RESTRICTED
GENERAL AGREEMENT TS/NGBT/W/1/Rev.1
10June 1994
ONTRADE INSERVICES Limited Distribution
(94-1216)
Negotiating Group onBasic Telecommunications
NEGOTIATIONS ONBASIC TELECOMMUNICATIONS
Note bytheSecretariat
Revision
1. Atitsmeeting atMinisterial level inMarrakesh (12-15 April 1994), theTrade Negotiations
CommitteeadoptedtheDecisiononNegotiationsonBasicTelecommunications.TheDecisionestablishes
aNegotiating Group onBasic Telecommunications (NGBT) andcalls upon thenegotiating group to
hold itsfirst meeting nolater than 16May 1994. This note isprovided asbackground forthefirst
meeting ofthenegotiating group (6May 1994). Itsummarizes thecurrent state ofplay with respect
towork onbasic telecommunications.
2. Inmid1992, interested participants intheGroup ofNegotiations onServices (GNS) began
todiscuss thepossibility ofextending negotiations ontheliberalization ofbasic telecommunications
beyond thecompletion oftheUruguay Round. Itwasnoted thatinthissector there were particularly
rapid advances under way inregulatory regimes andtechnology andinthelight ofthese andother
factors itwasfeltthatthere waslittle likelihood ofachieving ahigh level ofcommitments onbasic
telecommunications before thecompletion oftheUruguay Round. Asaresult ofthese discussions,
theGNS agreed toextend negotiations onbasic telecommunications andincluded theDecision on
Negotiations onBasic Telecommunications andtheAnnex onNegotiations onBasic Telecommunications
intheFinal Act. Forease ofreference these twodocuments areannexed tothispaper.
3. TheDecision states thatthenegotiations "shall beentered intoonavoluntary basis with aview
totheprogressive liberalization oftrade" inbasic telecommunications andthat they "shall be
comprehensive inscope, withnobasic telecommunications excluded apriori ".Itestablishes theNGBT
tocarry outthismandate. Italso contains astandstill commitment, which came into effect on
15April 1994, under which "itisunderstood thatnoparticipant shall apply anymeasure affecting
trade inbasic telecommunications insuch amanner aswould improve itsnegotiating position and
leverage". Itfurther states that"itisunderstood thatthisprovision shall notprevent thepursuit of
commercial andgovernmental arrangements regarding theprovision ofbasic telecommunications
services". Inastatement attheInformal GNS Meeting on10December 1993 (MTN.GNS/49), the
Chairmansaidthatitwashisunderstandingthat"measurestoimproveaparticipant'snegotiatingposition
andleverage could include anycategory ofactions, notexcluding MFN inconsistent measures" and
thatthisstandstill was"intended toserve apurpose andconvey alevel ofcommitment similar tothat
of"paragraph3oftheSubstantiveGuidelinesfortheNegotiationsofInitialCommitmentsintheUruguay
Round. TheNGBT isresponsible forsurveillance ofthestandstill. TheNGBT isdirected toconclude
thenegotiationsandmakeafinalreportnolaterthan30April1996.Uponcompletionofthenegotiations,
anyresulting commitments aretobeinscribed inMembers 'Schedules andenter intoforce "subject
toalltheprovisions oftheAgreement".TS/NGBT/W/1/Rev.1
Page 2
4. TheDecision states thatparticipation intheNGBT isopen toallgovernments, andtheEuropean
Communities, which announce their intention toparticipate. Todate, 20delegations have stated their
intention totakepartinthenegotiations. These are:Australia, Austria, Canada, Chile, Cyprus, Egypt,
theEuropean Communities andtheir member States, Finland, Hong Kong, Hungary, Japan, Korea,
Mexico, New Zealand, Norway, theSlovak Republic, Sweden, Switzerland, Turkey, andtheUnited
States.
5. TheAnnex onNegotiations onBasic Telecommunications provides thatArticle IIoftheGATS
andparagraph2oftheAnnexonArticleIIExemptionsshallenterintoforceforbasictelecommunications
(except those which arenow listed inSchedules) only onthedateofimplementation oftheresults of
thenegotiations mandated bytheMinisterial Decision, orshould thenegotiations notsucceed, onthe
dateofthefinal report oftheNegotiating Group. Once thecommitments resulting from thenegotiations
enter intoforce, Article IIandtheAnnex onArticle IIExemptions willapply tothem. Also atthat
time, Members may decide whether tolistanymeasure inconsistent with most-favoured-nation (mfn)
treatment forbasic telecommunications. Byvirtue ofthese provisions itwillbelegally possible for
Members tolistArticle IIexemptions thatwere notlisted attheconclusion oftheUruguay Round,
notwithstandingparagraph3ofArticleIXoftheAgreementEstablishingtheWTO(thewaiverprovision).
Onthisbasis participants were able toagree towithdraw, orinsome cases torefrain from listing,
Article IIExemptions relating toBasic Telecommunications aspartoftheUruguay Round results.
However,forcommitmentsonbasictelecommunicationswhicharenowincludedinschedules,ArticleII
anditsAnnex apply.
6. Duringinformalmeetingsamongtelecommunicationsexperts,thediscussionsreviewedtechnical
issues relating totheconduct ofnegotiations andways ofclearly reflecting commitments onbasic
telecommunications inschedules. Thethree issue areas discussed included coverage anddefinition,
regulatory issues andpractical considerations related toliberalization. Asaresult ofthese discussions,
adraft model schedule ofcommitments onbasic telecommunications wasdeveloped. Thedraft model
schedule isappended tothisdocument. Itisstressed thatthisisaworking document, notyetfinalised.
Thedraft model schedule wasintended tohelp clarify andresolve technical concerns andtoserve as
aguide totheconduct ofnegotiations. Indiscussions leading totheelaboration ofthedraft model
schedule, participants generally agreed onthefollowing points:
(i) thatitems listed insection 2.C(a)-(g) and(o)oftheServices Sectoral Classification List
(MTN.GNS/W/120) were considered anillustrative listofbasic telecommunications, not
necessarily complete duetorapid technological developments inthesector;
(ii) thata"positive list" approach toscheduling thesector anditssubsectors would bestserve to
provideclearandaccuratecommitments.Accordingly,aparticipantwouldlistonlythoseservices
orcategories (seebelow) inwhich itismaking acommitment; and
(iii) that, inorder tocapture allrelevant limitations, the"sector orsub-sector" column ofschedules
would alsoneed tobecomplemented bya"positive" listing, asappropriate totheregulatory
regimeconcerned,ofcategoriescoveringgeographicalscope(local,longdistance,international),
technology (wire-/radio-based), means ofdelivery (resale/facilities-based), and end-use
(public/non-public). Itwasfeltthatthese categories would bethebestmeans ofadapting the
requirements ofArticles XVI andXVII totheregulatory complexities ofthesector.
7. Sometechnicalissueswereidentifiedinfootnotestothedraftmodelscheduleasrequiringfurther
discussion inorder tocomplete thework onthemodel. These were:
(i) theapplicability oftheAgreement tomeasures related tointernational agreements between
operators;TS/NGBT/W/1/Rev.1
Page 3
(ii) aneed todetermine whether anysector-specific clarifications ofmodes ofdelivery arerequired;
(iii) whether ornottoschedule non-discriminatory limitations onthenumber ofservice suppliers,
thatareestablished strictly fortechnical reasons, aslimitations onmarket access; and
(iv) whether certain measures suggested bysome participants ascandidates foradditional
commitments would need tobeaddressed inthecontext ofnegotiations and, ifso,whether
they areadequately covered byother provisions oftheAgreements orwhether they need to
beaddressed asadditional commitments.
8. Afewother technical issues were alsoraised aspossible areas forfurther discussion inthe
context ofdetermining how toproceed with negotiating commitments onbasic telecommunications.
These include:
(i) therelationship between thedisciplines ofArticle VIandthescheduling ofcertain types of
telecommunications measures, particularly, butnotlimited to,licensing, approval, orstandards
setting procedures orcriteria;
(ii) thepossible relationship between theAgreement onTechnical Barriers toTrade andsome
measures considered toaffect trade inbasic telecommunications;
(iii) how todeal with "new" basic telecommunications, which could insome cases fallunder
subsectors inwhich commitments hadbeen made, butcould require theimplementation of
regulatory constraints notinplace atthetime such commitments were made; and
(iv) how toaddress "means" tests, involving what aresometimes referred toaspublic interest or
public convenience criteria, often associated with granting access totelecommunications
suppliers.
9. Asaresult oftheUruguay Round negotiations, 48schedules contain commitments inthe
telecommunications sector. Ofthese, atleast 22schedules include commitments inbasic
telecommunications. However, thescope ofcommitments andtheterminology used vary considerably.
Regarding scope, afewschedules listacommitment onasingle subsector such asfacsimile services
while some listcommitments inanumber ofsubsectors. Some commitments listasubsector such as
telephone services, butarelimited toaparticular category oftechnology (e.g. mobile orcellular).
Note: Theheading ofthisdocument, andthesymbol, aretoberegarded asprovisional pending general
decisions ondocument series andsymbols. Ifnecessary theywillberevised andthedocument re-issued.TS/NGBT/W/1/Rev.1
Page 4
DECISION ONNEGOTIATIONS ONBASIC TELECOMMUNICATIONS
Ministers decide asfollows:
1. Negotiations shall beentered into onavoluntary basis with aview totheprogressive
liberalization oftrade intelecommunications transport networks andservices (hereinafter referred to
as"basic telecommunications") within theframework oftheGeneral Agreement onTrade inServices.
2. Without prejudice totheir outcome, thenegotiations shall becomprehensive inscope, with
nobasic telecommunications excluded apriori.
3. ANegotiating Group onBasic Telecommunications (hereinafter referred toasthe"NGBT")
isestablished tocarry outthismandate. TheNGBT shall report periodically ontheprogress ofthese
negotiations.
4. Thenegotiations intheNGBT shall beopen toallgovernments andtheEuropean Communities
which announce their intention toparticipate. Todate, thefollowing have announced their intention
totake partinthenegotiations:
Australia, Austria, Canada, Chile, Cyprus, European Communities andtheir member States,
Finland,HongKong,Hungary,Japan,Korea,Mexico,NewZealand,Norway,SlovakRepublic,
Sweden, Switzerland, Turkey, United States.
Further notifications ofintention toparticipate shall beaddressed tothedepositary oftheAgreement
Establishing theWorld Trade Organization.
5. TheNGBT shall hold itsfirstnegotiating session nolater than16May 1994. Itshall conclude
these negotiations andmake afinal report nolater than 30April 1996. Thefinal report oftheNGBT
shall include adate fortheimplementation ofresults ofthese negotiations.
6. Anycommitments resulting from thenegotiations, including thedateoftheir entry intoforce,
shall beinscribed intheSchedules annexed totheGeneral Agreement onTrade inServices andshall
besubject toalltheprovisions oftheAgreement.
7. Commencing immediately andcontinuing until theimplementation datetobedetermined under
paragraph 5,itisunderstood thatnoparticipant shall apply anymeasure affecting trade inbasic
telecommunications insuch amanner aswould improve itsnegotiating position andleverage. Itis
understoodthatthisprovisionshallnotpreventthepursuitofcommercialandgovernmentalarrangements
regarding theprovision ofbasic telecommunications services.
8. Theimplementationofparagraph7shallbesubjecttosurveillanceintheNGBT.Anyparticipant
may bring totheattention oftheNGBT anyaction oromission which itbelieves toberelevant tothe
fulfilment ofparagraph 7.Such notifications shall bedeemed tohave been submitted totheNGBT
upon their receipt bytheSecretariat.TS/NGBT/W/1/Rev.1
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ANNEX ONNEGOTIATIONS ONBASIC TELECOMMUNICATIONS
1. Article IIandtheAnnex onArticle IIExemptions, including therequirement tolistintheAnnex
anymeasure inconsistent with most-favoured-nation treatment thataMember willmaintain, shall enter
intoforce forbasic telecommunications only on:
(a) theimplementation datetobedetermined under paragraph 5oftheMinisterial Decision
onNegotiations onBasic Telecommunications; or,
(b) should thenegotiations notsucceed, thedateofthefinal report oftheNegotiating Group
onBasic Telecommunications provided forinthatDecision.
2. Paragraph 1shall notapply toanyspecific commitment onbasic telecommunications which
isinscribed inaMember 'sSchedule.DRAFT MODEL SCHEDULE OFCOMMITMENTS ONBASIC TELECOMMUNICATIONSTS/NGBT/W/1/Rev.1
Page 6During thenegotiations, explanatory information regarding theregulatory environment ofaMember may beprovided inasection such asthisone, preceding the
actual schedule. Such information would beprovided forthepurposes oftransparency andinorder tofacilitate theconduct ofthenegotiations. Given thelegal nature
ofaschedule, itshould contain only descriptions ofbound commitments. Thus, once thenegotiations arecomplete andschedules arefinalized, thisadditional information
fortransparency purposes should beremoved. Upon entry intoforce oftheAgreement, such information willbesubject totheobligations ofArticle III.
Sector orSub-Sector Limitations onMarket Access Limitations onNational Treatment Additional Commitments
2.C. TELECOMMUNICATION
SERVICES
(a)through (g),and(o)ab
cLocal/long distance/international
service
-wire-based
-radio-based
-onaresale basis
-facilities-based
-forpublic use
-fornon-public useTypes ofmeasures tobelisted:d
(1)e.g., Quantitative limitations/needs
tests applied tothenumber ofservice
suppliers (incl. monopolies,
duopoloies, etc.) total value of
transactions, total number of
operations orquantity ofoutput.Types ofmeasures tobelisted:
(1)e.g., Preferences given todomestic
suppliers orrestrictions imposed on
foreign suppliers intheallotment of
frequencies.Types ofmeasures relevant to
possible undertakings:
(Commitments onmeasures not
subject toscheduling under
Articles XVI andXVII, including
butnotlimited tothose regarding
qualifications, standards, or
licensing requirements orlicensing
procedures andother domestic
regulations thatareotherwise
consistent with Article VIandthe
Annex onTelecommunications.)
2} 2} e.g., Separation ofregulatory and
operational functions.
Modes ofDelivery:e(1)Cross-border supply (2)Consumption abroad (3)Commercial presence (4)Presence ofnatural persons
aRefers toservices mentioned intheServices Sectoral Classification List(MTN.GNS/W/120, 10July 1991) which isconsidered asanillustrative list.
bParticipants have been moving inthedirection ofagreeing tousea"positive list" approach toscheduling commitments onbasic services. Ithasbeen noted that
thisapproach isprovided forbytheAgreement andthatitmay result inamore clear andtransparent listing ofapplicable limitations.
cDepending ontheservices being offered oronthelimitations existing intheregulatory regime concerned, thespecific commitments onthese services may be
subdivided intothecategories asnoted.
dIthasbeen noted thatthere isaneed forfurther discussion ofmeasures related tointernational agreements between operators andtheapplicability ofthe
Agreement tosuch measures.
eThere may beaneed todetermine whether anytelecom-specific clarifications regarding modes ofdelivery arerequired.Sector orSub-Sector Limitations onMarket Access Limitations onNational Treatment Additional Commitments
2.C.(a) through (g),and(o)
(continued)(3)e.g., Quantitative limitations/needs
tests applied tothenumber ofservice
suppliers (incl. monopolies, duopolies,
etc.), total value oftransactions or
assets, total number ofoperations or
quantity ofoutput;
Quantitative limitation onthenumber
ofavailable frequencies tobeallotted
toforeign service suppliers;f(3)e.g., Preferences given todomestic
suppliers orrestrictions imposed on
foreign suppliers intheallotment of
frequencies;
Limitations onthenationality or
residency ofdirectors orboard members;Safeguards against anti-competitive
practices (i.e., ofmonopolies and
dominant providers);
Procedures orrequirements related
tog
:
-licensing
-allotment ofradio frequencies
-numbering and identification
codes
-type approval
-interconnection;
Restrictions orrequirements regarding
thetype oflegal entity permitted to
supply theservices (also, a
requirement ofcertain forms of
commercial presence could ruleout
cross-border supply);
Limits onforeign equity participation.Restrictions onforeign ownership of
land, orforeign ownership offacilities.Pricing related measures, e.g.cost-
oriented pricingg;
Participation inthestandards-
setting process, including review
andcomment prior toadoption of
new standards;
Rights ofway fortheconstruction
ofinfrastructureg.
(4)e.g., Limitations/needs testapplied
tothetotal number ofnatural persons
thatmay beemployed.(4) }
Modes ofDelivery: (1)Cross-border supply (2)Consumption abroad (3)Commercial presence (4)Presence ofnatural personsTS/NGBT/W/1/Rev.1
Page 7
fThis example isadiscriminatory limitation. Some participants consider non-discriminatory limitations onthenumber ofservice suppliers thatareestablished
strictly fortechnical reasons (e.g. availability offrequency bands forradio-based services) tobecovered bythedisciplines ofArticle VI,rather than byArticle XVI.
This isnottheview ofallparticipants.
gFurther discussion isrequired todetermine whether these measures would need tobeaddressed inthecontext ofthenegotiations; ifso,whether they are
adequately covered byother provisions oftheAgreement orwhether they need tobeaddressed asadditional commitments.