 April 2005);
4. Panel Report, United States - Measures Affecting the Cross-Border Supply of Gambling and Betting Services, WT/DS285/R (10 November 2004).
5. Panel Report, Mexico - Measures Affecting Telecommunications Services, WT/DS204/R (2 April 2004).
6. See, generally, WTO Secretariat, Guide to the GATS: An Overview of Issues for Further Liberalization of Trade in Services (The Hague: Kluwer Law International, 2000), pp. 531-561.
7. See, generally, Aaditya Mattoo, Services in a Development Round: Three Goals and Three Proposals, 39 Journal of World Trade 6 (December 2005), pp. 1223-1238.
8. See also Alejandro Jara et al., Liberalization of Trade in Services and Trade Negotiations, 40 Journal of World Trade 1 (February 2006), pp. 113-127.
9. In terms of the extent of market access commitments under the different modes of supply, the telecom services can be supplied under any of the four modes of supply, although the most relevant modes are mode 1 (i.e., cross-border supply) and mode 3 (i.e., commercial presence). In terms of the limitations of market access, overall, three types of market access limitations are most commonly listed in telecom commitments: limitations on the number of suppliers, restrictions on type of legal entity, and limitations on the participation of foreign capital.
10. Lee Tuthill, The GATS and New Rules for Regulators, 21 Telecommunications Policy (1997), pp. 783-789;
11. cf. Daniel Roseman, "Domestic Regulation and Trade in Telecommunications Services: Experience and Prospects under the GATS", in Aaditya Mattoo and Pierre Sauve (eds), Domestic Regulation & Service Trade Liberalization (Oxford: Oxford University Press, 2003), pp. 83, 85.
12. Telecom Annex, para. 4.
13. Ibid., para. 5.
14. Ibid. This means that services suppliers can choose how to supply their services, including via the Internet.
15. Telecom Annex, para. 6. The challenges of the Telecom Annex and the Reference Paper is to ensure that the choice being imposed on developing countries is not a choice between modernizing their telecom sector or meeting social needs. For detailed discussion on this point, see Angus Henderson et al., WTO Principles and Telecommunications in Developing Nations: Challenges and Consequences of Accession, 29 Telecommunications Policy (2005), pp. 205-221.
16. M. Naftel and L.J. Spiwak, The Telecoms Trade War: The United States, The European Union, and the World Trade Organization (Oxford: Hart, 2000), pp. 90-119.
17. Ibid., p. 111.
18. Damien Geradin et al., "Levelling the Playing Field: Is the WTO adequately Equipped to Prevent Anti-Competitive Practices in Telecommunications", in Damien Geradin and David Luff (eds), The WTO and Global Convergence in Telecommunications and Audio-Visual Services (Cambridge: Cambridge University Press, 2004), p. 146.
19. See, also, David Luff, Telecommunications and Audio-visul Services: Considerations for a Convergence Policy at the World Trade Organization Level, 38 Journal of World Trade 6 (December 2004), pp. 1059-1086.
20. Reference Paper Section 2.2(a).
21. Reference Paper Section 2.2(b). Interconnection should be ensured at any technically feasible point in the network. However, there is no indication as to the level of unbundling required.
22. Reference Paper Section 3. However, consistent with its soft approach, the Reference Paper does not give any indication of the kind of universal service that could be mandated by the Members.
23. Reference Paper Section 4.
24. Reference Paper Section 5.
25. Reference Paper Section 6.
26. Information Note by the Secretariat, Council for Trade in Services, Special Session: Telecommunications Services, JOB(05)/208, 26 September 2005.
27. See, e.g., EC Document COM (1999) 539, Towards a New Framework for Electronic Communications Infrastructure and Associated Senices, The 1999 Communications Review Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions. Quoting: "Regulation should aim to be technologically neutral. Technological neutrality means that legislation should define the objectives to be achieved, and should neither impose, nor discriminate in favor of, the use of a cont. particular type of technology to achieve those objectives. The current legislative framework is not technologically neutral. Different rules apply, for example, to services provided over mobile and fixed networks, and to access to frequencies for telecoms; and broadcasting networks. Convergence between broadcasting and telecommunications allows the same service to be delivered over networks which hitherto have been regulated differently. As far as possible, therefore, regulation of communications services should not differentiate between technologies over which such services are delivered. Regulation that is based on specific technology can quickly become outdated. The provision of services should be regulated in a homogenous way whatever the communications infrastructure on which they are carried, so that the regulatory framework does not distort competition."
28. Geradin, as note 14 above, p. 147.
29. Ibid., p. 146.
30. See section IV.C. below regarding the Mexico - US Telecom dispute.
31. The Reference Paper establishes definitions and principles for these key requirements, but does riot always explain how they should be applied. The flexibility is exposed to the risk of regulatory capture by vested interests and risks lead to the ineffective implementation of the rules.
32. See Ernst-Urich Petersmann, "Competition-oriented Reforms of the WTO World Trade System - Proposals and Policy Options", in Roger Zach et al. (eds), Towards WTO Competition Rules (The Hague: Kluwer Law International, 1999), p.65.
33. See, generally, Frederic Jenny, "Globalization, Competition and Trade Policy: Issues and Challenges", in ibid.
34. Communication from the European Communities, Classification in the Telecom Sector under the WTO-GATS Framework (hereinafter "EC Paper"), TN/S/W/27, S/CSC/W/44, 10 February 2005. This communication does not deal with content or regulatory issues. Currently, this paper on classification is still under the discussion in WTO Friends of Telecommunications Group.
35. Information Note by the Secretariat, as note 21 above.
36. Statement by Japan, Report of the Meeting held on 21, 22 and 25 February 2005, TN/S/M/14, para. 46.
37. EC Paper, p. 4.
38. The GATS defines telecommunications services in its Annex on Telecommunications as "Telecommunications means the transmission and reception of signals by any electromagnetic means."
39. Those WTO Members that may have made commitments for 2.C.n. and would choose to adopt the new definition as proposed by EC, they would simply have to transfer their commitments applying to 2.C.n. to the CPC 84 computer services section.
40. Communication from the United States, Classification in the Telecommunications Sector under the WTO-GATS Framework (hereinafter "US Paper"), TN/S/W/35, S/CSC/W/45, 22 February 2005.
41. Generally, in terms of the extent of market access commitments under the different modes of supply, fewer limitations were listed with respect to "value-added services" for all modes of supply. For mode 1 (cross-border supply), "value-added telecom services" were fully committed by between 31 and 37 percent of the Members that undertook specific commitments, whereas for the "basic services" only 12 to 20 percent committed fully with no limitations. For mode 3 (consumption abroad), "value-added services" were listed with no limitations by between 44 and 51 percent of Members that undertook commitments, while the corresponding figure for "basic telecom services" ranged between 31 and 49 percent. See ROC Chung Hua Economic Research Center's Annual Report, Statistical Analysis of Market Access Commitments under the GATS 17 (December 2005).
42. US Paper, p. 3.
43. Informal discussion (via e-mails) in WTO Friends of Telecommunications Group, statement of the United States, 23 August 2004.
44. However, the EC proposes that any doubts about the "old v. new" classifications should be clarified in a footnote to the Schedule.
45. WTO Friends of Telecommunications Group currently includes Australia, Canada, Chile, Chinese Taipei, the EC, Hong Kong, China, Japan, Korea, New Zealand, Norway, Singapore, Switzerland, and the United States.
46. Informal discussion (via e-mails) in WTO Friends of Telecommunications Group, statement of Hong Kong, 6 September 2004.
47. Proposal by Mexico, S/CSS/W/101. See, also, Statement by Japan, as note 30 above.
48. E.g., proposals by Switzerland (S/CSS/W/72), Norway (S/CSS/W/59) and Australia (S/CSS/W/17).
49. In order for new market entrants to provide services, they must be able to interconnect with the networks of major suppliers. In most countries, the major supplier controls network infrastructure, which is the only economically feasible and timely means by which other suppliers may obtain access to end users.
50. Most commentaries suggest that the rates should use the long run incremental costs methodology and thus should be set at the forward-looking long run economic costs that would be incurred by an efficient firm using state-of-art least-cost technology. Such costs are not the major supplier's existing embedded costs (i.e., those costs already on the books of the firm), but the costs that an effectively competitive market would yield or that regulation would seek to ensure. Put simply, forward-looking, long-run economic costs are the total service or total element long-run incremental costs per unit plus a reasonable share of the forward-looking joint and common costs, so that each service contributes to the common costs of the service and the overheads of the firm. See, generally, H. Jeffrey, J. Rohlfs and Gregory Sidak, Exporting Telecommunications Regulation: The United States-Japan Negotiations On Interconnection Pricing, 43 H.V.I.L.J. (2002), p. 317.
51. See, also, Boutheina Guermazi, "Reforming International Accounting Rates: A Developing Country Perspective", in Damien Geradin et al. (eds), The WTO and Global Governance in Telecommunications and Audio-Visual Services (Cambridge: Cambridge University Press, 2004), pp. 84-86.
52. Information Note by the Secretariat, as note 21 above. Proposals by Australia, Chile, Colombia, Cuba, Japan, Mexico, Switzerland, the United States have been cited in the Note.
53. Proposal by Chile (S/CSS/W/88).
54. Proposal by Australia, (S/CSS/W/17).
55. Geradin, as note 14 above, p. 147.
56. More detailed transparency rules cannot be uniform across sectors because of the nature of sectors themselves. Given the need to develop sector-specific rules to address the interconnection issues, it may be better to develop tailored and specific transparency requirements in the telecom sector too.
57. Non-Paper From Australia, Clarifying Implementation of the WTO Reference Paper on Basic Telecommunications, Circulated to Telecom Friends in April 2004.
58. Since the Fourth Protocol to GATS has become effective in February 1998, only 83 Members have agreed to guarantee all or part of the regulatory principles set forth in the Reference Paper. (For the purpose of counting the number of Members who commit to the Reference Paper, the Member States of EC are counted individually.)
59. It is important to note that the current bilateral request-offer process does not derive from any specific provision of the GATS. Nothing in the GATS prevents Members from revisiting the Agreement's scheduling approach. Therefore, Members may explore all negotiating methods available within the parameters of Article XIX of the GATS and the Negotiating Guidelines, that is, bilateral, plurilateral and multilateral approaches. Of course, such an attempt should not change the basic structure of the GATS, neither should it diminish the negotiating flexibility of the GATS.
60. Statement on Telecommunications Services at the Special Session of the Council for Trade in Services on 30 September 2005, Document JOB(05)/253 (18 October 2005), Communication from Australia, Canada, the EC, Hong Kong China, Japan, Korea, Norway, Singapore, Switzerland, Chinese Taipei, and the United States.
61. The Doha Work Programme, Annex C, WT/MIN(05)/DEC, adopted on 18 December 2005.
62. According to Annex C of Document WT/MIN(05)/DEC, any Member or group of Members may present requests or collective requests to other Members in any specific sector or mode of supply, identifying their objectives for the negotiations in that sector or mode of supply. Members to whom such requests have been made shall consider such requests in accordance with paragraphs 2 and 4 of Article XIX of the GATS. Plurilateral negotiations should be organized with a view to facilitating the participation of all Members, taking into account the limited capacity of developing countries and smaller delegations to participate in such negotiations. Due consideration shall be given to proposals on trade-related concerns of small economies. As to the time-frame, groups of Members presenting plurilateral requests to other Members should submit such requests by 28 February 2006 or as soon as possible thereafter.
63. See note 3 above
64. Panel Report, paras 6.34-6.138;
65. Appellate Body Report, paras 158-213.
66. Panel Report, paras 6.83-6.96. The United States argued that when the GATS took effect in 1995, the United States would have had "no idea" that it was agreeing to open the US market to allow off-shore Internet firms to provide gambling services to US-based customers. The Panel concluded that while the United States "may well have inadvertently" undertaken specific commitments on gambling services, the Panel was not required to "second-guess" the intentions of the United States at the time a commitment was scheduled. It also spelled out carefully that it had not decided that WTO Members do not have the right to regulate or prohibit gambling activities, but instead had found in this case that the United States was maintaining measures in a manner inconsistent with its GATS obligations.
67. Appellant Submission of the United States, United States - Measures Affechng the Cross-Border Supply of Gambling and Betting Services, WT/DS285/AB/R (14 January 2005), para. 59.
68. Appellate Body Report, paras 16-20. In the view of the United States, the Panel erred by misinterpreting the ordinary meaning of "sporting" and improperly treating preparatory work for the GATS as context. The United States argued that the Panel in this dispute turned away from a correct initial conclusion - that the text is the paramount factor in interpretation GATS schedules - and erroneously went out of its way to read the US Schedule as if it were based on the CPC.
69. A panel may look to preparatory work only to confirm an interpretation made in accordance with Article 31 of the Vienna Convention, or if such interpretation leaves the meaning ambiguous or unclear or leads to a result that is manifestly absurd or unreasonable.
70. The United States argued that gambling properly resides in 10.E - where the United States made no commitment - rather than in the broad category of "recreational services" in 10.D.
71. Panel Report, paras 6.104-6.106.
72. Appellate Body Report, paras 58-161.
73. Appellate Body Report, EC - Computer Equipment, para. 109.
74. Appellate Body Report, paras 202-213.
75. On the other hand, developing countries already fear that the complicated nature of the services talks handicaps them and opens them to a challenge to provide market access in an area in which they thought they made no commitments. The Gambling ruling, perhaps, may limit countries' "margin of maneuver" and ensure that what one country schedules will tend to closely match what others have scheduled.
76. However, the US initial services offer tabled last year, within the telecommunications services category, includes a new category covering information services that does not correspond even to the W/120 system. After the Gambling case, it would be difficult to decipher the true impact of that commitment if it cannot be read in conjunction with other agreed classification systems.
77. See note 4 above.
78. Panel Report, para. 7.142.
79. The US first written submission, para. 107.
80. Ibid., para. 108.
81. Mexico's second written submission, paras 87-97.
82. ITU Recommendation, ITU-T Rec. D.140 (06/2002), para 1.
83. The US's first written submission, paras 115-116. The United States presented detailed evidence to show that the interconnection rates for terminating US calls charged by Telmex (and approved by Mexican authorities) were much higher on average than the prices Telmex charged for purely domestic use of the same network components. The United States also used three other proxy methods, showing that the interconnection rates that Telmex charges US cross-border suppliers greatly exceeds gray market retail rates for calls into Mexico, wholesale rates for the termination of calls into other countries, and rates Mexican operators charge each other for settling accounts relating to international calls.
84. See, also, Panel Peport, paras 7145-721.
85. Panel Report, para. 7.2.
86. Such issues are equally important for other sectors such as energy services and postal and courier services.