Trade in telecommunication services: opportunities and constraints

The growing importance of services such as telecommunications in various countries resulted in a demand to bring services trade under a framework of multilateral trade rules. This paper brings together the issues that are relevant to the WTO negotiations specific to telecommunication services from an Indian perspective. The objective is to focus on the opportunities and challenges in the multilateral trade of telecom services against the backdrop of the rapidly changing domestic and international telecom environment.

The paper reviews the present Indian Telecom market structure and its evolution over the last decade, while still bringing out the need and scope for further reforms. The paper starts by giving a brief overview of the telecommunication services in the world economy, with a focus on Asia Pacific and particularly India.

The paper provides insight on the following:

• the relevant positions of GATS and other rules and disciplines for telecommunications
• the liberalisation in telecommunications services under the Uruguay round
• a comparison of WTO commitments made by India with the actual policy implemented/under consideration
• the telecom policies of other WTO members that India should consider during GATS negotiations.

On the basis of the analyses of the wedge between the present regime and India’s present commitments, requests on India and offers on the table, the paper shows that there is considerable scope to make further commitments in this sector in the ongoing negotiations without changing the existing regime. As the regime is already liberal in developed countries a quid pro quo will have to be sought in other sectors.

The author also reviews some policy reform that can be further considered in the sector and suggests the following:

• the elimination of restrictions on the number of operators and on the geographical coverage
• the removal of restrictions on foreign equity
• the full commitment to the reference paper of the basic telecommunications negotiations
• the removal of all remaining MA and NT limitations for telecommunications services
• the removal of restriction on resale
• the removal of present exemptions on international service regarding accounting rates.

In the end, the author suggests a strategy for ongoing negotiations where India needs to look at issues in the following order:

• policies for which a commitment may be made as they exist at present or will evolve during the early phase of negotiations
• policies for which commitments may be introduced in terms of a commitment to review
• policies which should be considered in the interim phase of the negotiations, based on domestic developments
• policies for which a commitment could be considered in terms of a phase-in time period.