Wto Telecom Pact Opening Basic Services Takes Effect

A World Trade Organisation (WTO) pact to open up basic telecommunications like telephony and satellite services to competition among private and state-run companies around the globe came into force yesterday.

The pact, finalised last February after several years of negotiations, initially commits only 58 countries to open up their domestic telecoms market and many of them will be taking at least five years to do so.

Trade officials say that so many different services are involved, in each of which signatories have pledged varying phase-in periods, that it is likely to be well into the 21st century before the entire global industry is liberalised.

 

But WTO officials, from director-general Renato Ruggiero downwards, argue that the importance of the deal is that it steers most of the world firmly in the direction of free trade in telecoms.

Under the deal, business covering some 93 per cent of total domestic and international revenue of around $600 billion generated annually in the industry will eventually be subject to WTO trading rules.

Some countries have made commitments in certain areas, like private leased circuit services, and none at all in others, like data transmission.

In one early move under the deal, the acquisitive US firm WorldCom Inc said yesterday it had applied to Tokyo regulators for a licence to offer local and long-distance telephone services in Japan.

Preparing for the pacts entry into force, Japan has lifted earlier long-standing restrictions which limited foreign ownership of domestic telecom carriers to 33 per cent.

Other big powers like the United States, the worlds largest telecom market, and the European Union have also already begun implementing its provisions which include equal treatment for all other countries in the 132-member WTO.

This applies under the trade bodys key most-favoured-nation (MFN) principle whether a member state has signed up to the telecoms pact or not.

Agreement on the February 5 entry-into-force date was reached on January 26 after several weeks of haggling as the United States sought to ensure that all the original 69 signatories of the deal were coming on board.

As of yesterday, 58 countries, including 14 of the 15 EU states, had notified the WTO that they had ratified the deal, the latest being Romania, trade officials said.

But 12 of the original group who approved the pact last year, including large economies like Argentina, Brazil, Chile, the Philippines and Poland, as well as EU member Belgium, have not yet completed domestic legislation to ratify.

Key Asian emerging economies suffering from the prolonged economic crisis in the region, like Indonesia, South Korea, Malaysia and Thailand, are already on board although they will be opening up only slowly.

Some of those who are not implementing immediately, like India, are considering launching complaints in the WTO against powers that are opening up straight away, or are already substantially open, like the United States.

Delhi is pondering taking Washington before the WTOs dispute settlement body over a system of accounting rates for international calls which the United States is introducing to try to force other countries to cut their connecting charges.

The European Union is also known to be considering starting a case over Washingtons failure so far to ensure that individual US states come into line with the pact, especially on provisions for equal treatment.