RESTRICTED  WORLD TRADE  
ORGANIZATION  TN/S/W/35 
S/CSC/W/45 22 February 2005 
 
(05-0746) 
Council for Trade in Services  
Special Session Committee on Specific Commitments Original:   English 
 
 
 
COMMUNICATION FROM THE UNITED STATES 
 
Classification in the Telecommunications Sector under the WTO-GATS Framework
1 
 
  The following communication, dated 22 Febr uary 2005, from the delegation of the United 
States, is being circulated to the Members of th e Council for Trade in Services and the Members of 
the Committee on Specific Commitments.  
 
_______________ 
 
Summary  
 
1. This Communication addresses the European  Commission's (EC) Communication  
(TN/S/W/27, S/CSC/W/44) of 9 February 20 05 on the classification scheme used in the 
telecommunications sector under the GATS.  In that Communication, the EC outlined its proposal to 
classify telecommunications services through the "comprehensive" scheme used in the Annex on 
Telecommunications Services to the GATS.  In the EC's view, classifying telecommunications as "all 
services consisting of the transmission and recepti on of signals by any electromagnetic means", will 
avoid the perceived uncertainty su rrounding the coverage of the existing classification scheme based 
on the W/120 framework. 
2. While the United States appreciates the EC's efforts to clarify telecommunications 
commitments, and sees value in such an endeavour , the United States is concerned about the EC's 
proposal because of its potential to limit the scope of the telecommunications sector.  More specifically, the EC's proposed classification schem e, contrary to its intended purpose, may add 
greater uncertainty into the sector with respect to valu e-added services.  First, the generic nature of the 
scheme may leave many Members unclear about the sc ope of commitments in the sector.  Second, it 
introduces uncertainty as to the coverage of te lecommunications services that extend beyond mere 
transmission or transport of signals.  These "value-a dded" services are an essential component of the 
telecommunications services sector, and the United States would consider any classification scheme that does not explicitly cover them to be difficult to  accept.  Third, such a classification scheme that 
does not explicitly cover value-added services may actually result in diminishing existing 
commitments, which runs counter to the purpose of negotiations.  Indeed, many Members already 
have a "value-added" services category in their schedule of commitments. 
3. The United States is seeking to improve  market access commitments in the 
telecommunications sector, presumably a goal shared by the EC.  Given the vital role that 
telecommunications play in the development of other services, and the economy generally, 
                                                     
 
1 This paper is without prejudice to the US current initial offer on telecommunications.  Nothing in this 
paper should be interpreted as a new offer in this category. TN/S/W/35 
S/CSC/W/45 Page 2 
 
 
 comprehensive coverage for this sector is important.  The proposal outlined in this paper and attached 
in Annex 1 is meant to achieve this objective and address concerns with the EC's approach. 
I. THE EC'S APPROACH 
4. The United States appreciates the efforts of the EC to clarify telecommunications 
commitments and is willing to work with them and ot her Members to achieve th is goal.  However, the 
United States also has some reservations with particul ar aspects of the approach that the EC has taken 
in its attempt to provide such clarity.  A general definition of telecommunications can help to ensure 
broad coverage; indeed, this is what  the United States has done in its ow n revised offer.  But, in this 
sector, there is also value in having specificity with regard to the content of commitments, and it is in 
this regard that the United States through th is Communication seeks to improve upon the EC's 
approach. 
A. C
LARITY IN THE TELECOMMUNICATIONS SERVICES SECTOR  
5. The United States is concerned that a generic classification of telecommunications services, 
standing alone, will leave many WTO Members unclear  about the scope of commitments, particularly 
when an entire sub-sector – value-added services  – has been eliminated.  A greater degree of 
specificity as to what constitutes the sub-sectors of  this category would provide more transparency 
and encourage Members to make new, broader co mmitments.  Consequently, adoption of the EC's 
approach could result in less progress in this round of negotiations in the te lecommunications services 
sector.  Therefore, the U.S. proposes to improve upon the EC's classification scheme to make the coverage of commitments in the telecommunica tions sector both more comprehensive and more 
precise.   
B. C
OVERAGE OF VALUE -ADDED TELECOMMUNICATIONS SERVICES  
6. By focusing merely on the transmission functio n of telecommunications, the EC's approach 
does not sufficiently account for the fact that there are services in this sector that extend beyond mere 
transport.   Most telecommunications regimes re cognize that there are telecommunications services 
that add an element of functionality (e.g., storage, forwarding, processing and/or retrieval) to the basic 
transport layer.  Adding this "value" to the tr ansmission produces integrated services that are not 
necessarily reducible to transmission, and indeed, whose distinctiveness are defined as much by their 
computer-based functionality as by their transpor t functions.  Further, many of these services are 
essential to the development of competitive tel ecommunications markets and innovative services 
offerings.  The EC proposal leaves open questi ons about how these services would be covered. 
7. It has been suggested by the EC that valu e-added telecommunications services are already 
covered by commitments made in th e computer and related services sector, or alternatively, that they 
be scheduled in that sector going forward.  This is not a productive suggestion.  The United States, 
along with other WTO Members, views value-added telecommunications services as a vital sector in 
and of itself and not as an adjunct to computer services.  Telecommunications regulatory authorities in 
many, if not most, WTO Members recognize the se distinctions, and often implement licensing 
regimes accordingly.  From a practical standpoint , keeping market access commitments together in a 
sector likely to be subject to oversight by th e same regulatory authorities helps to avoid 
misunderstandings about which entities are held ac countable for implementing such commitments.   
Further, agreement by all WTO Members that valu e-added telecommunications services are covered, 
or are to be covered, in the computer services sect or would be necessary in order to avoid the risk of 
diminished coverage for these services.  This would be an overly complicated process that could delay 
progress in negotiations for a significant time period.    TN/S/W/35 
 S/CSC/W/45 
 Page 3 
 
 
 8. In the current round of negotiations, WTO Memb ers are combining commitments made in the 
Uruguay Round on value-added ("enhanced") teleco mmunications services and those made in the 
Basic Telecommunications negotiations, which covered basic telecommunications services.  In putting together the results of these two negotiations , it is important to ensure that commitments 
scheduled in each category are not omitted.    
9. The EC's approach, however, by relegating valu e-added services to an "optional" footnote, 
and then limiting the specific services in that foot note, has the potential to diminish commitments, 
since the focus purely on transmission coul d be interpreted as only including basic 
telecommunications.  Unfortunately, the EC has not  been able to adequately explain how their 
proposal avoids such potential roll-backs.  The Un ited States is interested in building upon these 
previous negotiations to make cove rage in this sector as comprehensive as possible, and looks forward 
to working with Members to achieve this objective.   Since the existing classification scheme is based 
on the W/120 framework, and the GATS Telecommuni cations Annex provides a broad definition of 
telecommunications, it is important to work with bo th provisions to formulate adequate coverage of 
this sector. 
II. A POSSIBLE SOLUTION 
10. As mentioned previously, the United States sees the value in what the EC is trying to do 
through its revised classification scheme.  Howe ver, for the reasons identified above, the United 
States is also concerned that if adopted, the EC's approach could have a negative impact on this round 
of negotiations.  Therefore, the United States w ould like to propose an alternative to the EC's 
classification scheme (See Annex 1).   
11. In this approach, the United States suggests clarifying that value-added services are covered 
in this sector by adding to the EC's definition, as follows: "All services consisting of the transmission 
and reception of signals by any electromagnetic means, alone or in combination with enhancing, 
storing, forwarding, retrieving, or processing f unctions added to the tr ansmission and reception of 
signals ."  
12. For purposes of greater continuity between the old and new classifications, the United States 
would also recommend that Members include the W/120 categories in their schedules.   
13. As suggested by the EC, the Reference Paper would apply to the basic telecommunications 
category, as committed to under the negotia tions on Basic Telecommunications.   
14. Further, the United States shares the objectiv e of maintaining the Chairman's Note on 
scheduling telecommunications, and believes that it would be useful to consider extending the 
application of relevant provisions to all telecomm unications categories.  For example, the important 
principle of technology neutrality with respect to market access should also apply to the value-added 
sector and include services provided through IP-based  networks.  Incorporated into the attached 
proposed approach is additional language for Member s' consideration that provides a way to achieve 
the precision on technology neutrality and scope of market access commitments desired by the EC. 
III. IMPLEMENTATION 
15. Those who wish to use the approach outlined above will find in Annex 1 an example of a 
schedule that is modified to follow the classification proposed. 
16.
 The United States agrees with the EC that all WTO Members are free to continue to use the 
existing W/120 framework to schedule commitments.     TN/S/W/35 
S/CSC/W/45 Page 4 
 
 
 17. The United States also strongly believes that if  efforts to address the problems with the EC 
approach highlighted here fail, it would be preferab le for all Members to continue to use the existing 
W/120 framework to schedule commitments, rather than schedule under a new classification system.  
 TN/S/W/35
S/CSC/W/45
Page 5ANNEX 1 
 
Sample Schedule2 
 
Modes of supply: 
1) Cross-border  2) Consumption Abroad  3) Comm ercial Presence 4) Presence of Natural Persons 
Sector Market Access National Tr eatment Addition al Commitments 
2.C Telecommunications 
 All services consisting of the transmission and 
reception of signals by any electromagnetic means, 
alone or in combination with enhancing, storing, forwarding, retrieving, or processing functions 
added to the transmission and reception of signals. 
 These services may be provided on a facilities 
basis or non-facilities basis, and encompass local, 
long-distance, or international services, for public or non-public use, and may be provided through 
any means of technology.  
 
[exclusion for radio and television broadcasting] 
 Basic Services 
3 
 
These services include, but are not limited to:  
a) Voice telephone services 
b) Packet-switched data transmission services 
c) Circuit-switched data transmission services 
d) Telex services  
 1) None 
 
2) None  
3) None 
 4) Unbound, except as indicated 
in horizontal commitments  
 1) None 
 
2) None  
3) None 
 4) Unbound, except as indicated 
in horizontal commitments Member X undertakes the obligations 
contained in the reference paper attached hereto for the following basic 
telecommunications services, (list 
consistent with 1997 commitments, as appropriate):  
 
a) Voice telephone services 
b) Packet-switched data transmission 
services 
c) Circuit-switched data transmission 
services 
d) Telex services 
e) Telegraph services 
f) Facsimile services 
g) Private leased circuit services 
o) Other 
 
                                                      
2 This sample is only for illustrative purposes and is without prejudice to any revisions that the United States may make to its  existing offer in the 
telecommunications sector of the United States. 
 
 3 These services are scheduled in accordance with the Notes for Scheduling Basic Telecom Services Commitments (S/GBT/W/2/Rev.1) a nd Market Access 
 Limitations on Spectrum Availability (S/GBT/W/3).  
 
  
 TN/S/W/35 
S/CSC/W/45 
Page 6 Modes of supply: 
1) Cross-border  2) Consumption Abroad  3) Comm ercial Presence 4) Presence of Natural Persons 
Sector Market Access National Tr eatment Addition al Commitments 
e) Telegraph services 
f) Facsimile services 
g) Private leased circuit services 
o) Other 
 
Value-added Services 
 These services include, but are not limited to: 
 
h) Electronic mail 
i) Voice mail 
j) On-line information and database retrieval 
k) Electronic data interchange 
l) Enhanced/value-added facsimile services, 
including store and forward, store and retrieve 
m) Code and protocol conversion 
n) On-line information and/or data processing 
(including transaction processing) 
o) Other  
 
 
 
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