"Wildly Enthusiastic" About the First Multilateral Agreement on Trade in Telecommunications Services

I. INTRODUCTION Traditionally, telecommunications services have been provided by national monopolies. In a sign that monopolies are a thing of the past, the World Trade Organization's (WTO)(1) Fourth Protocol to the General Agreement on Trade in Services (WTO Basic Telecom Agreement or Basic Telecom Agreement)(2) entered into force on February 5, 1998. The Basic Telecom Agreement was concluded on February 15, 1997, with sixty-nine WTO Members(3) agreeing to open to foreign competition for the first time some or all of their basic telecommunications services markets. These sixty-nine Members represent over 90 percent of the world's basic telecommunications revenues. Telecommunications services is a huge and growing market, with 1997 revenues expected to exceed $725 billion.(4) A telecom trade agreement came after two unsuccessful attempts to negotiate multilateral commitments on basic telecommunications under the auspices of the WTO. It was an achievement warmly welcomed by consumers and suppliers of basic telecommunications services.(5) In fact, many in U.S. industry declared themselves to be "wildly enthusiastic."(6) This Article describes the results of the negotiations on basic telecommunications, the history of the negotiations, the difficult issues that negotiators faced, and how those issues were resolved. II. THE RESULTS OF THE NEGOTIATIONS The results of the negotiations can be measured in a number of ways. The most obvious is the quantity and quality of commitments made by the countries involved. Sixty-nine countries made commitments to open their markets for some or all basic telecommunications services to foreign competition.(7) Fifty-two countries guaranteed access to their markets for international services and facilities, with five more countries open for selected international services. In almost all of those countries, international services have been provided by a monopoly that will face competition for the first time.(8) Fifty-six countries agreed to open markets for all or selected services provided by satellites. Not only have monopolies ended for the first time in many countries, but the competitors providing basic telecom services can be 100 percent owned by foreigners in forty-four countries. Another twelve countries agreed to allow foreign ownership or control of certain basic telecom services, while thirteen countries guaranteed to allow some degree of foreign ownership in their basic telecom services markets. To make these commitments of market access and foreign ownership and control fully realizable, fifty-three countries agreed to adopt as binding commitments the "Reference Paper," a set of procompetitive regulatory principles.(9) For the first time in a multilateral setting, countries agreed to abide by competition rules. The second way to measure the achievement of these negotiations is by the size of the markets that will be open to competition. In this respect, the results are particularly impressive. Prior to implementation of the results of these negotiations, only 17 percent of the top twenty telecom markets were open to competition.(10) As of the date of entry into force of the WTO Basic Telecom Agreement, 92 percent of major markets are covered by commitments to remove restrictions on competition and foreign entry.(11) Consumers will also benefit. The Clinton Administration estimates that the average cost of international phone calls will drop by 80 percent--from one dollar per minute on average to twenty cents per minute over the next several years.(12) III. THE HISTORY A. The GATS There is actually no free-standing WTO Basic Telecom Agreement, but a series of commitments that compose part of the General Agreement on Trade in Services (GATS),(13) one of the trade agreements included within the WTO Agreement.(14) The GATS establishes binding multilateral rules covering treatment of foreign services and service suppliers and government regulation of trade in services. …