India Keeps Telecom Rates Outside Wto Purview
India has opted for the most favoured nation (MFN) exception on telecom accounting rates (TARs) at the recently concluded discussions of the World Trade Organisation (WTO) negotiating group on basic telecom in Geneva. This means India has kept the issue out of the purview of WTO until a review in 2000.
Speaking to newspersons here yesterday, telecom secretary A V Gokak said the MFN exemption was taken purely as a defensive action. We felt that the WTO negotiations and TARs are separate issues. (Under WTO) MFN means no discrimination in treatment of countries for trade and services. TARs are bilaterally negotiated under the guidelines of the International Telecom Union and cannot be treated on a multilateral basis (as in WTO), he said.
TARs equally divided between carriers are negotiated rates between international telecom companies to carry and end a call from one country to another and constitute a significant portion of international call tariffs. The accounting rate is at present pegged at $1.60 (Rs 57.60) between US carriers and Videsh Sanchar Nigam Ltd.
However, Gokak hastened to add that TARs would have to be brought down in some time in future. The writing on the wall is clear. Accounting rates will have to come down over time. The period of transition will be different for different countries, he said.
After India adopted the MFN exemption, some other developing countries like Sri Lanka, Pakistan, Bangladesh and Turkey followed suit, Gokak said. It is learnt that Hong Kong also approached Indian negotiators to emulate the MFN exemption. The British colony is reportedly studying the legal aspects of Indias MFN exemption before making a similar offer.
When asked why India was not willing to bind itself on 49 per cent foreign ownership in telecom service companies, Gokak said member-countries at the WTO do not generally make international offers reflecting domestic reality. India bound itself only on 25 per cent foreign equity in telecom service companies. A binding commitment means that countries cannot reverse decisions without attracting heavy sanctions.
The decision to take an MFN exception on TARs insulates countries from pressure by other WTO members to reduce the rates. The US telecom regulator Federal Communications Com-mission has been pressuring India and other developing countries to reduce TARs. In fact, the US and European Commission opposed Indias moves to take an MFN exception.