TRADE OF TELECOMMUNICATIONS SERVICES: IMPLICATIONS OF A GATT URUGUAY ROUND AGREEMENT FOR ITU AND MEMBER STATES G Russell Pipe May 1993 II * Origin and Functions of GATT The General Agreement on Tariffs and Trade (GATT) is a binding contract between 108 governments which together account for about 90% of world merchandise trade. Governments which have signed the GATT contract are known as "contracting parties." The European Community represents its 12 member states in the organization. GATT was established in 1948 to provide a secure and predictable international trade environment for cross-border trade in industrial products and other forms of merchandise. Services and agriculture are not, as yet, covered by the agreement. Since 1986, when the Uruguay Round was launched, GATT contracting parties have been negotiating the most comprehensive multilateral trade agreement in history.[1] A Established After Havana Charter Rejected GATT was established on a provisional basis following World War II and it was envisioned to be one of three multilateral institutions dedicated to international economic cooperation under the "Bretton Woods" accord. The World Bank and the International Monetary Fund (IMF) negotiations for a third body, the International Trade Organization (ITO), began in London in 1946 and ended with the ITO charter being finally agreed at a UN Conference on Trade and Employment in Havana in March 1948. In 1950 the United States government announced it would not seek congressional ratification of what was known as the Havana Charter; the ITO was "effectively dead." The GATT contract, originally among 23 parties, was initially intended to be provisional but has existed as the only multilateral instrument governing international trade ever since. The Havana Charter of 1948 contained special procedures (Article 53) with respect to services, including "telecommunications, insurance and commercial activities of banks." The Charter also provided mechanisms whereby the ITO could deal with member countries' complaints about "any restrictive business practices engaged in these activities in international trade."[2] The failure of the Havana Charter left international trade outside the UN system and as well somewhat unclear lines of jurisdiction for the World Bank and IMF regarding trade, An important dimension of the Uruguay Round is to create a Multilateral Trade Organization (MTO) which has the structure and authority to administer the treaty and fill the gap in the UN system which has existed for 45 years. The body of rules which make up the multilateral trading system are composed of the GATT agreement itself and the results of eight successive trade rounds of negotiations. Emphasis always has been placed on achieving "substantial reduction of tariffs and other barriers to trade." Early rounds focused on tariffs only, whereas the Kennedy and Tokyo Rounds extended their scope to other impediments to trade, non-tariff barriers in particular.[see figure 2 on page 8] ___________________________________________________________________________ GATT Trade Rounds participating countries 1947 Geneva tariffs 23 1949 Annecy tariffs 13 1951 Torquay tariffs 38 1956 Geneva tariffs 26 1960-61 Geneva (Dillon Round) tariffs 26 1964-67 Geneva (Kennedy Round) tariffs and antidumping 62 1973-79 Geneva (Tokyo Round) tariffs, non-tariff and "framework" agreements 102 1986- Geneva (Uruguay Round) 108 ___________________________________________________________________________ Figure 2 B Stable and Predictable Basis for International Trade Sought The first principle embodied in the 38 articles of the General Agreement is the "most favoured nation" (MFN) clause.[Annex I] This states that trade must be conducted on the basis of non-discrimination. "All contracting parties are bound to grant each other treatment as favourable as they give to any other country in the application and administration of import duties and charges."[3] This prevents any country from giving special trading advantages to another or to discriminate against it: all are on an equal basis and all share the benefits of any moves towards lower trade barriers. "MFN treatment has been the vehicle which has ensured that developing countries and others with little economic leverage have been able to benefit freely and without question from the best trading conditions negotiated by, and among the strongest economic powers," the GATT secretariat has observed. Another aspect of non-discrimination requires that once goods have entered a market they be treated no less favourably than equivalent domestically produced products. This is known as national treatment. The objective of GATT is a stable and predictable basis for trade, not as is sometimes suggested free trade. GATT does not prohibit promotion of domestic industries. Countries seeking to shelter infant or weak industries are encouraged to do so by creating customs tariffs and not other commercial measures. This is to minimize distortion to trade caused by national practices. The GATT system involves parties making tariff levels binding which are negotiated with other contracting parties. GATT rules have prohibited quantitative restrictions on imports which have become less widespread in recent years, except in agricultural goods, textiles and certain other products. However, an exception to the rules against quantitative restrictions allows their use when balance of payment difficulties face a country. Another means of becoming exempt from GATT commitments is for a party to exercise waiver procedures when its economic and trade circumstances so warrant. There is a safeguard rule in GATT as well, which permits governments to offer domestic industries temporary protection from imports. Both waiver and safeguard procedures must be exercised on as narrow a basis as possible and in a non-discriminatory way. "Special conditions also exist for developing countries, which are embodied in a new Part IV to the agreement. Industrial countries are encouraged to assist developing countries "as a matter of conscious and purposeful effort." Part IV also recognizes the need of developing countries to enjoy more favourable conditions of access to world markets for their products, and for developed countries to refrain from introducing new barriers to exports of primary goods and other exports of special interest to less developed nations. Industrial countries also accepted that they would not expect reciprocity for commitments they made in negotiations to reduce or remove tariff and other barriers to the trade of developing countries."[4] In 1979 at the end of the Tokyo Round, in addition to adopting a major package of tariff concessions, a decision was taken to recognize developing countries as a permanent legal feature of the world trading system. This "enabling clause" includes provision of a permanent legal basis for extension of the generalized system of preferences (GSP) by developed countries to developing countries. It also permits special trade treatment for the least developed countries. This reflects the evolution of GATT from being considered the club of the major trading countries to a more global forum for participation by countries at all stages of economic development. The Multi-Fibre Arrangement (MFA) since 1974 has regulated much of the world trade in textiles and clothing. Some of its provisions are exceptions to normal GATT disciplines because they establish quotas on imports of textiles and clothing between industrial and developing countries. In addition to reconciling the interests of importing and exporting countries, it contains safeguard provisions that may be invoked by participants if their domestic market is disrupted or threatened as a result of imports. MFA has been extended four times, most recently in 1991, and is to be considered for renewal again before the end of 1993. There are 40 countries plus the EC participating in the current arrangement. C Agreements on Non-tariff Measures An important consideration during the Tokyo Round, in addition to major reduction in tariffs on agricultural and industrial products, was extending or reinterpreting the original articles of the General Agreement. This round also revised the GATT Antidumping Code negotiated in the Kennedy Round. These agreements on non-tariff measures are the following: "Subsidies and countervailing measures: commits signatory governments to ensuring that any use of subsidies does not harm the trading interests of other signatories, and that countervailing measures do not unjustifiably impede international trade; these measures may only be applied if it can be shown that the subsidized imports in question are in fact responsible for causing material injury, or threatening such injury to the domestic industry which has lodged the complaint. Technical barriers to trade: (also known as the Standards Code) commits signatories to making sure that when governments or other bodies adopt technical regulations or standards, for reasons of safety, health, consumer or environmental protection, or other purposes, these regulations or standards, and the testing and certification schemes related to them, do not create unnecessary obstacles to trade. Import licensing procedures: recognizes that such procedures can have acceptable uses, but can also hamper international trade. It aims at ensuring that they do not in themselves act as restrictions on imports. By becoming parties to the agreement governments commit themselves to simple import licensing procedures and to administering them in a neutral and fair way. Government procurement: aims to secure greater international competition in the bidding for government procurement contracts. It contains detailed rules on the way in which tenders should be invited and awarded. It is designed to make laws, regulations, procedures and practices regarding government procurement more transparent, and to ensure that they do not protect domestic products or suppliers, or discriminate against foreign products or suppliers. The agreement's provisions apply to individual contracts worth more than SDR 130,000 (about US$ 155,000) awarded by government agencies whose purchases are covered. Customs valuation: sets a fair, uniform and neutral system for the valuation of goods for customs purposes: a system that conforms to commercial realities, and which outlaws the use of arbitrary or fictitious customs values. The agreement provides a revised set of valuation rules, expanding and giving greater precision to the provisions on customs valuation already found in the GATT. Developing countries may delay applying the agreement for five years. Revised GATT Antidumping Code: covers ’dumped’ goods which are broadly defined as imports sold at prices below those charged by the producer in his domestic market. Participants in the Tokyo Round agreed on a revision of the earlier GATT Antidumping Code negotiated by a group of major industrialized countries during the Kennedy Round (1964-1967). The new agreement interpreted the provisions of GATT's Article VI, that lays down the conditions under which antidumping duties may be imposed."[5] D GATT Procedures and Operations Representatives of the contracting parties participate in meetings of the many negotiating and administrative bodies of GATT. Many parties have diplomatic missions in Geneva; some are headed by a special Ambassador to GATT. Most officials based in Geneva involved in negotiations are economists with diplomatic experience assigned from ministries of foreign affairs, trade and industry or economic development. Occasionally, government experts are sent directly from capitals to put forward their governments' views on specific issues. Ministerial-level meetings are rare; rather senior officials of the contracting parties meet annually in Geneva. A Council of Representatives is authorized to act on most matters, such as bilateral trade disputes, new accessions, waivers and reports of working parties. It meets on an almost monthly basis. Standing committees exist to administer each of the Tokyo Round non-tariff barrier agreements, pursue matters of special interest to developing countries, look at the situation in countries using trade restrictions to protect their balance of payments, administer the Multi-Fibre Arrangement, handle tariff questions and manage the GATT budget. Working parties are set up to deal with current questions, such as requests for GATT accession, to verify that agreements concluded by members are in conformity with GATT obligations (as free trade areas), or to study issues on which Parties may wish to take a joint decision. Panels also may be created by the Council or other bodies to provide judgments on trade disputes. A separate negotiating structure under a Trade Negotiations Committee (TNC) composed of all parties is responsible for each round. The situation in the Uruguay Round will be described in the next chapter. Decisions by Consensus GATT decisions are generally arrived at by consensus, not by vote. On occasion, however, voting takes place with each contracting party having one vote and a simple majority is required. In the case of waivers/authorization requests which depart from specific obligations in the General Agreement, a two-thirds majority is required, comprising more than half the contracting parties. Regional Economic Groups Recognized Participation in GATT takes place by economic groups as well as countries or economic zones (as Hong Kong). The largest and most comprehensive of the customs union with a single external trade policy and tariff is the European Community. The EC in practice speaks for the member states but is not a contracting party to the GATT. Other groups of countries involved in programmes of economic integration frequently coordinate their positions in the Uruguay Round. This is the case for members of the Association of Southeast-Asian Nations (ASEAN), European Free Trade Association (EFTA) and the Nordic Group. On occasion, unified statements are presented by the Latin-American Economic System (SELA) and the Cairns Group of agricultural exporting nations. Dispute Settlement Procedure An important aspect of GATT's mission is consultation, conciliation and dispute settlement. Any party may call on GATT for a fair settlement of disputes in which they believe their rights under the General Agreement are being withheld or compromised. The system (Articles XXII and XXIII) heavily emphasizes bilateral consultations as the first step in settling disputes. When disputes go further than this stage the GATT panel system can be employed. The GATT Council has established such panels over 100 times since 1947, and the frequency of doing so is increasing to about 12 per year. Panels consist of three experts from countries without an interest in the matters in question. A hearing is conducted where the two sides present their positions as well as other interested parties. The panel forms a judgment based upon an interpretation of the General Agreement itself as well as previous cases. The panel's report is submitted to the Council containing conclusions on the rights and wrongs of the case, together with a recommendation. The recommendation is reached by consensus of the three panelists. If the Council adopts the report of the panel * which is by consensus, then it is the duty of the parties to the dispute to act in accordance with the conclusion. If the violating party does not implement the recommendation, the injured party may seek authority from the other GATT parties to take retaliatory action. In practice such action is rare. Pressure from GATT members for all parties to maintain "negotiating credibility" within the multilateral system has been the most effective means to bring about implementation of a Council decision. Work with Developing Countries GATT is paying increased attention to special needs of developing countries, in particular to their acceding to the various non-tariff agreements and achieving maximum benefit from their participation. There are two types of programme for developing countries: Technical cooperation: A Technical Cooperation and Training Division within the GATT secretariat provides assistance to developing countries in all fields of GATT's work, including matters relating to the Uruguay Round. The division provides statistical data, information and background documentation on issues and problems of interest to developing countries. A programme of missions and seminars in developing countries also is conducted. Trade policy training courses: Two four-month training courses are usually offered by GATT each year in English, French and Spanish on trade policy issues for officials of developing countries. Since the programme began in 1955 more than 1,200 officials from 114 countries and 10 regional organizations have benefited from the courses. E International Trade Centre UNCTAD/GATT The Trade Centre was established by GATT in 1964 at the request of developing countries to help them promote their exports. It has been jointly operated by GATT and the United Nations through the UN Conference on Trade and Development since 1968. The Centre responds to requests from developing countries for assistance un formulating and implementing export promotion programmes as well as import operations and techniques. It provides information and advice on export markets and marketing techniques and assists in establishing export promotion and marketing services, and in training personnel required for these services. This assistance is provided free of charge to all developing countries. Endnotes 1 Source material excerpted from GATT: What it Is and What it Does, Geneva: GATT, 1992. 2 World Traded Services: The Challenge for the Eighties, Raymond Krommenacker. Dedham, Mass, USA: Artech, 1984. 3 op cit., GATT: What it Is and What it Does. 4 Ibid. 5 Ibid. III * Uruguay Round Biggest Trade Negotiation In September 1986 ministers representing GATT Contracting Parties met in Punta del Este, Uruguay to prepare and agree to launch the most ambitious multilateral negotiation in history. Although the Uruguay Round Declaration represents a single political undertaking, it was divided into two sections. The main text applies to goods, including for the first time agriculture- and trade-related aspects of intellectual property rights. The objectives of these negotiations are to: bring about further liberalization and expansion of world trade; strengthen the role of GATT and improve the multilateral trading system; increase the responsiveness of GATT to the evolving international economic environment; and to encourage cooperation in strengthening the interrelationship between trade and other economic policies affecting growth and development. The introduction of trade in services into a GATT negotiation was viewed with caution, if not opposition by many developing countries. This was because trade officials from developing countries recognized that many services industries were far less advanced than those of industrial countries, and consequently opening markets to foreign services could retard the growth of indigenous capabilities, result in unwanted reliance on foreign service providers as well as exacerbate balance-of-payments problems. A second section of the Uruguay Round Declaration outlined the objectives of a new framework of rules for trade in services.[see figure 3 below] ___________________________________________________________________________ Uruguay Round Declaration Part II Negotiations on Trade in Services Ministers also decided, as part of the Multilateral Trade Negotiations, to launch negotiations, on trade in services. Negotiations in this area shall aim to establish a multilateral framework of principles and rules for trade in services, including elaboration of possible disciplines for individual sectors, with a view to expansion of such trade under conditions of transparency and progressive liberalization and as a means of promoting economic growth of all trading partners and the development of developing countries. Such framework shall respect the policy objectives of national laws and regulations applying to services and shall take into account the work of relevant international organizations. GATT procedures and practices shall apply to these negotiations. A Group on Negotiations on Services is established to deal with these matters. Participation in the negotiations under this Part of the Declaration will be open to the same countries as under Part I. GATT secretariat support will be provided, with technical support from other organizations as decided by the Group of Negotiations on Services. The Group of Negotiations on Services shall report to the Trade Negotiations Committee. ___________________________________________________________________________ ________________ Figure 3 It was decided that the negotiating structure to handle every aspect of the Round would be composed of three bodies: the Trade Negotiation Committee (TNC) responsible for the entire Round; the Group of Negotiations on Goods (GNG) looking after all subjects with the exception of services; and the Group of Negotiations on Services (GNS). The GNG during the 1987-1988 period organized 14 working groups to deal with each of the subjects for negotiation.[see figure 4 on page 14] At the Mid-term Review in Montreal the subjects were reorganized into 11 negotiating areas. ___________________________________________________________________________ Uruguay Round Subjects for Negotiation Part I Tariffs: aimed at further liberalization with emphasis on especially high tariffs increasing the scope of tariff bindings and tariff escalation (where ascending levels of duty are charged linked to the level of processing of the products concerned). The Mid-term Review set a target for average reductions of around 30%. Non-tariff measures: the reduction or elimination of such measures, including quantitative restrictions. Specific agreements have been drafted on rules of origin and preshipment inspection (the use of private companies to check shipment and invoicing details where countries cannot do it adequately themselves). Tropical products: as in previous trade rounds, this is a priority sector in which the objective is the "fullest liberalization" of trade, covering both tariff and non-tariff measures. An early package of concessions * covering around $20 billion of trade * was agreed and implemented as part of the Mid-term Review results. Natural resource-based products: liberalization efforts aimed in particular at trade in fish and fisheries products, forestry products and non-ferrous metals and minerals. Textiles and clothing: negotiations should ensure the integration of this sector into the GATT with, among other things, the eventual elimination of the Multifibre Arrangement and other restrictions on textiles and clothing which are not consistent with GATT. Agriculture: the creation of more effective GATT rules, improved conditions of international competition through better market access and reduced subsidies, and reduction of the adverse trade effects of sanitary and phytosanitary regulations. GATT articles: a review of existing GATT provisions (especially where not covered by other negotiating areas) with negotiations as appropriate. Safeguards: the negotiations aim for a comprehensive agreement and are recognized as of particular importance to strengthening the GATT system. Includes consideration of the future of bilateral export restraints. MTN agreements and arrangements: improvement, clarification or expansion, as appropriate, of Tokyo Round agreements. Subsidies and countervailing measures: toughening up the disciplines contained in Articles VI and XVI of the General Agreement and in the Tokyo Round subsidies agreement. Dispute settlement: improvements to the system to ensure prompt and effective resolution of disputes and compliance with adopted recommendations. An initial set of reforms, including tighter deadlines, was agreed and implemented after the Mid-term Review. Trade-related aspects of intellectual property rights, including trade in counterfeit goods: the clarification of existing GATT rules which bear upon intellectual property rights and the elaboration of new rules and disciplines as appropriate, together with negotiations on a multilateral framework dealing with international trade in counterfeit goods. Trade-related investment measures: concerns the trade-restricting or -distorting effects of national investment measures and the possible elaboration of new provisions in GATT to avoid these adverse effects. Functioning of the GATT system: possible institutional changes to the GATT, including enhanced surveillance of trade policies, improved decision making and an increased contribution by GATT to achieving greater coherence in global economic policy making. Following the Mid- term Review a new system of national trade policy reviews was initiated in GATT. Part II Services: envisages the establishment of a multilateral framework of principles and rules for trade in services, including the elaboration of annexes for individual service sectors where it proves necessary. In addition, work has also been undertaken on a package of initial liberalization commitments by prospective members of the new agreement. Source: GATT: What it Is and What it Does, GATT Secretariat, Geneva, 1992. ___________________________________________________________________________ __________________________ Figure 4 A secretariat for the services negotiations (GNS Division) was set up to support the work of the GNS. The economic importance of service production, employment and trade were recognized in the early stages of the negotiations: *Production of non-governmental services was valued at $10,000 billion worldwide in the mid-1980s and was over $12,000 billion in 1992. *International trade in commercial services has been estimated being worth more than $800 billion a year and is growing at around 12% each year. (Merchandise trade is worth around $3,500 billion yearly.) *Although the United States and Europe are the largest exporters and importers of services, the relative importance of services trade to many small countries and to the least developed countries is greater. *Over 60% of the GDP of industrial countries is accounted for by services; around 50% for developing countries. *Sixty percent of working women and over 40% of working men in industrial countries are employed in service industries. For developing countries this is round 20% for both men and women. A Classification List Elaborates Telecommunications Services The negotiations to prepare a General Agreement on Trade in Services (GATS) involve a diverse group of sectors. The GNS Division in 1991 prepared a classification list organizing coverage of the negotiations into 12 categories.[see figure 5 below] ___________________________________________________________________________ Services Sectoral Classification List 1 Business services 7 Financial services 2 Communication services 8 Health-related and social services 3 Construction services 9 Tourism and travel-related services 4 Distribution services 10 Recreational cultural and sporting services 5 Educational services 11 Transport services 6 Environmental services 12 Other services not included elsewhere Source: GATT/MTN.GNS/W/120, July 10, 1991. ___________________________________________________________________________ ___________________________ Figure 5 The communication sector is divided into five subsectors: Communication Services A Postal services B Courier services C Telecommunications services a voice telephone services b packet-switched data transmission services c circuit-switched data transmission services d telex services e telegraph services C (continued) f facsimile services g private leased circuit services h electronic mail i voice mail j online information and database retrieval k electronic data interchange (EDI) l enhanced/value-added facsimile services, including store and forward, store and retrieve m code and protocol conversion n online information and/or data processing (including transaction processing) o other D Audiovisual services a motion picture and videotape production and distribution services b motion picture projection service c radio and television services d radio and television transmission services e sound recording f other E Other Under business services is a subsector, computer-related services, which covers: a consultancy services related to the c data processing services installation of computer hardware d database services b software implementation services e other B Group of Negotiations on Services (GNS) Prepares Agreement Participation in the GNS is open to all countries involved in the Uruguay Round. The programme for the initial phase (1987) of the negotiations was to address a number of basic elements: (1) definitional and statistical issues; (2) broad concepts on which principles and rules for trade in services, including possible disciplines for individual sectors, might be based; (3) coverage of the multilateral framework for trade in services; (4) existing international disciplines and arrangements; and (5) measures and practices contributing to or limiting the expansion of trade in services. During 1988 a stocktaking exercise was undertaken to assess achievements of the initial phase and begin an outline of a draft framework agreement for the December 1988 Mid-term Review in Montreal. Early in the negotiating process it became clear there was a significant divergence of views on several fundamental issues: (1) coverage of the framework agreement, whether all services sectors should be covered or only selected sectors; (2) the structure of the agreement, whether to follow the usual GATT formula of principles and rules by adapting them to trade in services. Institutional issues had to be addressed, such as: (1) what treatment would be afforded existing international disciplines; and (2) how should recognition of the need to increase the participation of developing countries be addressed? Among the arrangements and agreements on international services identified by the GNS Secretariat were those governed by the International Civil Aviation Organization (ICAO), the International Air Transport Association (IATA), the International Maritime Organization (IMO), the Convention on the Carriage of Goods by Sea, the UN Code of Conduct for Linear Shipping, the International Telecommunication Union (ITU), the International Organization for Standards, Intelsat, the World Bank, the World Tourism Organization, the UN Economic Commission for Europe, and the OECD.[1] Arriving at an acceptable definition of international trade in services turned out to be a major challenge. Traditional concepts applied to trade in goods were found unsuitable to apply to services. Four modes of delivery were identified: (1) cross-border, where services are delivered remotely, usually via telecommunications links; (2) through the establishment of infrastructure and personnel; (3) through the movement of customers, such as tourism; and (4) through the movement of labour as in the case of construction projects. As regards coverage, the universal approach was favoured by many countries because this was thought to maintain a balance of interests across a wide range of services sectors. Developing countries considered that concessions on coverage could be used to bargain for a slower speed for obligations and liberalization measures to come into effect. The United States and the European Community strongly pressed for universal coverage, but created the opportunity for parties to exempt themselves from most-favoured nation treatment (Article II, Dunkel text). Because certain sectors were considered to have special or unique characteristics, it was proposed to prepare sectoral annexes which elaborated peculiar features and determined their treatment under the GATS. C Principles and Rules for Multilateral Framework The Uruguay Round Mid-term Ministerial Meeting in Montreal on December 9, 1988 reaffirmed the objectives for negotiations on trade in services agreed in Punta del Este. The ministers agreed negotiations should continue without excluding any services sector, and elaboration of a multilateral framework of principles and rules for trade in services "should proceed expeditiously." To this end, the ministers stated the following principles and rules were considered relevant: A Transparency Provisions should ensure the public availability of information with respect to all laws, regulations and administrative guidelines as well as international agreements relating to services trade to which the signatories are parties. B Progressive liberalization The negotiations should establish rules, modalities and procedures in the multilateral framework agreement that provide for progressive liberalization of trade in services with due respect for national policy objectives, including provisions that allow for the application of principles to sectors and measures. Provisions should also be established for further negotiations after the Uruguay Round. C National treatment When accorded in conformity with other provisions of the multilateral framework, it is understood that national treatment means the services exports and/or exporters of any signatory are accorded in the market of any other signatory, in respect of all laws, regulations and administrative practices, treatment "no less favourable" than that accorded domestic services or service providers in the same market. D Most-favoured nation/non-discrimination The multilateral framework shall contain a provision on MFN/non- discrimination. E Market access When market access is made available to signatories it should be on the basis that, consistent with the other provisions of the multilateral framework and in accordance with the definition of trade in services, foreign services may be supplied according to the preferred mode of delivery. F Increasing participation of developing countries The framework should provide for the increasing participation of developing countries in world trade and for the expansion of their service exports, including, inter alia, through the strengthening of their domestic services capacity and its efficiency and competitiveness. Provisions should facilitate effective market access for services exports of developing countries through, inter alia, improved access to distribution channels and information networks. These provisions should facilitate liberalization of market access in sectors of export interest to developing countries. Autonomous liberalization of market access in favour of services exports of developing countries should be allowed. G Safeguards and exceptions Further negotiations will be necessary on provisions for safeguards, e.g., for balance-of-payments reasons, and exceptions, e.g., based on security and cultural policy objectives. H Regulatory situation It is recognized that governments regulate services sectors, e.g., by granting exclusive rights in certain sectors, by attaching conditions to the operations of enterprises within their markets for consumer protection purposes and in pursuance of macroeconomic policies. Asymmetries exist with respect to the degree of development of services regulations in different countries. Consequently, the right of countries, in particular developing countries, to introduce new regulations is recognized. During 1989-1990 the GNS pursued the preparation of a draft framework for trade in services based on the principles and rules set forth in the Mid- term Ministerial Statement. A concern expressed by a number of delegations before and during the ministerial was whether the principles and rules being considered could be effectively applied to the unique characteristics of several sectors, as air transport, financial services and telecommunications. To assuage these concerns, the GNS conducted sectoral testing examinations. D Trade in Telecommunications Services Described A secretariat note (MTN.GNS/W/52, May 19, 1989) set the stage for the preparation of the Telecommunications Annex to the GATS. The departure point for treatment of telecommunications is suggested in the note: "By accelerating the speed and efficiency of transmitting information worldwide, modern telecommunications technology is significantly affecting the realm of international services transactions, both by allowing for new or improved services which enter directly into international trade and by enhancing the tradeability of traditional services." Not only does the "development of globally interconnected telecommunications networks contribute to the expansion of trade in a host of other service sectors...[it] is also important because the service component of many manufactured products is rising. The ability of goods-producing industries to remain internationally competitive can indeed be expected to rely increasingly on the availability of competitively priced intermediate telecommunications service inputs." This initial analysis of the nature, characteristics and function of telecommunications in a trade environment strongly emphasizes its facilitative features. Far less attention is paid to telecommunications service industries * the provision of basic and enhanced services * than to its role as the "underlying transport means for other economic activities." The note refers to telecommunications as an intermediate service, that is, a conduit or enabler of other services to exist and be performed. Some trade economists have used the analogy of telecommunications being an electronic highway over which all types of services traffic flow. As such, liberal conditions of access and use of public telecommunications transport networks, they contend, must be ensured. The primary characteristic of trade in telecommunications services, the secretariat note points out, is that it "takes place predominantly through the interconnection and interoperability of national telecommunications systems,...mostly through the public-switched networks, but also through private facilities."[Annex II] For trade purposes, the document indicates, the treatment of telecommunications needs to consider five aspects: 1 Form of trade: includes the cross-border provision of services, the cross-border movement of consumers as well as the cross-border movement of factors of production (e.g., investment). 2 Preferred mode of delivery: considerations relate to establishment, commercial presence, non-establishment as well as the requirement to establish. 3 Market structures: the degree of market concentration and the characteristics of ownership. 4 Domestic and international regulatory treatment: includes the licensing of facilities, pricing arrangement, cost-accounting practices, technical standards, interconnection practices and transparency provisions. 5 Network access and use: availability of public-switched leased-line and international services; attachment of terminal equipment of the network and the access to and use of information and other content services. The provision of telecommunications services internationally is acknowledged as overwhelmingly involving cross-border provision of a service using the public-switched network or private lines leased from national telecommunications administrations. This being the case, the application of national treatment and market access principles takes on considerable importance. They involve how foreign suppliers of various services can access domestic telecommunications markets, on what terms, and by what means. The secretariat note suggests: "The fact that many telecommunications services are provided online and at a distance has usually meant that telecommunications providers in one country have not required a commercial presence in the other country in order to provide international telecommunications services. Matters relating to establishment, non- establishment and commercial presence might thus be expected to arise most directly with regard to the provision of telecommunications network-based services in a foreign country or private end-to-end services involving investment in satellite ground stations or landing rights for cables. The preferred mode of delivery could involve a range of possibilities. Establishment might in some instances be deemed necessary in order for an alternative private network using satellites or cables to be constructed and operated. In other instances a network-based service provider might prefer non-establishment and merely use the public-switched network or lease lines to access customers from abroad. Alternatively, the same service provider may wish to have a commercial presence in a foreign country in order to market its services." Regulations Standards and Tariffs Affect Trade Another vital aspect of trade involving telecommunications services is regulation. "Issues attracting regulatory attention in most countries include market structures, ownership conditions, licensing requirements, pricing policies, technical standards and interconnection arrangements." Market structures usually determine entry possibilities and "whether and how trade in telecommunications services takes place. For example, an increasing number of countries now treat telecommunications network-based services as domestically competitive and, in effect, internationally traded." The note refers to domestic pricing arrangements, observing: "Deviations from cost-based pricing of telecommunications services, volume- sensitive pricing of leased lines, or access charges for the provision of network-based services, are all examples of how cross-border trade in telecommunications services could be affected. Moreover, technical standards and type approval procedures for the attachment of equipment to the network or interconnection arrangements among operating entities in different countries are also potentially important." Trade in telecommunications services may be influenced not only at the national level but also by recommendations of the ITU-CCITT, the document observes. "The recently adopted International Telecommunication Regulations, which are concerned only with telecommunications services offered to the public and the underlying means of transport, allow special arrangements to be made between member states, place emphasis on national sovereignty, and mention the right of member states to grant or withhold authorization for telecommunications services and to services providers within their own territories. More generally, tariffication, accounting, technical standards and interconnection activities of the CCITT and its various study groups * although only recommendations and not binding on ITU member states * overlay and often influence domestic regulatory action." Conditions placed on access to and use of a country's national telecommunications system, such as policy, technical and national security considerations, may determine whether and how trade of telecommunications takes place. The availability of public-switched and leased-line capacities as well as international facilities are key determinants of trade in telecommunications services. "Where this capability is not available, as in some developing countries, or where the terms and conditions for use of the public-switched network, private leased lines or international facilities are unattractive, this may hinder the ability of prospective services providers to enter foreign markets or force them to use alternative arrangements, such as bypass strategies. Attachment of terminal equipment to networks, in particular that relating to software and other components necessary for interconnectivity and interoperability, is also an increasingly important feature of international telecommunications network access and use. This affects how trade in telecommunications services can take place and indeed whether it can take place at all."[see Annex II for full text] E GNS Sectoral Testing of Telecommunications This background note was the centrepiece of a GNS meeting on June 5-9, 1989 (MTN.GNS/23, July 11, 1989). More than 20 countries, the EC and ITU presented observations on the concepts, principles and rules, which may be included in the draft GATS. The EC delegation reflected the attitude of others, that is, the telecommunications sector is particularly important because of its relationship to other services sectors, but its complexity and changing characteristics make it hard to address. Furthermore, "can trade in services be envisaged without liberalization of trade in equipment?" As well, it ought to be decided "whether jointly produced services are traded services." Aspects concerning intracorporate data flows also need to be addressed, the EC stated. Several developing countries, in particular Egypt, Brazil and India, complained that the secretariat document did not reflect any of the developmental considerations "which certainly merited attention." The degree of liberalization in the telecommunications sector, the Brazilian delegate stated, would have to be based on the possibility of such liberalization to promote both growth and development. Some delegations admitted being confused as to whether the objective of the testing exercise was to evaluate the kind of regulatory environment necessary to facilitate cross-border trade in services employing telecommunications, or to press countries to restructure national telecommunications markets along the lines of the US, EC, Japan and Australia. The representative of ITU was called upon to comment on the secretariat paper from a factual and technical perspective. As regards value-added service, "ITU has not made significant progress in defining value-added services." There was wide consensus that the complexity of this sector plus impacts of technological change, required that knowledgeable, patient consideration be given to it. Due to the importance of this sector, it was decided to create a Telecommunications Working Group to prepare an annex encompassing many of these concerns.[see following section] F Draft Final Act (Dunkel Text) December 1991 The Uruguay Round was scheduled to be concluded in Brussels, Belgium in December 1990. To that end the GNS laboured to reconcile many competing views through formal and informal consultations. As the deadline for submitting a consensus text to the TNC drew near, in November 1990, the chairman of the GNS, Ambassador Felipe Jaramillo of Colombia, proposed his own draft for consideration at the ministerial conference. The TNC in turn incorporated this draft GATS into a December Text, to serve as the basis for ministers' deliberations. Only minutes after ministers had opened final negotiations on the GATS, the Brussels meeting collapsed as a result of a deadlock over agricultural subsidies. The GNS negotiations resumed in April 1991 with technical work going forward on the framework, initial commitments and sectoral annexes. Considerable attention was directed to preparation and tabling of offers in the form of draft schedules of initial commitments to serve as a basis for continuing negotiations on progressive liberalization of services markets. It will be necessary for all countries participating in the GATS to demonstrate a bona fide interest in liberalizing their services sectors by submitting a binding schedule of commitments. A mid-1991 review report submitted to the TNC by Ambassador Jaramillo noted that: "Considerable work remained to be completed in a number of fundamental areas." Thorny issues such as labour mobility, most-favoured-nation treatment and methodology of scheduling of specific commitments dominated GNS deliberations. When it became clear that most if not all GNG and the GNS texts would be incomplete at year's end, GATT Director General Arthur Dunkel instructed the secretariats to prepare a Draft Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations. This 500-page document was tabled in Geneva on December 20, 1991. During the course of extensive examination in national capitals the Dunkel Text has received wide support from developed and developing countries alike. The politically charged problem of agricultural subsidies, deeply involving the United States and the European Community, as well as Japan and the Cairns Group, has been dealt with outside formal GATT auspices, as have a number of other areas where informal negotiations were seen as the best modality in which to achieve consensus. G Significant Provisions of Draft GATS for Telecommunications Although the draft Final Act presented by Director General Dunkel has enjoyed strong support, 15 months have now elapsed since the text was tabled. A number of governments have changed, some national leaders, regional and sectoral groups have expressed concern over one or another provision, suggesting that more than a cursory review may occur when the GNS next meets. Thus, it is problematic to review the document in terms of specific principles, rules and other obligations which might affect the telecommunications services sector. However, a number of lines already appear rather clear in terms of how the international telecommunications system and national regulatory authorities, telecommunications organizations, providers of enhanced services and business and residential customers could be affected by the GATS. The provisions of the Telecommunications Annex will be reviewed separately. It is necessary to take into account the orientation of the trade economists toward telecommunications. They understand telecommunications to be vital to the development of services trade because it is a rapid, reliable, relatively inexpensive, distance-insensitive mode of delivery for most services sectors. In trade economist language, telecommunications is the underlying transport means for other economic activities. Telecommunications is considered to be an intermediate service, oriented to the greatest reasonable extent to facilitating the delivery of all types of information-based service products. It was observed by negotiators in Geneva on more than one occasion that telecommunications is a servant to other services sectors and as such must not be allowed to hinder open flows of services trade. Moreover, because of the prevalence of monopoly and dominant providers, it is considered necessary to clarify telecommunications customers' terms and conditions of access to and use of various services. The following is a review of the draft GATS articles and attachments, which highlights provisions of greatest potential significance to the telecommunications sector. Readers are urged to refer to the complete text of the draft GATS in connection with this. General Obligations Article I * Scope and Definition The Agreement applies to measures by Parties, by central, regional or local governments and authorities, affecting trade in services. Measures include law, regulation, rule, procedure, administrative action or any other form. They include the "access to and use of, in connection with the supply of a service,...public telecommunications transport networks and services."[Article XXXIV] Telecommunications note: The intention is to cover every form of requirement or restriction governing telecommunications. Explicit reference to access to and use of public telecommunications networks and services (defined in the Annex) is meant to ensure that suppliers of various types of service can secure reasonable and non-discriminatory access to cross-border and local telecommunications services. Article II * Most-Favoured-Nation (MFN) Treatment With respect to any measure covered by this Agreement, each Party shall accord immediately and unconditionally to services and service providers of any other Party, treatment no less favourable than that it accords to like services and service providers of any other country. A Party may maintain a measure inconsistent with the preceding paragraph, provided it is listed in, and meets the conditions of the Annex on Article II Exemptions. The latter provision requires a Party listing exemptions to describe the particular measure, the treatment inconsistent with Article II, the intended duration of the exemption, and the conditions which create the need for the exemption. The Parties shall review all exemptions granted for more than five years. In principle, exemptions should not exceed the period of 10 years. Telecommunications note: This obliges governments to ensure that telecommunications administrations and others providing services offered to the public to give the same treatment to service providers of all Parties to the agreement. However, MFN does not apply if a Party declares an exception to Article II. It also obliges governments to apply the same rules and regulations regarding the supply of telecommunications services to the service suppliers of all Parties. Article III * Transparency Each Party shall publish promptly, at least at the time of their entry into force, all relevant laws, regulations, administrative guidelines and other decisions, rules and measures of general application, whether made effective by national or subnational government bodies or by a non- governmental regulatory entity, which pertain to or affect the operation of this Agreement. International agreements pertaining to or affecting trade in services to which a Party is signatory shall also be published. Requests for specific information shall be promptly responded to. Each Party is to establish one or more enquiry points to provide specific information to other Parties. Telecommunications note: This provision requires governments (and by extension MPTs, telecommunications administrations and others providing services offered to the public) to publish or make available (presumably in the language of the country at official location) details of all policies, regulations and conditions which bear on trade in access to and use of public telecommunications services.[see also Telecommunications Annex] In addition, enquiry points need to be established. Countries which in the past have not made such information available to domestic and foreign customers could find this requirement difficult to fulfil in the short term. Article IV * Increasing Participation of Developing Countries The increasing participation of developing countries in world trade shall be facilitated through negotiated specific commitments by different Parties...relating to: (a) strengthening their domestic services capabilities such as through access to technology on a commercial basis; (b) the improvement of their access to distribution channels and information networks; (c) the liberalization of market access in sectors and mode of supply of export interest to them. Telecommunications note: Greater access by developing countries to technology and know-how is one objective of this provision; however, such sharing of knowledge is to be arranged as part of "negotiated specific commitments by different Parties." MPTs and telecommunications administrations should seek advice from the appropriate ministry to clarify how this may function in practice.[see also Article XIX, para 2] Article VI * Domestic Regulation In sectors where specific commitments are undertaken each Party shall ensure that all measures of general application affecting trade in services are administered in a reasonable, objective and impartial manner. Where authorization is required for the provision of a service on which a specific commitment has been made, the competent authorities shall within a reasonable period of time after the submission of an application, inform the applicant of the decision concerning the application. Parties shall, through the establishment of appropriate bodies, ensure that measures relating to qualification requirements and procedures, technical standards and licensing requirements, do not constitute unnecessary barriers to trade. Telecommunications note: This article obliges MPTs and/or telecommunications administrations to expeditiously decide applications of foreign entrants into their market, whether providing telecommunications, financial, aviation or other services. Article VIII * Monopolies and Exclusive Service Providers Each Party shall ensure that any monopoly provider of a service in its territory does not, in the supply of a monopoly service, act in a manner inconsistent with that Party's obligations under the Agreement. Where a Party's monopoly provider competes, either directly or through an affiliated company, in the supply of a service outside the scope of its monopoly...the Party shall ensure that such a provider does not abuse its monopoly position in a manner inconsistent with such commitments. Telecommunications note: There should be a "level playing field" whereby government-sanctioned monopoly or exclusive providers of telecommunications services do not use their market position to harm interests of service suppliers participating in activities where competition has been introduced. Article IX * Business Practices Parties recognize that certain business practices may restrain competition and thereby restrict trade in services. Each Party shall, at the request of another Party, enter into consultations with a view to eliminating (such) practices. Telecommunications note: This relates to the kinds of anticompetitive behaviour in a national market that could be carried out by private companies, irrespective of their size, to restrain the success of newcomers. Article XIII * Government Procurement Provisions of Article II (MFN), XVI (market access) and XVII (national treatment) shall not apply to laws, regulations or requirements governing the procurement by governmental agencies of services for governmental purposes. However, negotiations to cover government procurement are envisioned in Article XIII. Telecommunications note: Telecommunications services are not covered by the GATT Procurement Code (nor at present is telecommunications equipment) but negotiations are under way in this regard. This article is meant to allow GATS discussions on this issue to take place at a later date, once its relation to, and the results of the code discussions are clear. Article XIV * General Exceptions Subject to the requirement that such measures are not applied in an arbitrary or unjustifiably discriminatory manner...nothing in this Agreement shall be construed to prevent the adoption or enforcement by any Party of measures: (1) necessary to protect public morals or public order; (2) to protect human, animal or plant life or health; (3) necessary to secure compliance with laws or regulations, as protection of deceptive and fraudulent practices, as well as protection of privacy. Telecommunications note: A number of general exceptions, or escape clauses, are provided. The only aspect bearing on telecommunications is privacy, which may be subject to special rules of secrecy and confidentiality, and in some countries message content is subject to special security and other handling procedures. Article XV * Subsidies Parties recognize that subsidies may have distortive effects on trade in services. Parties shall enter into negotiations with a view to developing the necessary multilateral disciplines to avoid such trade-distortive effects. Such negotiations shall recognize the role of subsidies in relation to the developing programmes of developing countries. Telecommunications note: Cross-subsidization of telecommunications services, particularly in favour of a service for which competition has been established, can be addressed under this provision. When the Parties in time enter into negotiations to prepare "multilateral discplines" on the use of subsidies, it is certain that the telecommunications sector will be relevant. Specific Commitments The following articles only apply when a Party places telecommunications services on its schedule of commitments. Article XVI * Market Access In sectors where market access commitments are undertaken, measures which a Party shall not adopt or maintain are: (1) limitations on the number of service providers; (2) limitations on the total value of service transactions; (3) limitations on the total number of service operations or on total quantity of service; (4) limitations on the total number of natural persons that may be employed in a particular service sector; and (5) measures which restrict specific types of legal entity or limit participation of foreign capital. Telecommunications note: The prohibition on placing limits on the number of services providers, e.g., the number of cellular radio operators in a particular jurisdiction, should be carefully noted by MPTs and telecommunications administrations. As well, limitations on business turnover, market share, number of employees, and types of legal entity which can be licensed, must be specified in schedules unless they are to be eliminated. Already 30 or more countries have submitted offers on VAN/Type II services. Article XVII * National Treatment A Party may accord services and service providers of any other Party...by according either formally identical treatment or formally different treatment to that it accords to its own services and service providers...if it does not modify the conditions of competition in favour of its own service providers. Telecommunications note: This applies after a foreign entity has been authorized to conduct business within or into the territory of a Party. For the telecommunications market the main regulatory constraint some contend has been access by new entities to foreign markets, not discriminatory treatment after a company has received permission to operate. If this is the case, market access (Article XVI) may have more significance than national treatment (Article XVII) for the telecommunications sector. Progressive Liberalization Article XIX * Negotiation of Commitments Parties agree to enter into successive rounds of negotiations with a view to achieving a progressively higher level of liberalization. Such measures shall be directed to the reduction or elimination of the adverse effects on trade in services of measures as a means of providing effective market access. The process of liberalization shall take place with due respect for national policy objectives and the level of development of individual Parties. Telecommunications note: The GATS, if and when adopted, is not an end in itself, rather the beginning of many years of market opening negotiations. These take the form of commitments to submit sectors and subsectors to be traded according to rules of the agreement. This is pointed out in Chapter V. For the telecommunications sector, however, basic voice telephony is not listed in most commitments but many VAN and information services are. Efforts to include basic telecommunications on national schedules and remove MFN exceptions are under way. Article XX * Schedules of Commitments Each Party shall set out in a schedule the specific commitments it undertakes...with respect to sectors and subsectors where such commitments are undertaken. Commitments shall specify commitments on market access and on national treatment, undertakings relating to additional commitments, the time frame for implementation of commitments and their entry into force. Telecommunications note: The schedules are discussed in Chapter V. Institutional Provisions Article XXIII * Dispute Settlement and Enforcement Disputes between Parties, if no satisfactory solution can be effected, may be referred to the Parties...which shall promptly investigate any such matter referred to them and make appropriate recommendations. If Parties consider that circumstances are serious enough to justify such action, they may authorize a Party to suspend the application to any other Party. Telecommunications note: The GATS contains a similar dispute settlement mechanism currently applied to goods. If the same or more binding dispute provision is embodied in the MTO, this will expose telecommunications for the first time to binding dispute settlement procedures. Article XXVII * Relationship with Other International Organizations The Parties shall make appropriate arrangements for consultation and cooperation with the United Nations and its specialized agencies as well as with other intergovernmental organizations concerned with services. Telecommunications note: This calls for the new GATS body to consult and cooperate with ITU on matters relating to telecommunications. It is a very important provision because it ensures that the Parties take the initiative to make appropriate arrangements. Annexes: Financial, Telecommunications and Air Transport Services H Institutional Arrangement for GATT and GATS In addition to achieving a substantive outcome for the Uruguay Round, the negotiation has as its purpose a new multilateral institutional structure for implementing the agreement. As part of the Final Act there is expected to be a commitment to convene a ministerial conference to take the necessary steps to create a Multilateral Trade Organization (MTO). Since GATT is a contract rather than a convention through which an intergovernmental institution is established, the need to transform GATT into such a body has been recognized almost since it came into existence. Because of the Uruguay Round's scope of sectors covered and importance to world trade and development, a number of countries and the EC believe it is urgent to provide a suitable institutional structure to implement it. The political decisions relating to the mission creating an MTO are more complex and formidable than they may appear. There are three interrelated issues: (1) whether the MTO will be a specialized UN agency, and if so its jurisdiction vis-ŕ-vis the World Bank, the International Monetary Fund, UNCTAD and other bodies; (2) the management and decision-making structure of the MTO, specifically as regards settlement of disputes among the Parties; and (3) how the Council of the General Agreement on Trade in Services (GATS) will be organized, in particular what means the sectoral committees which may be formed will use to acquire or draw upon relevant technical expertise. Each of these issues has been subjected to extensive debate as well as governmental and academic commentaries. Only the main points can be reviewed in an abbreviated form in this paper. United Nations Status for MTO The rationale for the MTO to have a legal and institutional status comparable to that of the IMF and World Bank is said to be to ensure greater coherence in global policy making. Partisans of reformulating GATT into a co-equal Bretton Woods body also seek to delimit what they claim to be encroachment of the IMF and World Bank onto the trade terrain. Transforming the relatively small GATT secretariat and headquarters into a body co-equal with the IMF and World Bank is a formidable task for which the political support may not exist from developed and developing countries. The GATT, until the opening of the Uruguay Round, had been called the Club of the world's trading nations. Today there are 108 countries and economic zones participating in the Round as well as several important observers, such as the People's Republic of China and Russia. If an MTO were established in the United Nations system, its membership likely would expand and its mandate become more universal. This reality is considered to have serious drawbacks by some developed countries who see the decision- making process potentially paralyzed or lowest-common-denominator results becoming the organization's output. If the Uruguay Round fails, a trade body made up of OECD plus several more economically advanced developing countries might attempt to form a trade alliance to prevent a potential crisis in international economic relations. Although the Uruguay Round has attracted the participation of a number of developing countries because its broad scope is said to offer "some trade advantages for all," the principle of open markets functioning on the basis of MFN is not an acceptable short-term solution to problems of economic development to some developing countries. Inside the United Nations an MTO undoubtedly would be expected to give greater attention to substantive matters of priority concern to developing countries and expanding technical assistance programmes. Heretofore GATT has had a very precise and limited mandate. A much wider remit, involving extensive attention to developing country needs, may not be acceptable to the leading trading countries. The prospect of an MTO raises questions about the future of the UN Conference on Trade and Development (UNCTAD). Some discussions already have taken place at the United Nations on this matter,[2] but until the fate of the Uruguay Round is resolved it is unlikely the Contracting Parties to GATT, nearly all of which are UN members, will allow the organization to do more than explore the relationship of UNCTAD to an MTO. Reformulating GATT into an MTO In spite of its 45 years' service as a temporary organ for constructing multilateral trading arrangements and agreements, several Contracting Parties have asserted that GATT has four significant deficiencies. These are: (1) the institutional framework's inadequacy for its Director General and Secretariat; (2) the legal basis for implementation of trade agreements, in particular there is a need for strengthened dispute settlement procedures; (3) providing an adequate basis for it to be on an equal footing with the IMF and World Bank as well as stronger cooperation with other international organizations; and (4) increasing its contribution to achieving greater coherence in global economic policy making.[3] A number of the present deficiencies in the GATT machinery are attributable to its being a contract among countries which was intended to exist only until a long-term institution could be created. Therefore, the need for improvements in the institutional framework is well understood and recognized. As regards placing the MTO in the UN system and demarcating the trade-related activities of IMF and the World Bank, many countries appear to be reluctant to articulate their position, if indeed they have one. It is the legal basis for settlement of disputes which is the target of attention. An informal proposal which had its origin in the EC would be for the MTO to have as one of its duties establishment of a permanent panel consisting of a number of highly professional and independent members. This panel would serve as an appeal body in order to review, on request of a party to a dispute settlement procedure, the legal findings of the traditional ad hoc panels established by the GATT Council or Code Committees. According to the plan, this appeal procedure would replace the existing review procedure of adoption of panel reports by the GATT Council. The establishment of a permanent appeal body and strengthening of the multilateral enforcement mechanism also would involve an unequivocal commitment by parties to abide by the multilateral trade rules. That is provisions in national laws calling for unilateral actions against trade practices considered unfair, as Section 301 of the US Trade Act, would have to be brought into conformity with these new GATT procedures. It also has been proposed that settlement of certain disputes brought to GATT should no longer be resolved by consensus of parties, rather a system of voting should be instituted whereby if two-thirds of the parties support a panel recommendation this would make it binding on the party involved. These suggestions are known to be unacceptable to the United States.[4] Even though the United States has been active in GATT from its inception after refusing to ratify the Havana Charter, the US still claims to oppose a multilateral trade body established as a UN agency. Further, the contractual nature of GATT does not oblige the US to modify laws contravening substantive provisions approved after every Round. Finally, the Clinton Administration, as has been the case with each of the post- World War II American governments, intends to retain authority to retaliate against alleged unfair trade practices of foreign countries unilaterally, as well as multilaterally. This explains why international trade legislation renewing Fast Track authority for the President to conclude the Uruguay Round also can be expected to include renewal of the Super 301 provision. GATS Council and Sectoral Committees A draft Ministerial Decision on Institutional Arrangements for the GATS is attached to the substantive text.[Annex IV] Parallel bodies would be set up under the MTO to carry out the agreements on goods and services. Each would be directed by a Council composed of all Contracting Parties. The Ministerial Decision instructs the GATS Council to facilitate the operation and further the objectives of the Agreement, to establish subsidiary bodies. There is speculation that as many as five permanent sectoral committees may be formed * on telecommunications, financial, transport, professional (business) services, and on movement of labour issues. These sectoral committees would be mandated to: (a) keep under continuous review and surveillance the application of the Agreement with respect to the sector concerned; (b) formulate proposals or recommendations for consideration by the Council on any matter relating to trade in the sector concerned; (c) consider proposals to amend the sectoral annex for that particular sector; (d) provide a forum for technical discussions, to conduct studies on measures by parties and to conduct examinations of any other technical matters affecting trade in services in the sector concerned; (e) provide technical assistance to developing countries negotiating accession to the Agreement in respect of the application of obligations or other matters affecting trade in services in the sector concerned; and (f) to cooperate with any other subsidiary bodies established under this Agreement or any international organizations active in any sector concerned. Should a trade in telecommunications services committee be formed with responsibilities as outlined above, a number of issues will need to be addressed. Among them are: (1) How will GATS and/or the sectoral committee acquire technical expertise (of ITU, national administrations or other sources) to carry out its work? Will experts serve on national delegations or be sought out for the purposes of research or for presentation to panels? Will experts be able to serve on panels? Will experts be sought for the permanent staff of the secretariat? (2) What disposition is envisioned for the output of the committee's research and surveillance? Will general empirical studies be undertaken or specific alleged problems or breaches of the Agreement be explored? (3) On an institutional basis, how much exchange of information and collaboration, both formal and informal, will there be between the GATS telecommunications committee and the ITU general secretariat, the development, standardization and radiocommunications sectors? Throughout the lengthy impasse involving sectors where deep conflicts exist, as agriculture and intellectual property, little attention appears to have been given to how to implement the GATS. When a final agreement is in its last stages of negotiation and the MTO begins to receive attention, the direction, expertise, operating procedures and outputs of the Trade in Telecommunications Services Committee will become matters of some urgency. A limited period, probably less than 12 months, will be available to formulate the structure of the committee. Endnotes 1 Summary of Objectives, Coverage and Main Features of Existing International Disciplines and Arrangements Relevant to Trade in Services, GATT/MTN.GNS/W/16, August 6, 1987. 2 Implications of Current Proposal for an International Trade Organization, UNCTAD, MTN.RAF CB7, January 1991. 3 Establishment of a Multilateral Trade Organization (MTO), Communication from the European Community (MTN.GNG/NG14/W/42, July 9, 1990); and MTN: Strengthening the Open Multilateral Trading System, informal paper submitted by Canada to GNG, April 19, 1990. 4 "Uruguay Round Talks Face Fresh Delays as Washington Rejects World Trade Agency," in Wall Street Journal Europe, December 11, 1992. IV * GATS Telecommunications Annex As a result of GNS sectoral testing meetings which reviewed how trade principles and rules might be applied to financial services, transportation (air, sea, land), business and professional services and telecommunications, it was decided that annexes to the framework on services were necessary. The annexes are an integral part of the GATS and serve to interpret general principles for telecommunications and other sectors. The following is a brief examination of the main provisions of the Telecommunications Annex (see Annex IV). The Dunkel Text of December 20, 1991 remains a draft but there appears to be general consensus that it reflects a compromise among the interests of all delegations, developed and developing. Although the Annex and the GATS text are provisional drafts, there is a reasonable likelihood no substantial changes will be made. There has been no explanatory memorandum prepared to elaborate and clarify the text. A Objectives and Scope The objectives of the Telecommunications Annex are twofold: (1) to "recognize its dual role as a distinct sector of economic activity and as the underlying transport means for other economic activities;" and (2) to "elaborate upon the provisions of the Agreement with respect to access to and use of public telecommunications transport networks and services."[Article I] Unlike the annexes on air transport services and financial services, which "apply to measures affecting the supply of" these services, the Telecommunications Annex addresses access and use rather than supply or provision aspects. The Telecommunications Annex elaborates on framework principles and rules affecting the regulatory environment governments establish vis-ŕ-vis telecommunications network operators and other basic service providers. Unlike any other sectoral annex, it provides not only telecom service providers but also other service providers with access and use assurances. This reflects trade negotiators' conclusions that telecommunications is essentially a delivery vehicle for other types of services. The scope of the Annex applies to "all measures of a Party that affect access to and use of public telecommunications transport networks and services (PTTNS)."[Article II] This provision is understood to mean that, "Each Party shall ensure the obligations of this Annex are applied with respect to suppliers of PTTNS by whatever measures necessary." [Interpretative Note] There was considerable debate in the Telecommunications Working Group (TWG) over whether the Annex should be confined to services, or could legitimately extend to network infrastructure. A consensus was reached finally that in practical terms telecommunications (voice, data, facsimile, etc.) is not possible without the physical infrastructure. Therefore, all should be covered. As a result of bringing infrastructure and services, and the ability to attach the necessary equipment, within the scope of the Annex, suppliers of PTTNS are far more exposed than may have been originally anticipated. However, telecommunications service suppliers of a Party are not required to: "(1) authorize a service supplier of another Party to establish, construct, acquire, lease, operate or supply PTTNS, other than as provided for in its schedule; and (2) require a Party (or to require a Party to oblige service suppliers under its jurisdiction) to establish, construct, acquire, lease, operate or supply PTTNS not offered to the public generally." Thus, regulations under which service suppliers operate, and their own policies and practices, are the measures which are covered by the Annex. The Annex does not apply to cable and broadcast distribution of radio or television programming. It was felt that the trade issues associated with mass media relate to cultural matters more than the electronic delivery systems utilized. Another negotiating group is handling these issues. B Intracorporate Communications Recognized The definitions of the terms telecommunications and public telecommunications transport service and networks generally conform to those recognized by telecommunications service providers and ITU. The transport services definition is an attempt to establish the boundaries of basic services, to wit: "telegraph, telephone, telex and data transmission typically involving the real-time transmission of customer-supplied information between two or more points without any end-to-end change in the form or content of the customer's information." Transport networks mean the "public telecommunications infrastructure which permits telecommunications between and among defined network termination points." Intracorporate communications has been defined to be consistent with other GATT trade instruments as well as the legal situation in each Party. From the perspective of telecommunications services suppliers the definition contains the following: "Intracorporate communications in this Annex excludes commercial or non-commercial services that are supplied to companies that are not related subsidiaries, branches or affiliates, or that are offered to customers or potential customers." The Annex requires that telecommunications service providers "ensure that relevant information on conditions affecting access to and use of PTTNS is publicly available, including: tariffs and other terms and conditions of service, specifications of technical interfaces with such networks and services, information on bodies responsible for the preparation and adoption of standards affecting such access and use; conditions applying to attachment of terminal equipment; and notification, registration or licensing requirements, if any." This provision should be read in connection with Article III of the GATS. C Access to and Use of Public Telecommunications Networks and Services Established The provisions contained in Article V of the Annex set forth a number of obligations on telecommunications service providers. It is clearly stated that suppliers of various services identified in a Party's schedule of commitments "shall be accorded access to and use of PTTNS on reasonable and non-discriminatory terms and conditions, for the supply of a service included in its schedule." For example, many schedules include financial, insurance, aviation, advertising and data processing services which, according to this provision, must be ensured access to and use of the telecommunications services they require for cross-border communication as well as within another country. Several obligations are specified: 1 Pricing of PTTNS should be cost oriented. There is no further explanation as to what cost orientation means, but the debate in the TWG revolved around proponents of cost-based pricing and those opposing any reference to pricing in the Annex. In the end, "best endeavour" language prevailed. 2 Access to and use of PTTNS offered within or across borders, including private leased circuits, must be ensured, subject to conformity with the kinds of regulatory requirement set out below in Nos 5 and 6. Such access and use would include permitting customers to do the following: "(a) purchase or lease and attach terminal or other equipment which interfaces with the network and which is necessary to supply a supplier's services; (b) interconnect private leased or owned circuits with PTTNS or with circuits leased by another service supplier; and (c) use operating protocols of the service supplier's choice in the supply of any service, other than as necessary to ensure the availability of telecommunications transport networks and services to the public generally." 3 PTTNS may be used for the movement of information within and across borders, including for intracorporate communications of such service suppliers and for access to information contained in databases or otherwise stored in machine-readable form in the territory of any Party. 4 Notwithstanding 3 above, a Party may take "such measures as are necessary to ensure the security and confidentiality of messages, such to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade in services." 5 No conditions may be imposed on the access to and use of PTTNS other than as necessary to: "(a) safeguard the public service responsibilities of suppliers of PTTNS, in particular their ability to make their networks or services available to the public generally; (b) protect the technical integrity of PTTNS; or (c) ensure that service suppliers of other Parties do not supply services unless permitted pursuant to commitments in a Party's schedule." The preceding sets very limited and precise terms under which telecommunications administrations and other service providers may restrict access to and use of provisions outlined in 2 above. As stated, it would seem that customers may demand and receive access to and use of PTTNS if they so require, subject to the clarification in para 2.3 of the Annex that says suppliers are not entitled to services which the public telecom service provider does not offer to the public. This would reverse the traditional relationships between telecommunications providers and their customers. 6 Provided criteria set forth in 5 above are satisfied, conditions for access to and use of PTTNS may include: (a) restrictions on resale or shared use of such service; (b) a requirement to use specified technical interfaces, including interface protocols, for interconnection with such networks and services; (c) requirements, where necessary, for the interoperability of such services and to encourage achievement of international standards; (d) type approval of terminal or other equipment which interfaces with the network and technical requirements relating to the attachment of such equipment to the network; (e) restrictions on interconnection of private leased or owned circuits with such networks or services or with circuits leased or owned by another service provider; or (f) notification, registration and licensing was thought necessary to help clarify for regulators or operators the kinds of condition that could be applied within the context of applying 5 above. 7 Notwithstanding paragraphs 1-6, a developing country Party may, "consistent with its level of development, place reasonable conditions on access to and use of PTTNS necessary to strengthen its domestic telecommunications infrastructure and services capacity and to increase its participation in international trade in telecommunications services. Such conditions shall be specified in a Party's schedule." D Technical Cooperation Encouraged There is recognition that an "efficient, advanced telecommunications infrastructure in countries, particularly developing countries, is essential to the expansion of their trade in services." To this end, the Annex [Section 6] indicates, "Parties endorse and encourage the participation, to the fullest extent practicable, of developed and developing countries and their suppliers of PTTNS and other entities in the development programmes of international and regional organizations, including the International Telecommunication Union (ITU), the United Nations Development Programme (UNDP) and the International Bank for Reconstruction and Development (World Bank)." Furthermore, cooperation among developing countries at the international, regional and subregional levels is encouraged. It should be pointed out that technical cooperation as well as other measures included in this Article are not mandatory, rather they are encouraged by Parties. In cooperation with relevant international organizations it is proposed that, "Parties shall make available, where practical, to developing countries information with respect to international telecommunications services and developments in telecommunications and information technology to assist in strengthening their domestic telecommunications sector." Finally, Parties agree to "give special consideration to opportunities for the least developed countries to encourage foreign suppliers of telecommunications services to assist in the transfer of technology, training and other activities that support the development of their telecommunications infrastructure and expansion of their telecommunications services trade." E Standardization Role of ITU Recognized The roles of ITU and the International Organization for Standardization (ISO) are recognized in Article VII through "recognition of the importance of international standards for global compatibility and interoperability of telecommunications networks and services, and undertake to promote such standards through the work of relevant international bodies. This Article further states that, "Parties recognize the role played by intergovernmental and non-governmental organizations and agreements in ensuring the efficient operation of domestic and global telecommunications services, in particular ITU." In a final section the Annex indicates that, "Parties shall make appropriate arrangements, where relevant, for consultation with such organizations on matters arising from the implementation of this Annex." This provision is an invitation to members of the Union to continue and strengthen their work in ITU, and can be taken as a call for ITU's assistance after the GATS has become established. V * Initial Commitments for Telecommunications The objective of the Uruguay Round services agreement is liberalization of each sector and subsector over many "rounds" of negotiations. Nevertheless, Parties will commit themselves to this process. Initial Schedules of Commitments will be an integral part of GATS and the Final Act. Therefore, in addition to general obligations contained in various GATS Articles, there are specific commitments set forth in national schedules of commitments. Public telecommunications network and services are covered by the general obligations which the governments will undertake, and also may be included in the specific commitments of some Parties. As well, because telecommunications is a mode of delivery, it can be expected to ensure services of other sectors are delivered from outside or within the territory of a party. A Many Countries List Telecommunications Services A total of 46 countries plus the European Community (representing 12 member states) had submitted draft schedules of initial commitments by the end of 1992. Many were revisions of original submissions. The lists show how extensively parties are willing to participate in opening their services markets. Draft initial commitments, also called offers, while in the process of being negotiated, are responded to by other parties' requests to exchange market access. For example, party X may offer access to its civil aviation market in exchange for party Y offering access to its insurance market. This cross-sectoral trading is common practice under GATT procedures. The initial commitments are significant in telecommunications for two reasons. First, they indicate how many countries acknowledge that certain telecommunications services, or the entire sector, are to be specifically covered by the GATS. There were 37 countries plus the EC that had listed telecommunications services in their schedules as of December 1992 (see table on page 40). There are several parties that submitted schedules which omitted telecommunications, such as Brazil, China, Egypt, Ivory Coast, Jamaica, Singapore and Uruguay. However, this should not be taken to mean these parties will exclude telecommunications from specific future offers. Rather, it probably reflects a position of uncertainty about which services to put forward, or a strategy to wait for other parties to present their offers first. There is a wide range of terminology used in the initial commitments, because it is the responsibility of each party to describe the sectors/subsectors they will cover. This imprecision is not peculiar to telecommunications but is the case with essentially all sectors. For example, basic telecommunications services are described as: basic carriage services (Australia), voice telephone, telegraph and telex (Czech Republic) and public telecommunications transport services and networks (Finland). Value-added services are referred to as electronic mail, voice mail, online information and database retrieval, EDI, enhanced/value-added facsimile services, code and protocol conversion, online data processing, computer time sharing and videotex. Initial Commitments on Telecommunications Services (many commitments contain limitations) ___________________________________________________________________________ ______________ Basic telecommunications and value-added services Australia EC (partial) Hungary Japan (partial) New Zealand Sri Lanka Chile Finland Iceland Mexico Philippines Sweden Value-added/enhanced services only Argentina India Nigeria Switzerland Austria Indonesia Norway Thailand Canada Israel Peru Tunisia Colombia Korea Poland Turkey Cuba Malaysia Romania United States Czech Republic Morocco Senegal Venezuela Hong Kong Slovakia Yugoslavia ___________________________________________________________________________ _______________________ B Cross-border Supply via Telecommunications It was recognized early on in the services negotiations that there are fundamental differences between goods and services, one of which is that many services are information-based and so their import/export is possible utilizing telecommunications. Goods have physical characteristics and in most cases can be presented to customs authorities at ports of entry. Many services on the other hand cross borders electronically and cannot be monitored or measured. Consequently, a largely new approach had to be designed by the GNS to accommodate various modes of supply. There are four modes of supply in the scope of GATS. Modes are essentially defined on the basis of the origin of the service supplier and consumer and the degree and type of territorial presence they have at the moment the service is delivered. Cross-border supply is necessary when either the service supplier is not present or no legal entity is established within the territory of the Party where the service is to be delivered. For example, a financial institution may be allowed to enter the market of a Party and conduct business from its headquarters in another country. If the party authorizing market access makes a commitment to the cross-border supply of such financial services, as via telecommunications, then the public telecommunications network provider should ensure adequate services are made available to this customer. There has been considerable debate in the GNS over modes of supply involving commercial presence through investment to establish local facilities or movement of natural persons to carry out services projects (as construction, repair and maintenance of equipment). Investment rights and limitations have had a long history of debate in GATT. The movement of labour is a controversial issue because many developing countries have a comparative advantage in the construction sector over developed countries. However, unemployment in developed countries has resulted in resistance to allow foreign workers temporary entry for constructing buildings, airports, etc. As regards telecommunications, less divergence of views between developed and developing countries has arisen in the GNS. The reason for this seems to be that in the case of many services cross-border delivery by telecommunications as well as doing business in domestic markets implicitly requires the availability of adequate telecommunications services. This may be considered an improper encroachment on the prerogatives of MPTs and public telecommunications network operators in some countries, but for most trade negotiators in Geneva, reasonable access to and use of public telecommunications is indispensable as governments increasingly opt to open many services sectors to foreign competition. It seems clear that, following adoption of the Uruguay Round treaty and implementation of the GATS, some reconciliation of various viewpoints on what obligations are present in the mode of delivery via telecommunications for particular service sectors will be necessary. The interpretation and implementation of obligations associated with market access and cross- border delivery via telecommunications in all likelihood must be undertaken at the national level, not by GATS. However, if serious conflicts should arise this could be a subject of attention by the GATS Telecommunications Committee. VI * Considerations for ITU and Member States A Informal and Institutional ITU Relationships with GATT and GATS Throughout the more than six years (1987-1992) the Uruguay Round negotiations have encompassed, the ITU secretariat has been intermittently involved in the preparation of the GATS. In 1989 ITU responded to a GNS questionnaire regarding its responsibilities and how they may bear on trade in services, particularly trade principles such as national treatment, transparency and market access. The GNS limited invitations to observe its meetings to the World Bank, the UN Centre on Transnational Corporations (UNCTC) and the UN Conference on Trade and Development (UNCTAD). Other UN bodies were invited to formal GNS meetings and sectoral working groups in which they might have a particular interest. A representative of ITU participated in most if not all sessions of the Telecommunications Working Group, serving as a resource to the delegations and GNS secretariat. Since completion of the draft GATS in 1990 and presentation of the Dunkel Draft in December 1991, there has been no review or reconsideration of the text. This also has meant little additional attention has been necessary from the ITU secretariat. The long-standing mode of operation of GATT is to expect national delegations or the EC to come forward with needed information, such as statistics and definitions of terms and concepts. This procedure was followed by the GNS during the preparation of the framework of principles and rules and the annexes, as well as schedules of commitments, as was pointed out earlier. The lack of standardized terminology or definition of terms is a result of the parties' determining how to describe sectors and subsectors in their own ways. If in fact the political will exists to successfully conclude the Round in 1993, renewed informal ITU/GNS secretariat-to-secretariat cooperation should be mutually beneficial. It remains undecided, at least no public announcement has been made at this writing, whether the GNS is to be re- established and a review of all provisions in the GATS undertaken. Should this occur the ITU secretariat, if called upon, likely would be a useful resource for responding to enquiries from the GNS. When the GNS turns its attention to the MTO and how the GATS mechanism will be organized and operate, the ITU secretariat could provide advice and assistance regarding the functioning of the Telecommunications Committee. In terms of a future formal institutional relationship between ITU and the MTO, a number of bridges must be crossed before any initiatives can be launched. First, the Uruguay Round agreement must be adopted and follow-up action taken to create the MTO. The precise relationship the MTO will have with the UN system, e.g., ECOSOC and the specialized agencies, as yet is unknown. Second, if the MTO is established outside the UN system, or only involves the Bretton Woods institutions, e.g., World Bank and IMF, establishing an intergovernmental agreement between ITU and the MTO may be appropriate and desirable. In view of the participation in the GATS by the World Bank, UNCTAD, UNCTC, ILO, ICAO and the World Travel Organization (WTO), and in GNG negotiations by UNIDO and WIPO, an agreement between several UN bodies and the MTO may be envisioned. B ITU Strategy and Initiatives The Uruguay Round trade in services negotiations have directed considerable attention to the telecommunications sector. The consequence of this elaborate treatment of telecommunications, even though no final act has been agreed, has been to legitimize or validate the claim by a number of business associations and developed countries that this is a fully traded sector. Although this may not be generally acknowledged in the telecommunications community, trade economists widely concur this is a vital dual-role sector as provider and facilitator of services trade. Telecommunications services trade is a main feature of the European Community single telecommunications market programme, a prominent section of the North-American Free Trade Agreement (NAFTA), and the subject of a number of bilateral IVAN agreements. Given the widely accepted inclusion of telecommunications in multilateral, regional and bilateral trade programmes and agreements, it seems clear that ITU should not only examine existing and proposed agreements covering telecommunications but also monitor future developments. Most developed countries have prepared international trade in services policies but this is not the case with many developing countries. However, there are several exceptions. The ITU secretariat might prepare and distribute periodic reports on trade regimes of incorporating telecommunications services. Such an undertaking could be of great benefit to telecommunications ministries in developing countries which are involved in interministerial preparations of government policy, bilateral relations, and consideration of these matters in international bodies. The greatest gap in information circulation and preparatory work seems to involve small, less economically advanced developing countries. Because the BDT is concerned with operational, management and regulatory aspects of telecommunications, addressing trade aspects as well would be both timely and of practical value. It may appear that taking on trade issues could be a formidable task, but trade of telecommunications services is the logical extension of commercializing this sector. Once business rules are applied to the provision of telecommunications, the next step is to work out rules for cross-border trade of these services. Perhaps a background document and/or a panel composed of telecommunications officials involved with trade matters could be presented at future BDT regional conferences. The evolution of telecommunications as a trade issue vis-ŕ-vis ITU seems to have been considered to hold impacts largely external to the main responsibilities of the Union. That is, any impacts would be complementary or potentially conflicting to the roles of ITU and the envisioned MTO. In view of the detailed attention given to this sector contained in the Telecommunications Annex and initial commitments of several countries, some preliminary attention by the standardization and radiocommunications sectors may be useful to determine how relevant these are to their responsibilities. The work programmes of the standardization sector are relevant to matters covered in draft Uruguay Round texts, GNS meetings or initial commitments. In particular, these involve technical standards, conditions for leased circuits, access to and use of public telecommunications networks and services, tariffs (including accounting rates and settlements), and definition of terms. As regards radiocommunications, whether and how allocation of the orbital spectrum and radio frequencies affect trade by service sectors dependent on cross-border delivery via telecommunications has never been carefully scrutinized. An internal assessment of trade principles and rules by the sector secretariats may be appropriate. The APP adopted a resolution (COM 5/5) endorsing the need for ITU to establish a Forum to Discuss Strategies and Policies in the Changing Telecommunications Environment. The resolution calls on the Secretary General to prepare strategic policies and plans for the Union, and to submit an annual report relating to the changing environment to the Council, together with recommendations for action. Administrations should become involved in discussing their own and the Union's strategies and policies through such a forum. Among the prime elements of this new environment are technological and economic as well as regulatory provisions of new telecommunications services. As noted earlier, responding to commercial trends is already widely accepted and addressed. An enlargement of these issues to cover the kind of matters contained in the Telecommunications Annex is recommended. C Involvement of Telecommunications Administrations in Trade Policy at National Level There has been no systematic research on the extent to which MPTs and telecommunications administrations have studied trade issues, prepared positions, or participated in discussions with relevant ministries, as trade, industry and foreign affairs. Given the widespread publicity the Uruguay Round exercise has received, a considerable number of ITU member states may be familiar with the main trade issues. During the course of the Round the trade negotiators of most of the 70 countries plus the EC (representing 12) have been involved in discussions of this sector in national capitals. Some trade officials in Geneva have reported highly negative reactions to applying trade rules to telecommunications by MPTs. This situation may be a result of divergent attitudes of trade experts and telecommunications practitioners on whether and how these services are indeed traded. Since the legitimacy of considering telecommunications as a traded sector is now widely accepted in economic circles, it is incumbent on administrations to: (1) be in possession of current reliable information on the state-of-the-art of telecommunications trade issues and agreements; and (2) prepare their own response to proposals for coverage of telecommunications in multilateral and regional trade in services agreements. If trade aspects of telecommunications were addressed in studies commissioned by administrations in national assessments and future plans, this would strengthen their position vis-ŕ-vis other ministries and foreign companies seeking concessions. A useful methodological approach would be to examine trade aspects within existing medium- and long-term planning, not as a special, isolated problem area. List of Reference Documents The Changing Telecommunication Environment * Policy Considerations for Members of the ITU, report of the Advisory Group on Telecommunications Policy. Geneva: ITU, February 1989. Final Acts of the Additional Plenipotentiary Conference. Geneva: ITU, 1992. "GATS, Son of GATT: A New Rule Book for Cross-border Competition," by Robert Tritt, in Intermedia, November/December 1992, pp 15-17. GATT * What it Is, What it Does. Geneva: General Agreement on Tariffs and Trade, 1992. Restructuring and Managing the Telecommunications Sector, edited by Wellenius, Stern et al. Washington: The World Bank, May 1989. Restructuring of Telecommunications in Developing Countries. Geneva: Centre for Telecommunications Development, ITU, May 1991. Tomorrow's ITU: The Challenges of Change, report of the High Level Committee to review the structure and functioning of ITU. Geneva: ITU, 1991. Trade in Services: Sectoral Issues. Geneva: United Nations Conference on Trade and Development, 1989. The Uruguay Round: Services in the World Economy, edited by Patrick A Messerlin and Karl P Sauvant. Washington: co-published by the World Bank and the United Nations Centre on Transnational Corporations, 1990. ISBN 0- 8213-1374-6, 226 pp, US$13.95. World-traded Services * The Challenge for the Eighties, by Raymond Krommenacker. Dedham, Massachusetts: Artech, 1984. These notes are observations of the author on implications of an agreement for telecommunications. 50 51