India has made a start in the telecom sector, but the particular choice of instruments imposing universal service obligations and their design were not the best ones. In Chile, subsidies equivalent to less than 0.5 per cent of total telecom revenue, allocated through competitive bidding, mobilised 20 times as much private investment for basic telephone services to rural areas. These approaches can be extended to other sectors. In the first case, the challenge is to eliminate explicit and implicit barriers to movement. For the second, to ensure that openness is maintained.
Multilateral engagement can help.
There is no doubt that the Uruguay Round outcome in services was unbalanced and very little progress was made in establishing multilateral commitments on movement of labour. Although stiff resistance from partner countries was a major contributing factor, an unwillingness on India s part to open up domestic services markets also made its demands for labour mobility difficult to sustain. Also, severe shortages of skilled labour in the US and Europe and the powerful constituency of high-tech companies lobbying for relaxation of visa limits makes this a propitious time to put labour mobility squarely on the negotiating agenda. One way of implementing these trade-offs is by making explicit links between modes. India has invariably opposed a formula-based approach, fearing that this would undermine selective, gradual liberalisation.