US scuppers deadline for WTO telecoms deal

Date: 02/05/1996

DESPITE all the advance talk of how the 30 April deadline for a deal had to be respected at all costs, negotiators at the World Trade Organisation this week agreed to give themselves another nine months to reach an accord on liberalising the global telecommunications market.

The decision followed an announcement by the United States just 36 hours before the world pact was due to be sealed on Tuesday that a “critical mass” of substantial offers had not been reached.

US negotiators singled out Canada, Malaysia and Indonesia for blame, saying none of the three had contributed sufficiently despite the fact that gaining substantial access to their markets was considered essential for Washington.

Developing country diplomats, however, rejected the US argument, saying it was a limp excuse for withdrawal.

Washington's refusal to sign the deal, which stirred memories of its stance during the 1995 negotiations on financial services, angered EU and other officials.

Trade Commissioner Sir Leon Brittan immediately seized the high moral ground, accusing the US (in the nicest possible way) of putting domestic votes before the crucial world deal.

“We regret and deplore the fact that the United States should have come to the decision that it did,” he said, adding, with more than a touch of sarcasm: “I know it is difficult to reach conclusions of a far-reaching kind in a year with a presidential election.”

Powerful American companies such as Motorola and AT&T have put Washington under pressure in recent weeks not to open satellite services to competition, arguing that few countries had reciprocated - pressure to which it finally yielded.

The US also said it needed the right to refuse licences to foreign companies wishing to operate international services out of the US.

EU officials claim that both problems could have been resolved this week in time to sign the telecoms accord as planned.

The Union was ready to reach a deal opening all or part of its national telecoms markets to foreign operators under agreed competition rules.

“Urgent and early conclusion of these talks was highly desirable ... This was a negotiation that was ripe for conclusion today,” said Brittan on Tuesday.

Partners to the talks hope that the last-minute rescue plan drawn up by WTO Director-General Renato Ruggiero will save the two-year negotiations from collapse by keeping existing liberalisation offers on the table in the hope that they will be improved upon.

Analysts argue that the pact would give a huge boost to an already booming telecoms sector worth an estimated 400 billion ecu a year. If a deal is reached by next March, it would still come into force from January 1998.

The near collapse of the telecoms talks will send a bad signal to those struggling to reach an agreement on maritime services by June. It also represents a significant defeat for the fledgling trade organisation, which is trying desperately to establish itself as a force to be reckoned with.