The telecommunications trade agreement agreed by 68 countries in Geneva on Saturday underlines the fact that in an era of global free trade, regional trade groupings are becoming less and less necessary. It also raises the question whether, if the pact is going to be so good for employment and the world economy, why we […]
The telecommunications trade agreement agreed by 68 countries in Geneva on Saturday underlines the fact that in an era of global free trade, regional trade groupings are becoming less and less necessary. It also raises the question whether, if the pact is going to be so good for employment and the world economy, why we can’t strip all trade restrictions away and launch an era of totally free trade. The telecommunications agreement, reached under the auspices of the World Trade Organization – successor to the General Agreement on Tariffs & Trade, was reached just hours before the midnight deadline. The breakthrough came after the US eased its position on Friday after months of tough negotiating.
Key sticking point
The agreement turns the World Trade Organization into the international policeman and ultimate appeals body for all forms of basic telecommunications, including satellite systems, cellular phones, data transmission and paging. The International Telecommunications Union is forecasting that world revenue for the industry, including equipment, could almost double to more than $1,200bn from the present $600bn by the year 2000 as a result of the agreement. According to Reuter, European Union Trade Commissioner Sir Leon Brittan said the pact would slash telephone costs for ordinary people and businesses around the globe and speed up the digital revolution. The US walked away from a deal last year, saying the offers from emerging nations were not good enough, but Canada’s efforts to restrict foreign ownership of domestic telecommunications companies was a key sticking point this time, and Canada in the end retained a 46.7% limit on foreign ownership. The US retained curbs on satellite transmission of some television and audio services to appease the Canadians. Foreign firms will be able to acquire up to 100% of US companies through US subsidiaries, easing the path of British Telecommunications Plc’s move to acquire the other 80% of MCI Communications Corp. Japan, whose 15.6% share of global revenues makes it the worlds third largest telecommunications market, agreed to remove its 33% ceiling on foreign investment in most carriers and radio-based services, but resisted US pressure to remove its 20% ceiling on foreign stakes in Nippon Telegraph & Telephone Corp and Kokusai Denshin Denwa Co Ltd. Indonesia and Malaysia offered nothing new, and Thailand and South Korea will maintain limits on foreign participation in their market. Commenting on the pact, US Trade Representative Charlene Barshevsky declared that A 60-year tradition of telecommunications monopolies and closed markets has been replaced by market opening, deregulation and competition. Before this agreement, only 17% of the top 20 telecommunications markets were open to US companies; now they have access to nearly 100% of these markets. AT&T Corp welcomed the pact, saying it would like to see telecommunications markets in other countries become as open as the US. British Telecom said it was ‘delighted’ by the pact: We believe that the outcome offers almost every citizen in the world the opportunity to experience the benefits of competition, it said. Telecom Eireann said increased competition would lead to significant reductions in Irish telephone rates. Irish long distance telephone rates were likely to be cut by 50% over the next three years, it said.