RESTRICTED
WORLD TRADE S/GBT/W/4
11February 1997
ORGANIZATION(97-0524)
Original: English Group onBasic Telecommunications
Statement byAmbassador Celso Lafer
Permanent Representative ofBrazil
10February 1997
1. TheBrazilian Government ispresently undertaking anambitious andthorough process of
economic reform, intheunderstanding thatthemodernization oftheeconomy andtradeliberalization
arefundamental tothedevelopment ofthecountry. Inthiscontext, therestructuring ofthe
telecommunications sector isakeypriority, given thepositive effects itcanhaveontheperformance
ofthewhole national economy.
2. Inthecourse ofthepast18months, Brazil hasmade significant progress inreforming the
telecommunicationssector.TheliberalizationprocesswassetoffbyConstitutionalAmendmentnumber8,
ofAugust 1995, which abolished themonopoly ofstate-owned telecommunications enterprises.
3. OnJulythe19th1996, Lawnumber 9,295, oncellular mobile services, satellites, value added
services andservices forclosed usergroups, wasapproved. These specific segments ofthemarket,
asareas ofgreat interest toinvestors, werechosen fortheirspecial suitability tomobilize foreign and
domestic capital. Itwasfeltthattherestructuring ofthese segments could accelerate thewhole process
from thestart, throughout thetelecommunications sector.
4. Averysignificant stepforward intheprocess wastaken lastDecember, when adraftbillfor
aGeneral Telecommunications Lawwassubmitted totheappreciation oftheBrazilian Congress. When
itenters intoforce, thenewlegislation willachieve complete restructuring ofthesector, allowing for
anambitious process ofprivatization thatwillgenerate newopportunities ofinvestment forprivate
capital, bothnational andforeign.
5. Thenewlegislation, when approved, willallow theState towithdraw from theroleof
entrepreneur,whilereinforcingitsregulatoryfunctions.State-ownedservicesupplierswillberestructured
andprivatized.
6. Thenewlegislation alsoprovides thatanindependent regulatory bodywillbeestablished. This
agency, referred inthedraftbillasthe"Brazilian Agency forTelecommunications", willberesponsible
forregulation andenforcement inthetelecommunications sector. Itsprocedures willbeopen and
transparent, andapublic consultation mechanism isenvisaged before theadoption ofbinding decisions.
Thisnewbodywillbeheaded byaCouncil offivemembers, appointed bythePresident oftheRepublic
andapproved bytheFederal Senate, withafixed termofoffice. Moreover, theAgency willhaveits
ownstaffandbudget.
7. Theproposed legislation willclassify services according tothekindofneeds theyaretoaddress
andaccording tothelegalregime ofsupply. Thesupply ofservices willbebased ontheprinciple of
free,broad andfaircompetition under thelaw.Apolicy willbesettoachieve universalization ofS/GBT/W/4
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telecommunicationservices.Licensestosupplytelecommunicationsserviceswillbegrantedtocompanies
incorporatedaccordingtoBrazilianLaw,havingtheirheadquartersandmanagementinBrazilianterritory.
Thedrafttextalsoforesees thatconditions fortheparticipation offoreign capital inthose companies
willbelaiddown bytheExecutive Branch ofGovernment.
8. Weexpect thattheGeneral Telecommunications Lawwillbeapproved during thefirsthalf
of1997. Upon approval, theBrazilian Government plans toimmediately carry outthefirstprivatization
process intheTelebrás system. TheGovernment iscontemplating tostartwithTelesp, which isthe
biggest regional company ofthesystem, aswellasEmbratel, thepublic monopoly supplier ofinterstate
andinternational services.
9. Brazil seesthenegotiations intheGBTasanimportant process thatmustgo,atamultilateral
level, hand inhand withdomestic initiatives. Bothprocesses arecomplementary: theinternal drive
forliberalization inmany countries, including Brazil, canbeconsistently helped bytheattainment of
aneffective multilateral undertaking inWTO.
10. Therefore, Ihavethehonour toofficially announce thepresentation, today, ofanewBrazilian
revised draftoffer inthecontext ofthenegotiations intheGBT.
11. ThenewdraftBrazilianofferdemonstratesclearlythestrongcommitmentbyPresidentFernando
Henrique Cardoso 'sGovernment andbytheAuthorities incharge oftheBrazilian telecommunications
policy, namely Minister Sérgio Motta, toasatisfactory conclusion ofthenegotiations nextSaturday,
orevenbefore that.Compared totheprevious revised text,dated April 25th1996, itcontains many
technical andsubstantive improvements towhich Iwould liketodraw yourattention.
12. Firstofall,thehorizontal section nowclearly indicates theframework oftheBrazilian national
policy ontheuseofbothBrazilian andforeign satellites, establishing afewanduniversal conditions
toattain faircompetition. Therationale forthismodification istomake clear thatmarket access is
allowed, onanMFN basis, forsatellites occupying orbital positions notified byother countries. In
thisrespect, Brazilian satellites havetobeusedonlywhen theyofferbetter orequivalent conditions.
13. Forpublic services, Brazil isoffering asignificant improvement ofthe"phase-in arrangement".
Theprevious offer established a2-year period, after theenactment ofthepresent draft General
Telecommunications Law, fortheintroduction ofliberalizing commitments related tothesupply of
publictelecommunicationsservices.Brazilisnowofferingtoincludethenewcommitmentsinitsschedule
nolaterthanoneyearaftertheenactment oftheLaw. Wearethussetting evenmore ambitious goals
forouraccelerated internal process ofliberalization.
14. Following thetendency nottodiscriminate between technologies forthesupply ofservices,
Brazil hasworked tomake itsoffer astechnologically neutral aspossible. Inthisregard, thedraft
legislation stipulates thatpublic andnon-public services forclosed users groups canbeprovided using
anynetwork technology, onafacilities basis.
15. With regard tonon-public services forclosed users groups, theirdefinition wasrevised and
made more precise.
16. Brazil ismaking astraightforward commitment inthesense thatnolicensing requirements
areneeded forthesupply ofvalue added services. Suchmention, which waspreviously located inthe
column ofadditional commitments, isnowpartofthehorizontal section oftheoffer.
17. Abetterwordinghasbeenprovidedtothecommitmentsassociatedwithcellularmobileservices,
making itclearthattheservices inscribed intheschedule aretheonessupported byterrestrial systems,
operating inthe800Megahertz frequency band. Anewandadditional commitment hasbeenincludedS/GBT/W/4
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inthecommercial presence mode ofsupply: allrestrictions onforeign capital participation willbe
dropped forforeign companies seeking licenses asfrom July20th, 1999. Allpossible restrictions to
theparticipation offoreign governments orcompanies under theirdirect orindirect control inthevoting
capital ofsuppliers ofthisservice havealsobeenremoved. Moreover, therevised offerdoesnotcontain
anyrestrictions applying tothenumber offoreign nationals onboards ofdirectors aswellasexecutive
officers incompanies supplying thisservice.
18. Forsatellite telecommunications transport services, allrestrictions ondirect orindirect foreign
capital participation havebeenwithdrawn forcompanies seeking licences asfrom 20thJuly, 1999,
inthesame waymentioned before forcellular mobile services. Likewise, thelegislation excludes all
possible restrictions totheparticipation offoreign governments orcompanies under theircontrol in
thevoting capital ofsuppliers, aswellastothenumber offoreign nationals onboards ofdirectors
orfunctioning asexecutive officers. Inaddition, satellite telecommunications transport services have
received anewandrefined definition, making iteasier tounderstand theBrazilian regulations onthe
subject.
19. Therevised draftthatwearesubmitting today represents thebestpossible Brazilian offer. Brazil
ismoving forward atapacethat,compared tothatofmost countries thathaveundertaken orare
undertaking thesamereforms, canundoubtedly bequalified asaveryfastone.Atthisjuncture, Iwould
liketorecall that,atthetimeoftheapproval ofConstitutional Amendment number 8,ofAugust 1995,
public services, including telephony, telex, dataandtelegraphy, could onlybeprovided byState-owned
enterprises onamonopoly basis. Asyoucanconclude from theremarks Imade about thedomestic
process ofrestructuring ofthesector, theperspectives havebeenradically altered, onlyeighteen months
since then. Brazil believes, though, thatinsuchasensitive area, speed should notautomatically be
privileged overeffectiveness. Proceeding inadetermined andresponsible way, isthebestguarantee
wecanhavethatthereforms willserve theinterests ofallactors concerned, and,above all,thatthey
willbring positive results toBrazilian society aswellastoourcommercial partners.
20. Almost 60countries havenowtheiroffers onthetable, presenting newandimproved levels
ofcommitments which willcover almost completely theinternational basictelecommunications market.
Webelieve thatitisnowbeyond doubt thatthecritical mass weneeded forreaching amultilateral
agreement onbasic telecommunications intheWTO hasbeencomfortably attained.
21. Brazil isconfident thatourpartners share thispositive assessment, andwearesurethatall
members understand theimportance ofmaintaining theirbestoffers onthetablenow. Wehopethat
suchaconstructive attitude willhelpusthrough thesefinalanddecisive moments ofanegotiation whose
timeforconclusion hasclearly come.