Telecomunications and the WTO.

• Author: Makaryshyn, John

Introduction

According to the Canadian Council for International Business, trade in services now exceeds US$2 trillion annually. It has grown faster than trade in goods and accounts to become 20% of world trade. Services also account for close to 60 % of the world's foreign direct investment (FDI). (Service Industries account for $US18 trillion of world production, and make up almost 70% of GDP in industrialized nations, and close to 50% in developing ones. Employment in G7 countries accounts for roughly 70% of total employment.)

Telecommunications services in particular have become a significant and rapidly expanding segment of trade in services, with total revenues of approximately $US800 billion in 1998. Telecommunication services, including broadband and e-commerce services, is one of the fastest growing sectors and one that stands to benefit greatly from international trade liberalization agreements. According to Forrester Research, business to business e-commerce services will be a $1.95 trillion (Cdn) trade opportunity in the US by 2003. If Canada was to attract an additional five percent of that amount, it would translate to over 1,072,500 jobs (using Statistics Canada's figures of 11,000 jobs for every $1 billion exports). When one considers the economic growth potential in the telecommunications services sector and its role in facilitating our knowledge based economy, it becomes clear that trade agreements negotiated within the context of international organizations, such as the World Trade Organization (WTO), will have a profound impact on economic prosperity.

In November 1999, the representatives of the 134 member nations met in Seattle for the WTO's Third Ministerial Conference. The WTO 1997 Agreement on Basic Telecommunications (ABT) laid the foundation for improved market access and the liberalization of foreign investment in the telecommunications sector. It was a necessary starting point for phasing out telecommunications carrier monopolies and providing the regulatory principles and fundamental commitments needed to introduce competition in basic telecommunications services across WTO member countries. While the agreement produced significant gains, there remain considerable government-related trade barriers to enabling true and effective competition in WTO telecommunications markets.

The challenge for the WTO in the next round will be to include more nations in the existing agreement, while improving the quality of commitments by those countries that have participated in the Fourth Protocol Spreading the benefits of liberalization may encourage greater foreign direct investment, strengthen basic and advanced communications infrastructure, and allow populations greater access to the world through information technology. With respect to e-commerce, the Canadian Government's WTO Proposal, states that "international cooperation is essential to creating such a trading environment and to optimizing the social and economic potential of electronic commerce, both by creating the enabling conditions for electronic business to take place on a transnational basis and by removing barriers or impediments to...