USIA - Landmark Global Telecom Pact to Stay Open through November 30, 97-02-18

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LANDMARK GLOBAL TELECOM PACT TO STAY OPEN THROUGH NOVEMBER 30

(Further talks with Japan, Canada expected) (1190)

By Jon Schaffer
USIA Staff Writer

But some major barriers remain in several key telecommunications markets, prompting these nations to keep the agreement open until November 30 with the hope of an even better trade liberalization package.

Japan will restrict foreign equity in its two principal carriers, KDD and NTT. And while both Mexico and Canada have liberalized their markets, foreign equity will be limited to 49 percent in Mexico and 46.7 percent in Canada.

"Several delegations announced tonight -- for example, Japan -- that they supported and were prepared to engage in efforts over the next several months to improve offers," one senior U.S. official said in Geneva. "Our agreement is that during what's called the 'ratification period' -- which begins at midnight (February 15) and ends at midnight November 30 of this year -- countries can improve their commitments; they simply can't make them weaker. So we would hope to work with countries who are prepared to improve their offers, and we're certainly prepared to work with Canada as well."

Still, the gains to be realized in this more than $600,000-million global telecommunications market are huge, officials say. The International Telecommunications Union forecasts global revenues approaching $1,000,000 million annually by 2000.

"I don't think the real measure of this agreement is in dollars, or even in the jobs it will generate," Deputy U.S. Trade Representative Jeffrey Lang said at the final negotiating session in Geneva. "I have no doubt the numbers are stupendous, almost beyond belief .... The value of this negotiation is the hope it delivers that the world is ready to take the risk of responding to an offer of access to the richest market in the world."

Acting U.S. Trade Representative Charlene Barshefsky, briefing in Washington February 15, called the accord "one of the most important trade agreements for the 21st century."

"We estimate that the average cost of international telephone calls will drop by 80 percent," Barshefsky said.

Beginning January 1, 1998, when the accord goes into effect, 68 countries representing over 90 percent of world telecom revenues will offer full or substantial access to foreign telecom companies covering all types of basic telecommunications services -- domestic and international telephone operations, data and fax transmissions, and radio and satellite communications.

The United States, European Union and Japan will be mostly open to domestic and foreign competition from 1998. Liberalization will be delayed until December 1998 for Spain, 2000 for Ireland and 2003 for Portugal and Greece.

In 18 countries, foreign-owned companies will be permitted a 100-percent stake in domestic telecom companies next January 1. Total foreign ownership will be allowed in a number of other countries over the next three to five years, one official said.

Also, for the first time, 54 countries agreed to guarantee "pro-competitive" regulatory principles -- rules covering the establishment of independent regulatory bodies, the right to connect with existing networks at fair prices, the elimination of subsidization, and the assurance of complete openness in government regulations and licensing decisions. An additional three countries are committed to adopting those principles in the next two or three years, and eight countries -- Bolivia, India, Malaysia, Morocco, Pakistan, Philippines, Turkey and Venezuela -- agreed to adopt a substantial portion of these principles.

"Facilities-based" operations -- the right of a foreign company to build and operate its own hard facilities, such as wires, fiber optics, telephone poles, rights of way, radio transponders -- will now be allowed in many negotiating countries. According to the World Trade Organization, developing countries will need about $60,000 million annually in capital investment for telecommunications, almost all of it coming from private sources.

U.S. officials stressed that the success of these talks shows that countries can sit down and conclude a major trade liberalization accord without having to do it within the contexts of a sweeping round of trade liberalization negotiations covering a multitude of issues. In that light, they hope the telecom accord will provide some impetus to global negotiations seeking to liberalize trade in financial services, set to conclude later this year.

Following are some of the commitments by country:

I. Permit foreign ownership or control of most telecommunications services and facilities:

Antigua and Barbuda (after 2004), Argentina (2000), Australia, Austria, Bangladesh (after 2004), Belgium, Bolivia (2001), Brazil, Brunei (after 2004), Bulgaria (2004), Canada, Chile (except local service), Colombia, Cote d'Ivoire (after 2004), Czech Republic (2001), Denmark, Dominican Republic, Ecuador, El Salvador, Finland, France, Germany, Ghana, Greece, Grenada (after 2004), Guatemala, Hong Kong, Hungary (2002), Iceland, Ireland (2000), Israel, Italy, Jamaica (after 2004), Japan, Korea, Luxembourg, Mauritius (2004), Mexico, Netherlands, New Zealand, Norway, Papua New Guinea (2002), Pakistan (2004), Peru (1999), Poland, Romania (2003), Singapore (2000), Slovak Republic (2003), Spain, Sweden, Switzerland, Trinidad and Tobago, Tunisia, United Kingdom, United States and Venezuela.

II. Guarantee pro-competitive regulatory principles:

Antigua and Barbuda, Bangladesh, Bolivia (partial adoption), Brazil, Argentina, Australia, Austria, Belgium, Brunei, Bulgaria, Canada, Chile, Colombia, Cote d'Ivoire, Czech Republic, Denmark, Dominican Republic, El Salvador, Finland, France, Ghana, Germany, Greece, Grenada, Guatemala, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Jamaica, Japan, Korea, Luxembourg, Malaysia (partial adoption), Mauritius, Mexico, Morocco, Netherlands, New Zealand, Norway, Papua New Guinea, Pakistan (partial adoption), Peru, Philippines (partial adoption), Poland, Portugal, Romania, Senegal, Singapore, Slovak Republic, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Thailand, Trinidad and Tobago, Turkey, United Kingdom, United States, and Venezuela.

III. Guarantee market access to international telecommunication services and facilities:

Antigua and Barbuda (2012), Argentina (2000), Australia, Austria, Belgium, Bolivia (2001), Brunei (2010), Bulgaria (2005), Canada, Chile, Czech Republic (2001), Denmark, Dominican Republic, El Salvador, Finland, France, Germany, Greece (2003), Grenada (2006), Guatemala, Hungary (2004), Iceland, Indonesia (2005), Ireland (2000), Italy, Jamaica (2013), Japan, Korea, Luxembourg, Malaysia, Mauritius (2004), Mexico, Netherlands, New Zealand, Norway, Papua New Guinea, Peru, Philippines, Poland (2003), Portugal (2000), Romania (2003), Senegal (2006), Singapore (2000), Slovak Republic (2003), Spain (December 1, 1998), Sweden, Switzerland, Thailand (2006), Trinidad and Tobago, Turkey (2006), United Kingdom, United States, and Venezuela (2000). Six countries open for selected services: Brazil, Cote d'Ivoire, Hong Kong, Israel, Pakistan, and Ghana.

IV. Guarantee market access for satellite services and facilities:

Argentina (2000), Australia, Austria, Belgium, Bolivia (2001), Brunei (2010), Bulgaria (2004), Canada (2000), Chile, Colombia, Czech Republic (2001), Denmark, Dominican Republic, El Salvador, Finland, France, Germany, Greece (2003), Grenada (2006), Guatemala, Hungary (2003), Iceland, Indonesia (2005), Ireland (2000), Israel, Italy, Jamaica (2004 or after), Japan, Korea, Luxembourg, Malaysia, Mexico (2002), Netherlands, New Zealand, Norway, Peru (1999), Poland (2003), Portugal (2000), Romania (2003), Singapore (2000), Slovak Republic (2003), Senegal (2004 or after), Spain (December 1, 1998), Sri Lanka, Sweden, Switzerland, Thailand (2006), Trinidad and Tobago, Turkey (2004 or after), United Kingdom, United States, and Venezuela. Six countries guarantee market access for selected services: Brazil, Cote d'Ivoire, Ghana, Hong Kong, Mauritius, and South Africa.

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